Open Forum
New Delhi, 25
November 2020
R&D Technology
UPGRADATION VITAL FOR REVIVAL
By Dhurjati Mukherjee
India’s manufacturing
expertise is not very efficient and cost competitive, even compared with the emerging
economies. As such, there have been efforts by the government to modernise
manufacturing technologies and make it more innovative. Recently, the
production-linked incentive scheme in 10 manufacturing sectors to a total of 13
has been aimed in this direction.
At the outset, it’s important
to clarify that this idea of self-reliance is not about a return to Nehruvian
import substitution or autarkic isolationism. The government has emphasised
that the vision includes active participation in post-COVID global supply
chains as well as the need to attract foreign direct investment.
The aim obviously is
to boost manufacturing, investment and employment through targeted State
support to domestic and foreign firms for local production for such a vast
market. The focus has to be on manufacturing lewd growth with an export bias
through market protection, subsidies and other interventions, several of which
has been outlined in the ‘Atmanirbhar Bharat’ policy. Though self-reliance is
being rightly stressed as India is now being seen as an emerging economy, the allocation
of Rs 6000 crore for Atmanirbhar Bharat Rozgar Yojana and Rs 900 crore for department
of biotechnology for corona virus vaccine research seems inadequate.
The five key features
of the Yojana are: one, it would be operational during October 2020 to June
2021; two, it would incentivise creation of new employment opportunities during
COVID recovery phase; three, the employment scheme would be effective from
October and will be applicable to eligible new employees joining the
EPFO-registered establishments; four, it would benefit those who exited these
concerns during the pandemic and drawing monthly wages of less than Rs 15,000
and five, the Central government will subsidise the Employees` Provident Fund
(EPF) contributions for two years.
The point that needs
to be made note of is that all-round manufacturing has to be modernised, even
in rural industries so that products turn quality conscious and competitive,
both at national and global markets. There are many products and equipments
that are still imported but can easily be manufactured in the country through minor
R&D efforts. Even sophisticated products need no longer be imported and if
necessary be can be manufactured in the country with foreign technology.
Let us look at the
example of China. It has moved far ahead with its sharp focus on self-reliance
in technology and innovation, challenging the might of the US. With thrust on
manufacturing, Chinese products have entered markets across countries,
including India. Over the years, Beijing has paid lot more attention on
technology upgradation on products and equipments so as to make these acceptable
at global levels.
India is at a
critical juncture with several factors having hindered growth. A three-year
slowdown and presently Covid-19 pandemic has further retarded manufacturing
growth, slow rise in output share, capacity slack, failure to attract
Greenfield foreign direct investments and slower trend export growth. An
investment slowdown and the inability to reverse the graph is indeed alarming
and this needs to be addressed.
The change in
strategy necessitated is to attract investment and generate employment. Thus
there are expectations on increasing efficiency, productivity and improving
all-round quality. If necessary, special incentives need to be given to
increase public-private collaboration in areas where State technology along
with efficiency of the private sector can work wonders.
Moreover in the
recent geo-political environment, there are reports of some firms coming to
India from China and the economic situation has to be made conducive. In fact,
all-round efforts are needed at attract foreign investment but special thrust
would be necessary towards technology upgradation.
However, the task of
moving towards self reliance is not as easy as our political leaders point out
for electoral and other gains. There is need to be more serious and evolve a
strategic plan of action in gearing up research in selected sectors with
academia-industry collaboration and fixing up specific targets. This only will
enable transfer of technology so that production and productivity improves and
become s more quality conscious.
As is well known,
there is ample scope in sectors like defence, IT and electronics, shipbuilding,
mining etc. It is understood that in the defence sector, there are plans to
curb imports in a variety of products and curb imports while also exporting to
some selected countries. Some collaborations have been envisaged and the one
with Israel has already taken shape. However, in the shipbuilding sector, India
has made some advance and may, in coming years, start exporting ships, even
worships.
Experts in the field
are of the opinion that the inclusion of high demand, high technology items
such as semi-conductor fab, IoT devices and ACC batteries in the newly
announced Production Linked Incentive (PLI) scheme is expected to boost India’s
capacities and catapult it among major manufacturing hubs. As regards the
mining sector, legislative amendments are proposed to The Mines & Minerals
(Development and Regulation) Act 1957 as structural reforms may boost private
investments for accelerating growth and employment opportunities.
Additionally, the government
proposes to nearly double its oil refining capacity in the next five years and
reduce both imports and carbon footprint by 30-35 per cent by increasing the
use of natural gas four times this decade, as stated by Prime Minister Modi
recently at the convocation ceremony of Pandit Deendayal Petroleum University.
Investment bankers
are optimistic about slight rise in GDP but even if it happens, to boost up
manufacturing, big investments are required. The government can’t depend upon the
private sector solely and will need to shell out resources.
The key question is
the ability to attract foreign investments and global technology companies who
would be willing to set up units in the country, preferably in collaboration
with Indian companies working in similar areas. There is need for the
government to focus on companies such as Garden Reach Shipbuilders &
Engineers, Hindustan Aeronautics, ISRO, IRCON etc. and ensure further
technology upgradation to make their global presence felt.
It is not expected of
the private sector, except a few, to be much advanced and make the country a
manufacturing hub. Apart from extending various types of facilities, some of
which have already been announced, technical and financial collaborations would
help achieve the objective of self-reliance in a big way. Though attracting
finance remains a big problem, technology also remains an equally crucial arena
where R&D activities need to be geared up. Also the country’s meagre public
expenditure on higher education needs to be substantially ramped up (as against
current trends of privatisation which would only shrink access), including in
skill development.
Finally, it needs to be
admitted that the spirit of self-reliance has been rightly echoed and should be
judiciously pursued by all stakeholders. If it is done with all sincerity,
innovation and product upgradation, time will help plan draw a strategy
shortlisting areas where imports can be reduced and manufacturing be given a
boost. Even if this helps marginally it is no doubt a step to revive a badgered
economy. ---INFA
(Copyright, India
News & Feature Alliance)
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