India is doing a commendable job in fighting the Corona virus pandemic. The first priority was to save people from this virus. The government's effort brought good results in health care infrastructure.
Covid-19 is a nonlinear and uncertain
event. The likelihood of post Covid-19 recovery being a V, U or L shaped curve
will largely depend on the choice of the recovery path. The Government action
will be commensurate with the severity of the global recession. India’s
strengths are its Demography, Democracy and Demand.
Risk diversification
strategy
A
number of multi-national corporations are working on ‘Risk Diversification
Strategy’ in reference to their huge investments in manufacturing base in China.
India can be an important player in global and regional supply chains. World
finds India as an attractive alternative, but the government needs to address
many challenges. Rebuilding and catalyzing growth has to be in an unprecedented
manner. Protectionism, competition and level playing field have to be carefully
balanced. It is essential for India to build on our own manufacturing
facilities and make it more competitive. There are many bottlenecks that need
to be removed. All these challenges have the potential to be converted into
opportunities, once the government embarks on the process of reforms and the
industries shifts their focus from demanding protectionism to an ecosystem of
level playing field.
Indian industries have
to bear heavy cost on transportation of goods, raw material and services. A National Logistics Policy is in the pipeline,
seeking reduction in logistics cost by about 4o percent by 2022. Investments
into railways, roadways, waterways and airways will help in creating demand in
the economy and employment and also help in meeting the target set above.
India is moving from
the regime of high interest rate to lower interest rates. RBI is continuously
reducing both repo rate and reverse repo rate. Over the period the risk premium
in the financial institution has been reduced due to advent of IBC, NCLT etc.
Labour being one of the most crucial factor of production, has always
been a contentious issue. Labour market is characterised by extreme rigidities
while over 90 percent of the labour force is outside formal protection. Centre
has consolidated labour laws into four codes and since labour is in a
concurrent list, some states have unilaterally gone ahead and amended the
labour laws in order to revive and attract industries. The ease of doing
business ranking for states will create good competition amongst the states.
The cost of land in India is quite high. Thus for any green field
project this cost is a deterrent. State governments must pool in its land
holdings and make land banks available. Local authorities for cluster
development and special purpose vehicle with joint participation are the road map
ahead. Centre has launched a website giving details of all the land available
for industries, it will be very helpful for all the industries.
Contract enforcement and judicial intervention on administrative
decisions is a big deterrent for businesses. The Commercial Courts Act of 2015
is welcome. Setting of commercial and district level courts will expedite mercantile
dispute resolution. Also, fast tracking, New Delhi International Arbitration
Centre Act in NCR will bring India to the global stage.
Reduction in compliances and transparency are a required for Ease Of
Doing Business (EODB). GST with its online registration, filing of returns, assessment
and refund is helping, but GST network (GSTN) remains a pain. Moving towards
e-assessment and virtual taxation regime will remove harassment in due course. Launch
of Tax Payers Charter will empower tax payers to a great extents.
India’s FDI policy is quite attractive, with maximum sectors falling
under automatic route (including defence) with some of them only having sectoral
caps. Repatriation of profits and royalties are allowed and we have current
account convertibility. Section 92 of the Income Tax act on transfer pricing,
profit shifting and base erosion, has defined companies working as agencies in
India for foreign companies, as permanent establishment (PE) and for Indian
companies having foreign establishment, as India being place of effective
management (POEM), for checking tax evasions by multinational companies (MNC).
Aatma
Nirbhar Bharat and Global Investments
Recently, Prime
Minister in his message has been saying that 'India has undertaken deep structural
reforms, improving domestic manufacturing and is committed to diversified
international trade'. He talks about merging of domestic production and
consumption with global supply chains.
Shri Narendra Modi has
never shied from taking tough decisions in the interest of the nation. He has
the will power and is always ready to take bold decisions; privatization of
railways, PSU disinvestments, reducing corporate tax and opening up of coal
mining to private sector, may have been unpopular with certain quarters, but
are necessary for the long-term health of our economy, particularly
strengthening our manufacturing base. The goal is; politically and economically
strong India and Aatma Nirbhar Bharat is the roadmap.
Government’s Aatma Nirbhar
Bharat Abhiyan is a 360 degree initiative to make India an economic superpower.
The focus is on five pillars of development; economy, infrastructure,
technology, demography and demand. Our targets are the factors of production;
land, labor, legislation and liquidity, improving their efficiency and reducing
cost to make our industries, globally competitive. It is not only restricted to
manufacturing, but targeted to direct benefit transfer to the needy,
particularly farmers, migrant laborers, daily wagers, also resulting in the
demand generation in the economy.
It has little to do with
disengagement with China alone. All these efforts are to protect domestic
industries from the onslaught of dumping and competition. Without first
strengthening domestic manufacturing by providing level playing field, reducing
the cost and increasing the efficiency of factors of production, we cannot open
the floodgates of imports.
India's
manufacturers need to come forward to take this golden opportunity in sectors
such as; toys, electrical equipments, electronics, minerals, chemicals, iron
& steel, plastics, furniture, sports goods, musical instruments,
fertilisers and Apps.
Governments focus is in
the areas such as agriculture; particularly food processing, automobiles, textiles,
defense production, affordable housing, healthcare and education, and increase
their contribution to our GDP. These sectors have ample scope, can generate
large employment and are looking up, on our path to recovery.
I believe that India has a fair chance to attract global manufacturing
capital and emerge as the world’s factory. Facilitating setting up of manufacturing
base in India falls within the jurisdiction of the Centre and the State and the
Government at all the levels will have to work collectively.
Gopal
Krishna Agarwal,
National
Spokesperson of BJP of economic affairs
M:
9810019753
Email:
gopal.agarwal@gmail.com
Excellent Post, It’s really helpful article
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