Not Devils

This refers to the news item saying that Daewoo Motors plans to export cars to the US composed of Made in India components.

This clearly vindicates the theoretical raison detre for promoting MNCs in the country. Besides providing technology, managerial skills and other resources all in a package, MNCs allow the host country to tap its export potential. Although India has many successful indigenous exporters MNCs help to add, expand and diversify the export base, alongwith the very potent advantage the access to international markets.

To understand the importance of realising the export potential of a developing nation, one has to only relook at the East Asian tigers: true they initially embarked on an import substitution strategy (just like India) but when this move achieved its objective, viz, to build a strong domestic manufacturing capacity and when this strategy had outlived its usefulness evidenced by the creeping inefficiencies in the system, these countries were prompt in removing this strategy and graduating to export led growth. India, too, started similarly under the Mahalanobis plan but held on to it for too long.

 

It is now time to consider export as an important ingredient of growth alongwith the domestic market which India has a very wide one. More needs to be done, especially to remove supply side bottlenecks.