Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

India as a factory for the Quad

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- India's manufacturing capacity

The article highlights how India could offer the solution to the tactical issue faced by the Quad: matching China’s manufacturing capacity.

Strategic case for the Quad

  • The strategic case for the Quadrilateral Security Dialogue, better known as the Quad, has always been sound.
  • A rising China, with its authoritarian one-party system, is a challenge to the democratic order.
  • The strategic case for the Quad has, however, always faced a tactical hurdle.
  • China was the factory of the world.
  • It had become an almost indispensable cog in the global supply chain owing to its low-cost manufacturing prowess at a mass scale.
  • How could any grouping hope to challenge China’s power-play dynamics while at the same time being dependent on its factories to sustain its economies?

Two recent development that changed the dynamic

  • Two recent developments have completely changed the dynamic.
  • First, Australia returned to the Malabar Naval exercises in 2020, after 13 years.
  • Second, on March 12, the first summit-level meet of the Quad — comprising the US, India, Japan and Australia — is scheduled to take place.

Rise in India’s manufacturing ability

  • What has changed between 2007 and 2020 that Quad 2.0 has become viable is the globally visible rise in India’s manufacturing ability.
  • Consider the following examples.

1) PPE Kit manufacturing

  • First, the success in PPE kits.
  • At the beginning of the COVID-19 pandemic, India was manufacturing zero PPE kits.
  • India not just created an overnight world-class manufacturing capacity to meet its own needs but also started exporting PPE kits.

2) Vaccine Maitri

  • Second, the soft power of Vaccine Maitri.
  • The developed countries are scrambling to secure vaccines for their domestic population.
  • India is not only vaccinating its own people faster than any other country but is also exporting millions of vaccines to countries in need.
  • From Canada to Pakistan and from the Caribbean Islands to Brazil — Made in India vaccines have been a life vest across the globe.

3) India’s private industry

  • Third, the enterprise of India’s private industry — a hallmark of the deepening manufacturing base.
  • As a recent New York Times report noted, when it came to syringes — without which the vaccines were useless — the global scramble again led to Indian manufactures.
  • Hindustan Syringes alone has ramped up its manufacturing capacity to almost 6,000 syringes a minute.

4) Precision high-end manufacturing

  • The PLI scheme launched for electronics’ manufacturing evinced unprecedented global interest with 22 top companies, including the top manufactures for Apple and Samsung mobile phones.
  • Over the next five years, a manufacturing capacity of over $150 billion and exports of $100 billion have been tied up through this scheme.

5) Figher plane manufacturing

  • Fifth, the success of India’s fourth-generation fighter jet programme and the orders placed by the Indian Air Force for 83 Tejas jets.
  • India’s success is one more milestone in its journey towards emerging as a global manufacturing destination.

Policy changes to make India manufacturing destination

  • Concurrently, India has been reforming its economic policies to make it even more attractive as a manufacturing destination.
  • India has the lowest tax rate anywhere in the world — 15 per cent for new manufacturing units.
  • FDI norms have been relaxed across the board and automatic approval processes instituted for FDI even up to 100 per cent.
  • Privatisation of PSUs is now an established process.
  • Labour laws have been finally reformed and compliance burdens significantly eased.
  • Taxation is now faceless, thus ending the spectre of rent-seeking.
  • A well-functioning, world-class bankruptcy law is in place. Interest rates are low.
  • And India’s digital infrastructure rivals the best in the world and in many cases beats it.

Consider the question “India’s growing prowess as the manufacturing hub could provide the Quad tactical basis by replacing China. Comment.

Conclusion

The only arrow that was missing in the quiver of the Quad has now been attained. The strategic case for the Quad was never in doubt. The dependence on China’s factories is what kept the grouping of democracies from emerging. India has raised its hand to solve that problem.

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