India can be any of these:
It can be a China, whose manufacturing prowess and exports has ruffled the might of the world – the US and has led to a toxic trade war between the two that has impacted the entire world economy.
It can be a Taiwan or South Korea that have seen their economy soaring on the back of cutting-edge electronic manufacturing.
It can even be a Vietnam, which has muscled its way into the global trade scene by attracting electronic manufacturers with its cheap labour and business-friendly policies.
These comparable Asian economies, not until too long back, were mired in poverty. But with dogged determination, effective policies and most importantly by staying on top of changing consumption trends (many of those effected by them) they reaped a windfall.
All the while the Indian economy lagged thanks to its policy paralysis. It failed to see and grab opportunities like these nations.
And even now, as the government keeps pumping huge amounts into the already saturated auto and real estate sector, it’s vision at best can be described as myopic. Announcements on corporate tax reduction came in a tad too late as well. And, to be sure, there is no guarantee it would yield the desired results. In the absence of demand growth, there would hardly be any reason for companies to invest in expanding production with the savings resulting from lower tax.
What the government instead needs is to figure out where the untapped opportunity lies and spend its big bucks on it.
Speaking of which, the electronic sector springs to mind first. It is said that our electronic exports have risen two folds to US$57 billion in the past five years. Soon it may exceed our oil import bill.
And we have failed spectacularly at fixing this.
High manufacturing costs owing to high taxes, strict land and labour laws and lack of proper infrastructure are just some of the main reasons behind it. To propel world-class manufacturing of electronic goods and their expensive components, the government not just has to tackle these issues but also has to ensure robust supply and logistics chain, proper human resource development and state-of-the-art research and development centres for nurturing innovation. Only then the electronic industry can thrive and buoy economic growth.
So far, thanks to high taxes on research and development, innovation has been stunted. Private research, which could have paved the way for better products and manufacturing processes, never took off properly. One glaring consequence of it is in the mobile manufacturing domain. Despite production units numbering to almost 300 (this includes Samsung’s biggest manufacturing site globally), components are mainly assembled to make the final product in India. Expensive mobile parts such as touch and display panels are mostly imported from abroad to reduce production costs. If an Apple were to shift its manufacturing plant from China here, chances are it would face the same fate as others.
For the very same reason, the startup sector has been confined to online wallets, e-commerce platforms, ride-hailing, food-delivery services or education so far. Breakthrough work in new age technologies such as Internet of Things (IoT), artificial intelligence, cloud, robotics and machine learning is almost unheard of. A quick comparison with the scene in China, Israel and other nations, leaves a lot to be desired.
With big names in IT outsourcing such as Infosys and TCS facing pressure from cloud services and tough US visa rules, the startups can be our saviors.
In fact, opportunities are many. Think renewable energy sector, medical tourism, education or even recycling of scrap (China made a fortune by recycling scrap metals, plastic and paper).
If only successive governments, including the current one in its second term, had the willpower and sagacity to explore those.