Turning the tables

Vinyak Surya Swami

With the advent of COVID-19 pandemic, a new world economic order is emerging and nations are just coming to terms with it.

Indian Prime Minister Narendra Modi has been quick in his realisation and accordingly altered existing policies and introduced several multi-sectoral initiatives to further the vision of a thriving economy for India.

Reaffirming his belief in a recent address, he said, “Howsoever big the crisis might be, India is determined to turn it into an opportunity.”

He called upon the nation for its support in this regard by making India aatma nirbhar or self reliant.

Prime Minister Modi also announced a relief package of INR20 trillion (equivalent to 10 per cent of India’s GDP) to steer the country on the path of rapid development and growth, and create a robust local supply chain.

Indian Prime Minister Narendra Modi greets participants at the launch of the Garib Kalyan Rojgar Abhiyaan via video-conference in New Delhi, India

India’s plan for self-reliance is intended to be a two pronged approach.

The first step will be the undertaking of interim measures Prime Minister Narendra Modi at the launch of the Garib Kalyan Rojgar Abhiyaan through video-conferencing, in New Delhi on June 20 such as liquidity infusion and direct cash transfers to migrant workers and daily wage earners.

The second facet would be long-term reforms in growth-critical sectors that will make them globally competitive and attractive.

According to the Prime Minister’s vision, a self-reliant India will stand on five pillars: ‘economy’, that introduces quantum jump; ‘infrastructure’ in tune with the new India, a ‘system’ based on 21st Century technology, India’s ‘vibrant demography’ and ‘demand’, which will utilise our requirement and supply chain to full capacity.

STARTING RIGHT

Prime Minister Modi’s vision of a capable, efficient and self-reliant nation, has quickly been realised and introduced as the Aatmanirbhar Bharat (self-reliant India) initiative. Some immediate reforms are now being factored into policy making decisions to bolster domestic capabilities and upscale production.

The Aatmanirbhar Bharat Abhiyan (ANBA) is focussed on building entire value chains for domestic products that will enable local manufacturers to thrive and reduce the need for imports. India’s Department of Promotion of Industry and Internal Trade already identified key sectors followed by measures to boost competitiveness, simplify procedures and encourage direct investments.

HOLISTIC APPROACH

The ANBA identified the MSME (micro, small and medium enterprise) sector, with its significant contributions to the GDP, exports and employment ratio as the core area for economic revival and competence.

As a start, a more inclusive definition has been announced to bring a larger group of small-scale industries under the purview of the beneficial reforms and extend the cover for existing businesses allowing them to grow under the same canopy.

Over 500 million entities will be empowered to restart operations and get back on their feet with momentous reforms for the MSME sector.

These include the introduction of collateral free loans (INR3,000 billion), INR200 billion in subordinate loans for reviving businesses and a significant infusion of almost INR500 billion in the sector through several new funds being set up.

EQUAL OPPORTUNITIES

With an aim to boost domestic production and expand quality exports, the MEIS (Merchandise Exports from India) scheme is poised to be replaced by the Remission of Duties and Taxes on Exports (RDTEP) scheme, to offset infrastructural inefficiencies and costs associated with exporting goods produced in India. The government aims to extend these benefits to entities with a capability of generating employment in the country as well.

The export sector and domestic production will also benefit from the proposed re-envisioning of the existing costs associated with manufacturing.

The lowered taxes on exporting goods across borders in addition to the imposition of anti-dumping duties on imports will provide a level playing field to domestic manufacturers. A reform aimed towards increasing production potential locally and to ease the process of exports while simultaneously reducing the dependence on foreign products.

THE NEW VISION

The start-up segment of the Indian space sector has been added as a direct beneficiary for the use of facilities and premier infrastructure of the ISRO (Indian Space Research Organisation), India’s state-run space agency. The move has come as an addition to ISRO’s ‘technology transfer’ initiative that provides new age tech to private and state-run entities towards the betterment of Indian industry.

The defence industry will also benefit from the freeing-up of the space sector. When it comes to innovative advances towards new-age technology, the pandemic, and the new reforms, will act as a catalyst for development.

Moreover, this move will also allow for an opportunity for DSRO (Defence Space Research Organisation), India’s new defence-oriented space agency, to become a nodal authority for positive outreach with space start-ups.