Many nations now looking to India for their supply chain operations: Modi

We need to stop exporting raw materials and buying finished goods, time has come to start adding value; 'Aatmanirbhar Bharat' a duty towards global good, says PM Modi in his Independence Day speech

An 'Aatmanirbhar Bharat' would be economically stronger which will lead to more peace and financial stability across the region, Prime Minister Narendra Modi said in his address to the nation on the occasion of 74th Independence Day. "Many nations are watching India as a centre for their supply-chain operations. Now, we have to internalise the motto of ‘Make for the world’ alongside ‘Make in India’."

"The world is interconnected and interdependent now. Therefore, India' contribution to the global financial system should rise. This is India's duty towards global development. For that to happen, India would have to become self-reliant," the PM stressed during his seventh speech from the ramparts of the historic Red Fort.

This self-reliance has the potential to spread across diverse sectors like space technology, agriculture, health and tourism, and the benefits would ultimately reach both India and other nations, Modi said in his strong pitch.

He also emphasised the need to reduce the country's dependence on finished foreign goods. "How long we will keep sending raw materials abroad and bringing back finished goods? We need to move forward strongly on the path of value addition," Modi said.

India's export basket continues to be disproportionately filled with raw materials like iron ore, raw plastic, cotton, etc. Overall imports in 2018-19 stood at $473 billion, down 7.8 per cent from a year earlier. This had been preceded by inbound trade rising for three years straight, and hitting a high of $514 billion in 2018-19. On the other hand, exports stood at $313.2 billion in 2019-20 — $160 billion lower than imports.

The way ahead

Since the onset of the coronavirus pandemic, India's long-standing plan to drastically reduce its dependence on imports — from China as well as elsewhere — has gone into overdrive. After incidents of violence along the India-China border in Ladakh, the government has given its green signal to place tighter restrictions on the import of 371 items — from toys and plastic goods to sports items and furniture — which contribute about $127 billion to the annual import bill.

PM Narendra Modi addressing the nation from ramparts of Red Fort on Independence Day.

To achieve this, the government is planning to undertake a series of non-tariff barriers, as raising import duties suddenly might hurt the domestic manufacturers that depend on imports. As a result, restrictions on imports will be placed through the establishment of product standards, incentives for domestic manufacturing, and discussions with business stakeholders to progressively source from a broader range of nations.

A large chunk of India’s imports come from China, across product categories. These will help in direct import substitution, according to officials, who added that electronics, drugs, apparel, and consumer durables were also on the list of items on which import restrictions were being considered.

Performance-linked incentive schemes for battery cells, furniture, leather and toys, among other sectors, are being drawn up by the government to pull in more foreign investments and act as a bulwark for domestic manufacturing.
 

Vocal for local

Simply reducing imports was not the priority, the PM said. Giving a fillip to his 'Vocal for Local' call, Modi said the appreciation of local goods and services should be pushed by all citizens. "If we do not praise our own goods, they will not get the opportunity to become better," Modi said.

Modi also gave a call to double down on skill development at a national stage. "When things continue to come in from abroad, our national trove of skills and human resources gets destroyed over generations," he said. The PM said public policy could be used easily but skilfully to push domestic production, referring to a ramp-up in PPE, mask and ventilation manufacturing amid the coronavirus crisis.

All these have been possible due to the resilience and inherent strength of India's economy. India saw record 18 per cent growth in foreign direct investment (FDI) last year, Modi said. "Even when the pandemic was raging, large foreign companies were coming to India."