Import Cut to Become Self-Reliant

• 03 Jun 2020

Why in News

Recently, the Union Government has identified 10 promising sectors to cut “unnecessary” import.

Key Points

• Identified Sectors: The sectors include capital goods and machinery, mobile and electronics, gems and jewellery, pharmaceuticals, textiles and garments.
  
  • Earlier, the government had asked the Indian industry to set new targets towards building self-reliance in furniture, footwear and air conditioners.
• Government’s Plan:
  
  • The government is looking for increasing domestic manufacturing and exploring the export potential in these areas.
  • For this, the government is bringing more investment and making India a major manufacturing destination for these sectors.
  • The government is also focussing on raising quality controls to make India globally competitive.
  • If necessary, the government can also raise the import duties on these sectors without violating the World Trade Organisation (WTO) bound rates.
• PM’s Focus on AtmaNirbhar Bharat: Earlier, the Prime Minister had stressed on the need for self-reliance and a stronger focus on manufacturing locally by enterprises to strengthen the economy against the impact of coronavirus and get the country back on the growth track.
  
  • He had emphasised on the need to build robust local supply chains and focus on Make In India.
  • He called for creating strong enterprises in India that can become global forces and help in generating employment.
  • He highlighted that India did not use to manufacture PPE kits earlier but the pandemic has shown that India can fulfill its own needs.
• Schemes:
  
  • The government has brought various schemes towards making India a major player in sectors like medical devices, Active Pharmaceutical Ingredients (APIs). For example: Production Linked Incentive (PLI) Scheme.
  • However, in some cases, the schemes are repackaged versions of older attempts of the previous government to promote domestic production in these areas.
  • For instance, recently, the government invited applications from companies to invest in India under the second phase of the electronics manufacturing scheme.
  • An earlier version of a similar electronics manufacturing scheme, called the Modified Special Incentive Package Scheme was notified by the previous government in July 2012.

Issues

• Concerns related to India’s dependence on imports e.g. over 30% Imports in the air conditioners sector.
  
  • As per the Ministry of Commerce, India imported $467.2 billion worth of commodities between April, 2019 and March, 2020.
• With AtmaNirbhar Bharat, there is a danger of India going back to an import substitution framework.
  
  • Taking this path would also be quite daunting, as the financial and technological resources required would be very high.

Way Forward

• The Prime Minister has talked about 5 Is to make India self-reliant. This includes intent, inclusion, investment, infrastructure, and innovation.
• There is a need to be strategic in terms of the choice of sectors in which the country wants to be self-reliant.
• India has a natural advantage in these 10 sectors and if work is done to strengthen these industries, these will support the country massively.

Source: IE