Atmanirbhar Bharat will remain a distant dream unless the domestic industry is deeply integrated with global valuechain system, observe experts from the industry, while ruling out the assumption that India should limit itself in its own boundary or self-isolation. Atmanirbhar Bharat means very deep integration into the global value chains, using the domestic manufacturing strengths of India to become a leading exporter globally, advise economists.
Prime Minister Narendra Modi-led NDA government’s think tank NITI Aayog has reiterated that Atmanirbhar Bharat doesn’t mean self-isolation, but a very deep integration into the global value chains, using the domestic manufacturing strengths.
Amitabh Kant, CEO, NITI Aayog, said: “Manufacturing sector will lead India’s exports by 2025 in key sectors including mobile, electronics, pharma, textiles, engineering products etc. We are keen on creating global manufacturing champions in sectors of strength.”
Dr Sangita Reddy, president, Ficci, adds: “India is the new home for global business and will play a role, not just in the invention, but also in moving from invention to innovation and scaling. We need to look at everything required to make India a competitive manufacturing base.”
Participating in a webinar recently organized by Ficci as part of LEADS-2020, Sidharth Nath Singh, UP Minister for MSME, Investment & Exports, NRI, Sericulture and Handlooms, said that India has a diversity of natural resources that give it a distinct position to lead the global economy, particularly sustainable global economy. “Therefore, it is a stated policy of the Govt of India, along with the state governments, that to address India’s national environment, resources need to be used efficiently,” added Singh.
While the pandemic has affected the global value chains, India is required to turn this crisis into opportunities.
“Countries and companies are re-evaluating their trade and manufacturing strategies which can serve as new avenues for growth in India considering the inherent competitive advantages which the country possesses. The only truly comprehensive alternative for this rapidly changing supply chain environment is India,” emphasized Kant.
Kant added that India has capabilities to produce export-ready goods and provide large consumption market through its domestic needs. “The government has initiated many steps to position India as a truly global manufacturing hub with strong focus on exports,” he said.
Mfg Segment In Focus
Kant stressed that digital transformation will drive India’s manufacturing sector forward with the help of technologies like AI, Cloud computing, IoT, Block chains and robotics. “In order to take its rightful place in the global supply chains, India is leveraging these technologies and applying them across the manufacturing value chains to gain competitiveness. Data will be critical to meet these goals,” he said.
The Centre has announced Production Linked Incentive (PLI) scheme to help the industry in a big way. “The $7 billion worth PLI scheme for mobile and electronics will have a strong multiplier impact on direct and indirect jobs. 22 domestic and international firms have submitted their proposals for mobile phones production worth Rs 11 lakh crore over the next 5 years,” Kant added.
Similar schemes have been launched in pharma, medical devices, and soon will be finalized for automobiles, networking products, food processing, advanced chemistry, cell battery storage and solar PV manufacturing.
Dr Sangita Reddy further said that India should focus on enhancing the supply chain of components, not just to assemble in India but creating a vibrant components and electronic manufacturing system which will also boost the MSME sector.
Kant said that more and more innovations will further drive the large amount of data which India has. “As we move from becoming data rich to data intelligent, one would see more and more innovations. Innovations and continued investments in R&D will be required to make advanced manufacturing in India,” he said.
Manish Sharma, Co-Chair, Ficci (electronics & white goods manufacturing committee), and president & CEO, Panasonic (India & SA), said: “East Asia has been the hot bed for manufacturing for decades and there will be significant changes that will happen in supply chain for goods and services going forward. We as a country and industry need to prepare and precipitate in that.”
Manu Kumar Jain, global V-P, Xiaomi, and MD, Xiaomi India, said that the expansion of local supply chains in India is a great opportunity for long term suppliers given the disruptions that have happened due to the pandemic.
Surinder Rosha, CEO, HSBC Bank India said that being able to continue providing services, shifting work from offices to even home, is a big testimony to the robustness of service supply chain.
Mr Sunil Shewakramani, Executive Director, Li & Fung, Hong Kong said that we need better manufacturing efficiencies in India, engage more with countries with bilateral FTAs and creation of economies of scale.
Shigekazu Suenaga, chairman, Toray Industries India, said that environment was becoming central to a lot of business strategies.
Reset, reorganize & re-innovate
Another session on Reimagining Synergies in Sustainable Resources during the 4-day ‘LEADS 2020’, focused on re-innovating the manufacturing and business processes. The UP minister Singh said that there was a need to reset, reorganize and re-innovate government policies and businesses both at central and state levels. “The national development policy is to work on SDGs, but the global pandemic has thrown challenges to all of us and these challenges need remodelling in all our policy frameworks. We have been working on UN Sustainable Development Goals (SDGs) for the last one last year. Almost all ministries have adopted these after a brainstorming session with IIM, Lucknow.”
The Atmanirbhar Bharat vision of the PM means more synergies are needed with the world. “The Jal Mission is one of the most important visions of the PM. The Uttar Pradesh government is hopeful that by 2022, we will be able to ensure each household with pipe water and each farmland to be irrigated,” Singh added.
