The Hindu The newspaper recently had an interview (‘How a team of 20 people from different backgrounds created an affordable, world-class ventilator during a lockdown’, 3 April 2021) Ventilator project, Srikanth Shastri, Amitabha Bandyopadhyay. The cover of the book tells the story of how an Indian Institute of Technology-Kanpur consortium built a world-class product in 90 days. The normal time required is 18 months. The ventilator requires 500 components, therefore, establishing domestic production capacity during a global lockdown is an exciting success. When asked about the shortage of domestic medical equipment, the authors said the government should invest in medical infrastructure and give priority to domestic medical equipment. Second, the Indian industry must respond with good quality inexpensive products. This is the implication of India’s renewed drive for self-sufficiency.
In a column (Where Modi may be as wrong as Nehru) On April 3, 2021, for Bloomberg Quint, Andy Mukherjee acknowledged that despite the many good policy initiatives taken by the government over the past two years, self-sufficiency was an tried and failed approach.
In light of the aggressive diplomacy pursued by China against many countries and in many fields, self-sufficiency is returning to many corners of the world. See the fact sheet on the American Jobs Plan created by the White House Briefing Room on March 31:
“[President Joe Biden’s] Investments use more sustainable and innovative materials, including cleaner steel and cement, and component parts are shipped under U.S. law with American crew on Made in America and US-flag ships.
. It gives customers point-of-sale rebates and tax incentives to buy American-made EVs, while these vehicles are affordable for all families and are made by well-employed workers. …
ప్రయత్నాలు .These efforts will create well-paid jobs for union workers, line workers and electricians, as well as demand for American – made building materials and components.
The Information Technology and Innovation Foundation acknowledged in a report last year that “previously useless tariffs and other forms of trade protection could play a role” (China product product impact on innovation in global solar photovoltaic industry, 5 October 2020).
In this regard, what happened in America after Donald Trump tariffs on solar manufacturing is very encouraging. According to an article in The American Prospect (The Case for Taking Back Solar), “Tariffs on foreign solar modules imposed under the Trump administration. 201 of the Trade Act, in retaliation for dumped imports, prompted three foreign manufacturers (Hanwa Q Cells, Ginkgo, and LG) to open US module plants in response to tariffs. “
In fact, there was a similar reaction in India as well. Borosil Glass will double its solar panel glass manufacturing capacity to 900 tonnes per day, with this improved capacity expected by April 2022, Financial Express reported. One reason to be in addition to this capacity, is cost ₹500 crore, i.e. borosil glass was protected by the anti-dumping duty of India. If such domestic fixed capital formation with acceptable international quality standards occurs in response to defense, then the policy would be to its advantage. If not, no.
In his inaugural address at the 36th Anniversary of Exim Bank of India, Professor Arvind Panagaria pointed out that investments attracted to industries that enjoy tariff production must be ineffective. Under normal circumstances, this is a fair statement and an exception to be remembered. However, after the 2008 global financial crisis the world first began to confront aggressive China, and now, after Kovid, China’s trade and foreign policy actions have taken on a higher level of combat. The tail-risk of a massive supply disruption of products and components imported from China during the conflict is not insignificant.
In January, Clive Hamilton, author Hidden Hand: Revealing how the Communist Party of China is redesigning the world, Questions the wisdom of keeping Chinese businesses in the heart of Britain’s infrastructure (How can China turn off Britain’s lights, 25 January 2021). In particular, Hamilton drew attention to the threat to Britain’s power distribution system. Therefore, critics of the policy of creating domestic capacity with tariff protection attribute such losses to their cost-benefit analyzes. It’s no longer ‘business as usual’ Trade Economics. Of course, this does not become a catch-all excuse for defensiveness for all sectors and all players.
In the final analysis, whether the national policy of self-sufficiency is self-defeat or financial success will be determined by Corporate India’s response to the incentives offered by the government in recent years, including total corporate tax rates and a 15% tax rate on new manufacturing businesses, if established before March 2023. If Indian industry steps into the plate, it is a win-win. If not, it comes back to the drawing board. But, there is no doubt that the conditions that allow neoliberal economic policies are in decline.
These are the personal views of the author.
V. Anantha Nageshwaran is a member of the Economic Advisory Council to the Prime Minister.