Follow up on call to make for world

Follow up on call to make for world

It is welcome that Prime Minister Narendra Modi, in his Independence Day address, recalibrated his definition of Atmanirbhar Bharat — self-reliant India. While making his first reference to Atmanirbhar Bharat, the PM had, indeed, referred to making for the world. But subsequent policy announcements had overt tones of protectionism and import substitution. This is a prescription for inefficient production and anti-export bias.

The Independence Day exhortation to make for the world provides a welcome corrective. The rest of the government should translate the ‘make for the world’ slogan into coherent policy, and that would entail dismantling the walls of protection that have been built up around different sectors of the economy.

Writing on this page on Monday, Arvind Panagariya detailed the perils of trying to promote industry behind high tariff walls. Sure, there is value addition in the protected sectors, but of an inefficient kind that cannot compete in the global market, thereby shutting out the possibility of export success, unless underwritten by export subsidies.

There is the added problem of resources — capital, labour, entrepreneurial energy — being diverted from potentially competitive sectors to these global non-competitive sectors, as a result of protection. India had steadily liberalised external trade since 1991, till the onset of the Global Financial Crisis. That is the course to which India should try to revert, if it is to make for the world.

Sure, in some sectors such as microelectronics, there is a case for State-supported deep backward integration, for development of comprehensive capability in everything ranging from chip design to printing 7-nanometre circuits. But there is little point in extending support to superficial value addition in electronics while remaining dependent on external sources for the technology intensive bits of the industry. Technology is not a global commons and a nation that seeks strategic autonomy must have the capacity not to have its arm twisted by technology denial. India’s potential in this sector remains to be harnessed.