The world is moving towards sustainable businesses to tackle the challenges of climate change, empowerment of communities, health, education and other social causes to ensure the survival of life on the planet. From Davos, where the world’s most powerful people gather, to a humble policy document emerging from a bureaucrat’s desk, the theme is sustainability. In the midst of the clamour for making the blue planet a safer, healthier zone, lies the underlining theme of slowing the world order and tightening cross-border flows of goods, services and people. India, with its goal of a $5 trillion economy by 2024 in the middle of ominous forecasts of slow GDP growth, is facing a double challenge of sustainable growth vs a steroid shot of booster measures to put the economy on the fast track. While the full Union Budget 2020 will deliver parts of the promise and create hopes for more, the door is ajar for two important policies under consideration by the Government — the industrial policy and the e-commerce policy.
The proposed industrial policy (third after 1956 and 1991) ought to be a North Star for making India a global innovation, R&D and manufacturing hub, thereby achieving the $5-10 trillion target in the next decade. However, it must be kept in mind by lawmakers that this policy is coming at a time when the world has shifted towards Industry 4.0 and the global economy determinants are increasingly sinking into computing prowess of latest chips and bots while facing tremendous ecological challenges. This policy has a stated objective to develop and sustain global competitiveness for India; increase technology depth of the industry; increase employment avenues; increase share in global merchandise exports and reduce the environmental footprint. The stated vision is a one trillion gross value addition in manufacturing by 2025, (even though with right policy measures this target can be moved up.) The Government at this stage is in focussed stakeholder consultations to devise the right strategy for pushing India up in the world economic order.
The key questions being asked under the stated targets are how to bring the cost of capital expenditure in large-scale manufacturing in value terms for land, electricity and money at par with the globe benchmarks? How to reduce regulations and promote ease of doing business? How to develop India as a research, design and innovation hub by removing hurdles which are fully-integrated with the new asks from a connected digital economy? How to promote skills and workforce education as well as upskilling of the existing workforce to be able to function in the new industrial arena? How to focus on quality checks, testing and standards practices while recognising that we need to align with global benchmarks? Also, how to increase India’s global share in exports with a focus on our policy? Assist and put all industries on technology-aided platforms to enjoy the true benefits of a connected global economy? Achieve a stable, predictable, industry, consumer and economy-friendly policy framework to foster higher growth? Increase foreign direct investments? Promote sustainability as the core objective of all businesses in the country?
All these are commendable strategy directions which ask the right questions for an increasingly coagulating global order where technology innovations are diminishing physical barriers in fractions of seconds while protective Governments are putting iron fences around their economies and reducing global agreements to pieces of paper.
It is in this context that the new industrial policy seeks to achieve significance, as it comes at a time when every citizen is feeling the impact of the crumbling economy, job losses and more important, climate change. From extreme weather conditions being reported around the globe, to rising costs of providing basics to humans, not to forget, extinction of species, are a real danger today.
India needs to walk the tightrope of creating a sustainable business environment and impactful economy while getting more integrated with global benchmarks and practices. The new industrial policy needs a series of deliberations and clause by clause analysis of the vision, objectives before being drafted.
The Department for Promotion of Industry and Internal Trade has formulated a working group to finalise the policy which includes a couple of key State Governments. Nobody can deny the role States are likely to play in shaping the next economic growth for India. State Governments in the past have organised successful roadshows or “invest inwards” summits, promising big-ticket businesses free land, cheap electricity and fast Government clearances for new projects. However, now they need to align with the Central Government and put in their key demands, challenges and proposed solutions towards developing their States which are sustainable, long-term and more importantly can survive changing regimes. It is a long shot but in the spirit of federalism, States need to get their records straight on power subsidies, clamp down on existing businesses using local administration and similar regulatory challenges. The deliberations so far have been behind closed doors. For a global “outward”-looking industrial policy, there should be an open consultation process, especially at the State Government level. (MR, Inputs: Agencies).