Context: In the backdrop of COVID-19 pandemic, the necessity of self-reliance was emphasised upon by the PM amid calling for improvement in quality and domestic supply chains going forward.
More on the news:
- The imminent spark for the need of Self reliance was brought home by the absence of domestic production of personal protective equipment (PPE) when COVID-19 struck.
- Although, India initiated and quickly ramped up PPE production.
- Now, the road to self reliance calls for India to make major course changes in development strategies.
- The world has seen major changes since the self-reliance model of the Nehruvian era.
- So a perspective for Indian self-reliance in science and technology (S&T) and industry in a globalised world is long overdue.
Issues with the Industries : Out of tune with Global competition
Initial decades of Independent India
- Self-reliance in state-run heavy industries and strategic sectors in the initial decades post-independence had placed India ahead of most developing countries.
- In the succeeding decades of 1970s and 80s, India did not modernise these industries to climb higher up the technological ladder.
- The private sector stayed content with near-monopoly conditions in non-core sectors in a protected market marred by License Raj.
- No or low effort was made to modernise light industries or develop contemporary consumer products.
- All in All, India’s industrial ecosystem was thus characterised by low productivity, poor quality and low technology, and was globally uncompetitive.
Missed out on the Third Industrial Revolution
- India missed out on the third industrial revolution comprising electronic goods, micro-processors, personal computers, mobile phones and decentralised manufacturing and global value chains during the so-called lost decade(s).
- Presently, India is the world’s second largest smartphone market.
- However, it does not make the majority of these phones itself, and manufactures only a small fraction of solar photovoltaic cells and modules currently used.
At the turn of the millennium
- When India started on its journey towards liberalisation, privatisation and globalisation, the very concept of self-reliance was rubbished.
- It was believed that Self reliance was tantamount to reinventing the wheel when advanced technologies could simply be bought from anywhere at lower costs.
Two related ideas have prevailed since then, and neither delivered the desired results.
- The first was that public sector undertakings (PSUs) are, by definition, inefficient and sluggish for the competitive globalised scenario.
- No effort was made to provide either real autonomy or a transition to new technological directions rather PSUs with capability and scale for the task were undermined, along with many nascent research and development (R&D) efforts in photovoltaics, semiconductors,etc.
- Even today, most R&D in India is conducted by PSUs, and much of the smaller but rising proportion of private sector R&D is by foreign corporations in IT and biotech/pharma
- Alternatively, the private sector displayed little interest in these heavy industries and showed no appetite for technology upgradation.
- The entry of foreign corporations pushed most Indian private companies into technology imports or collaborations.
- The second idea was that inviting foreign direct investment and manufacturing by foreign majors would bring new technologies into India’s industrial ecosystem.
- It got rid of the need for indigenous efforts towards self-reliance.
- However, mere setting up of manufacturing facilities in India is no guarantee of absorption of technologies
- There is no evidence from any sector that this has taken place or has even been attempted.
- The fact is, foreign majors guard commercially significant or strategic technologies in off-shore manufacturing bases.
The key problem of self-reliance is therefore neither external finance nor domestic off-shore manufacturing, but resolute indigenous endeavour including R&D.
Lessons from Global Perspective
- Global Experience and achievements also contradict the notion that self-reliance is a hangover from Nehruvian socialism.
- Learning from Japan’s post-war success, countries like South Korea, Taiwan, Singapore and Hong Kong took huge technological and industrial strides in the 1970s and 80s.
- South Korea, in particular, climbed up the technology ladder and value chains in electronic goods, consumer durables, automobiles, micro-processors, personal computers and heavy machinery.
- It emerged as a global powerhouse in manufacturing, but also in indigenously developed technologies.
- Taiwan developed technologies and manufacturing capacities in robotics and micro-processors, while Singapore and Hong Kong adapted advanced technologies in niche areas.
- Countries like Thailand, Malaysia, Indonesia and Vietnam have focused on off-shore manufacturing lower down the value chain and without the thrust on self-reliance.
- This is useful for job creation but is an unsuitable model for a country of India’s size and aspirations.
- China advanced purposefully from low-end mass manufacturing to a dominant role in global supply chains.
- It has now decided on shifting to advanced manufacturing and has set itself a target of becoming a world leader by 2035 in 5G, supercomputing, Internet of Things, artificial intelligence (AI), autonomous vehicles, biotech/pharma and other technologies of the fourth industrial revolution.
- India’s self-reliant capabilities in electric and fuel cell vehicles, electricity storage systems, solar cells and modules, aircraft including UAVs, AI, robotics and automation, biotech/pharma and others are well within reach.
- State-funded R&D, including in basic research, by PSUs and research institutions and universities needs to be scaled-up significantly, well above the 1% of GDP currently.
- Upgraded and reoriented PSUs would also be crucial given their distinctive place in the ecosystem.
- Given the disinclination of most of the private sector towards R&D and high-tech manufacturing, significant government reinvestment in PSUs and R&D is essential for self-reliance.
- Private sector delivery-oriented R&D could also be supported.
- Finally, India’s meagre public expenditure on education needs to be substantially ramped up including in skill development.
- No country has achieved self-reliance without quality public education.
- And no country has developed without a much stronger public health system.
- Even the lessons from the global examples, show the self-reliant capabilities call for
- Planned state investments in R&D including basic research (3-5% of GDP)
- Technology and policy support to private corporations
- Education and skill development (4-6% of GDP).