From the sustainable side, it completely changes the farm economy. Doubling of farmers’ income is possible because there is a model that is sustainable and innovative. Also, the simple task of providing everyone with pipe water elevates the ease of living phenomenally.
In laying down his thoughts for the energy sector, Singh said that there is a six per cent drop in demand, globally, hence, it is important for all of us to address this globally as well. “Some countries have better technologies and innovative systems for renewable energy. For those countries that haven’t developed at that scale, we can join hands, and India would be very happy to do so,” he added. He Renewable energy (RE) is an important factor, and the state government is working towards 20GW of RE. While many big players have already joined hands but there is still huge scope for others under the Open Access System policy,” Singh added.
States like UP are ready to collaborate with countries for artisanal goods to improve rural economy and create markets for each other thereby making a change to the domestic economy. Opportunities are available collaborate and bring synergies together, India needs a sustainable supply chain model that would be resilient and equitable.
“I commit myself and the Govt of UP to Oceania countries to bring strategic partnerships with each other in order to develop a sustained engagement that will give an economic political and will create value addition particularly in our natural resources,” emphasized Singh.
Ilham A Habibie, CEO & president, PT Ilthabi Rekatama, Indonesia, stressed on the potential for opportunities in renewable energy sector especially geothermal, hydro, wind, solar and marine and tidal energy in Indonesia.
Marcelo Castillo Agurto, Head of Business Development, Enel Global Infrastructure and Networks- Italy, highlighted the efforts of Italy such as transformation of waste to electricity, electric vehicles and smart industrial processes like metering, to promote sustainability in Italy. Agurto also emphasized on the importance of sustainable businesses and sustainable incentive regulation by the governments in order to keep with growing demand in cities.
Anooj Oodit, MD, Asia-Pacific, Turner & Townsend, Australia, shared that Australia has been embracing on renewables by maximizing on the opportunities in renewables , focusing on carbon reduction and creating conducive environment across states, developing energy storage solutions such as lithium ion batteries to meet the growing demand.
Devin Narang, Country Head- India, Sindicatum Renewable Energy Company, said: “India is slated to grow at over 10 per cent next year. With programmes by the central government on RE, clean air programmes, Swachh Bharat Mission, and others, India is well on its way to sustainable development goals. India would also like to learn from the experiences of other countries. This will be the beginning of learning and hopefully we will leave behind a better world for generations to come.
“There are immense opportunities for Indian businesses specially with Oceania countries. While collaborations are happening, India and Oceania’s relationship is yet to develop to its full potential in post pandemic world,” added Narang.
Ashish Khanna, President- Renewables, Tata Power India talked about that India has leapfrogged in renewable energy sector in last 6-7 years, and we can achieve more in this sector with best practices from Australia especially rooftop solutions and energy storage solutions. He also spoke about enabling policy environment for renewable adoption by Agriculture sector, to reach our full potential while providing sustainable power to that crucial segment of our economy.
Stressed assets segment is another major area of concern for the domestic banking sector. The problem has been further aggravated by the impact of Covid-19. Towards this, under Insolvency and Bankruptcy Code (IBC), the government is evolving a process and there is scope for making it more efficient, says Dr Krishnamurthy Subramanian, Chief Economic Adviser (CEA) to the Centre.
“IBBI developing virtual platform for stressed assets and auction process facility to be launched in next six months,” added Sudhaker Shukla, whole time member, Bankruptcy Board of India (IBBI).
Dr Krishnamurthy Subramanian said: “IBC is an evolving process and there is scope for making it far more efficient. It is definitely an important step in the right direction.”
Shukla and the CEA spoke in a virtual session on ‘Investment Opportunities In Stressed Assets In India’, organized by Ficci.
Emphasizing the importance of establishing a market for price discovery of stressed assets, he said that without this, the process of taking the haircut itself becomes difficult. “This is where distressed funds play an important role. Also, the corporate bond market that enables the distressed companies, for the loans and bonds to be traded also becomes important.” Highlighting the US case of having a market for price discovery, he said that there are some important market failures which we have in the creative destruction process which we need to focus, added Dr Subramanian.
Pavan Kapoor, Ambassador of India to UAE said that India and Abu Dhabi share a very strong bilateral relation complemented by high-level exchanges which happened in the last few years. “The establishment of a comprehensive strategic partnership has brought the countries closer resulting in deeper economic integration. With the recent policy reforms and the IBC, there is a lot of potential for UAE investors to invest in Indian stressed assets and reap the benefits,” Kapoor added.
Dr Subramanian said: “Given the stress that had built up in the financial sector before we entered the crisis, we will now have to take care of some stress that will inevitably happen because of Covid-19. The eco-system of creative destruction is a very important part of any economy.”
In order to make the distressed assets market to flourish in the Indian context, Dr Subramanian said that we need to focus on incentives for banks, especially public sector banks, along with establishing a market for price discovery of stressed assets.
He further highlighted that when a company goes into distress, judgment is involved in order to avoid the under-investment problem. “With the involvement of judgement, there is always a possibility of hindsight bias which can create enormous risk aversion. Judgment and investigation that does not take into account some of these nuances can make it difficult for the bankers to do what is economically efficient,” Dr Subramanian noted.
The writer is a journalist with 27 years of experience