7 PM Editorial |How India can become self-reliant| 27th May 2020

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How India can become self-reliant

Atmanirbhar Bharat Abhiyan has been announced by the government of India to achieve self-reliance. Industrial policy changes in sectors such as defence, agriculture, space, power, mining have been included in this initiative. Achieving self reliance requires India to reform it’s R&D capabilities, education, skilling and public health.

Let us see how self reliance evolved in India, what lessons can be learnt from other nations and path ahead.

Evolution of self reliance in India:

1947-1991:Pre liberalisation era

1. Steps taken:
   1. Planning commission was established with objectives of growth, self sufficiency, modernization, equity
   2. Green revolution was undertaken which provided self sufficiency in agriculture
   3. Import substitution through tariffs and restrictions reduced competition to Indian industry and developed indigenous capabilities
2. Failures in achieving self reliance:
   1. Industrial policy, 1956 provided for license permits for establishment and expansion of industries. This was exploited by industrial houses to obstruct entry of innovative new products. This resulted in India losing out on Industrial revolution 3.0 in electronic goods, micro processors, mobile phones, global value chains. Hence Indian industry was characterized by low quality, poor technology and globally uncompetitive.
   2. Reduced competition from foreign imports due to import substitution resulted in stagnation of quality of products.

Post 1991: Liberalization, Privatization, Globalisation

1. Steps taken:
   1. PSU’s were deemed inefficient and uncompetitive globally. Hence disinvestment and their confinement to core sectors was done.
   2. Industrial licensing confined to select industries such as alcohol, explosives, cigerattes etc. This was to enhance innovation by easing entry of new players
   3. Globalization through offshoring in areas such as IT, BPO. This was done with a view that global companies will bring new technologies to India and there is no need to research them again.
   4. Import substitution was removed by reducing tariffs, removing quantitative restrictions, import licensing. This is to enhance competition and hence innovation and quality
2. Failure in achieving self reliance:
   1. PSU’s were major contributors to R&D in India. Due to reduced capital investment in these, research and modernization was effected. At the same time, private sector have not invested in R&D. R&D investment is about 1% which is low. This resulted in India becoming importer of technology
   2. FDI has brought technologies but they were guarded by foreign companies through intellectual property. Minimal transfer of technology occured undermining self reliance.
   3. Cheaper imports negatively impacted Indian industry. API in manufacturing of medicines is an example where Chinese imports displaced Indian industry and hence self sufficiency

Lessons from other countries:

China, South Korea, Taiwan, Hongkong, Singapore have invested in education and skill development, planned state investment in R&D, technology, infrastructure and policy support to private companies. This has resulted in development of indigenous capabilities in advanced technologies and manufacturing such as electronic goods, microprocessors, robotics.

China is pursuing super power status through technology by investing in transition from low end manufacturing to advanced manufacturing. Industrial revolution 4.0 technologies such as 5G, quantum computing, robotics and automation, Artificial intelligence are some areas of focus by China.

Steps to achieve the goal of self reliance:

1. Investment in education and skilling to be raised to 6% of GDP. Sciences need to be strengthened from school level. This will enhance research capabilities in higher education
2. State funded R&D investment through PSU’s, universities and research institutions like DRDO, ICAR. This has to include basic research. About 3-5% of GDP is state funding for R&D in South Korea, Taiwan, Singapore. This can be a benchmark.
3. Focus on areas of electric vehicles, photovoltaics, artificial intelligence, robotics, UAVs, biotechnology
4. Policy framework to promote private sector investment in R&D needs to be taken up. R&D activities can be included as part of Corporate Social Responsibility (CSR) activities.
5. Promoting industry-academia-research institutions linkages.
6. Stronger public health system which aids in improving efficiency of the economy and boosts expenditure on education and thus self reliance.

Source: TheHindu

Mains Question:

1. Atmanirbhar Bharat Abhiyan has announced by the government of India to achieve self-reliance. What steps did India take for self reliance since independence and what are their shortcomings? [15 Marks, 250 Words]