oppn parties Will We Remain The Screwdriver Economy Forever?

News Snippets

  • After AIMIM legislator Akbaruddin Owaisi was named pro-tem speaker in Telangana, BJP MLAs skipped the oath-taking event. They accused Owaisi of being anti-Hindu
  • Rahul Gandhi disagrees with Ashok Gehlot, says not BJP's polarization but communication gap was the main reason for the party's defeat in rajasthan
  • Bombay HC disagrees with Enforcement Directorate, says house arrest is part of detention as personal liberty is curtailed
  • With no decision yet, the suspense over BJP's chief ministers for Rajasthan, Madhya Pradesh and Chhattisgarh continues, decision likely on Sunday
  • Mayawati's BSP has suspended outspoken party MP Danish Ali who was targeted by BJP's Ramesh Bidhuri and was also strongly defending Mohua Moitra
  • Mamata Banerjee seeks appointment with PM Modi over dues to Bengal, likely to meet him between December 18 and 20
  • New counting machines had to be requisitioned as the ones in operation broke down while counting cash seized from the properties of Congress MXP and brewery owner Dhiraj Sahu. The amount seized is likely to cross Rs 300cr, the biggest such haul ever
  • India take on South Africa in the first T20 today. Match starts 7.30pm IST
  • The elections to the Wrestling Federation of India (WFI) will be held on December 21
  • 2nd Women's T20 versus England: Indian batters cut a sorry figure, all out for 80 to hand England vicxtory by 4 wickets and lose the series
  • Junior World Cup hockey: India thrash Canada 10-1, enter quarterfinals
  • Delhi HC has ruled that a woman can be the 'karta' of HUF as per existing law
  • Supreme Court says that pre-trial detention of the accused in the Delhi liquor excise case cannot be 'so long', grants bail to Benoy babu, reginal manager of Pernod Ricard, a liquor manufacturing company
  • Calcutta HC rules that a married women is also a part of her father's family
  • Mohua Moitra says she has been 'hanged by kangaroo court'
BJP springs a surprise, tribal leader Vishnu Deo Sai is the new chief minister of Chhattisgarh
oppn parties
Will We Remain The Screwdriver Economy Forever?

By A Special Correspondent
First publised on 2020-08-04 17:01:26

The government has moved the import of fully built television sets to the restricted list. This means that anyone importing the same in India would have to apply for an import license. It is also thinking of putting toys, furniture and sports goods under the restricted list. Ostensibly, it is being done to promote local manufacturing in line with Prime Minister Modi's vision of atma nirbhar Bharat and Make in India. It is, on paper, a very noble initiative as it will promote local brands, bring in investments and create jobs.

But there are several things that need to be considered before any such policy change can be regarded as good. The first and foremost fear is that it will bring back the dreaded, and inhibiting, license-permit raj. Second, in the absence of local manufacturing of components, India will become the assembling destination of the world. Fully built items placed on restricted import lists will now be imported in completely knocked-down (CKD) or semi knocked-down (SKD) kits and will be assembled in workshops (it will be a misnomer to call them factories) here. All that will be needed will be soldiering irons and screwdrivers. Do we really wish to be an economy that survives on such activity? It also results in loss of revenue for the government as imported SKD kits in many sectors attract little or no duty while the import finished product brings huge revenue. Finally, it is against the government's stated objective of aligning the Indian economy with global supply chains.

Local manufacturing will not be encouraged by banning fully built products. Instead, the manufacture of components that go into making these products must be started in India. Tariff and non-tariff barriers are self-defeating, even crushing, in the long term in the absence of local manufacturing from the component level. They either encourage assembling from imported components (thereby increasing the cost of the finished products to the disadvantage of the end-buyer) or the making of shoddy, uncompetitive products that have no export potential.

The government must not ban fully built products until India starts making components and then the final products all on its own. The government's efforts in attracting FDI should be in the area of encouraging component manufacture for such essential and fast-selling items with huge export potential as computer and mobile phone chips, memory cards, hard disks and other components or LCD screens. Once these components are manufactured in India leading to the local sourcing and assembling of the same by brands, only then can we truly say that Make in India is successful. Until then, we will remain a nation of CKD and SKD kits importers and assemblers.