News: View: Another opportunity to put India’s economic house in order-28-04-2020
Updated On : 28-04-2020
Firms want to move or lessen their dependence. An active hunt for host nations is on.
Opportunity has knocked on India’s door many times in the past and it’s doing so again. Can India grab it? Or will it go by tradition of never missing an opportunity to miss an opportunity?
The ultimate make in India moment has arrived and if handled intelligently India could secure a better place in the new world economic order. It would mean jobs and an easier recovery from the devastation caused by the pandemic.
CEOs of manufacturing giants have got a serious case of ABC – Anything But China – from a mild one of just thinking about it. They want to move or at least lessen their dependence. An active hunt for other host countries is on. PM Narendra Modi has a real opportunity to steer the Indian ship to a better place. India is already a player in services – although Corona has seriously affected back office operations -- but now it has a rare chance to become one in goods. The leadership has to think fast, think big and most importantly think through the steps needed. It may have to go beyond the Gujarat cadre to find answers.
Mukesh Aghi, president of the US-India Strategic Partnership Forum, told me the three top priorities for India should be transparency, land reforms and labour reforms. “The fundamental issue for US companies – and by implication for European and Japanese companies -- is lack of predictability and transparency in policy making. A multinational company must feel part of the consultative process to build confidence,” says Aghi.
USISPF has emerged as an important channel of communication between US companies and the Indian government, especially in these Covid times. Apart from webinars and connecting state government officials to company bosses, Aghi and team ensure the policy conversations go smoothly. US officials are also often in the mix.
Earlier this month the team sent a practical “to-do” list in key sectors for India’s Covid-19 Economic Response Taskforce. From allowing restructuring of loans to giving easier access to foreign portfolio investors to deferring certain compliance deadlines to using low oil prices to provide relief on consumer loans to filling up government job vacancies – it’s 10 pages of useful recommendations.
India is among the top five destinations on every major CEO’s list but it is NOT the automatic choice. The million reasons why – political and bureaucratic -- are well known. We have a special ability to tire people out with over confidence (size of the Indian market) and infinite arrogance (ministers dis investors instead of wooing them). If India is to grab this Corona-induced opportunity, it has to sweat it out along side Vietnam, Cambodia and Bangladesh. As in the past, the competition is proving more nimble.
If India wants to be a bigger part of the US supply chains, this is the time to show reliability. The list of essential services and critical workforce can be aligned – India can basically map the US list along with what it deems critical so supply links are neither broken nor choked.
The government must also ensure flawless implementation. Companies shouldn’t have to beg for switches used in data centres or negotiate with police to access their godowns to get laptops for their workers. As one business insider told me, “If you can maintain the supply links now, US companies will turn to you for more.”
Think of the equipment needed for a 5G future – phones, TVs, laptops – if that’s the next wave. If a sensible electronic eco-system existed, Apple could be exporting tens of billion worth of equipment out of India. The medical manufacturing industry is another that could shift base if the environment were friendlier.
Honeywell was looking to set up a plant in Maharashtra in a hurry to mass produce N-95 masks but struggled to get permission. It decided to use the existing facility but it still has hoops to jump. If there was a time to move quickly, it is this.
Finally, the opening of the economy can’t be as chaotic and thoughtless as the closing was. Upper class bureaucrats never imagined the exodus of migrant workers because they were thinking Gurgaon, not Bihar. When it’s time for the workers to return, they must have the dignity of state transport at the very least.
India’s stimulus package of $22.6 billion may not be enough to cover the fallout from Covid. It’s important that no one fail – neither the public nor the private sector. And not the workers.
