Prathamesh Themdeo | Jayendra Muley

Some years ago, there were two brothers, set free to make their choices. Both had almost similar pasts and both were determined to be the best. Elder one started with a good cause and achieved many things initially whereas younger one started with the things he thought were right and became stagnant. As the time passed, both of them became stagnant. Younger brother got evolved in order to not get outdated while elder one didn’t evolved till his future survival didn’t demand changes. The ‘elder’ in the story is India and younger is ‘China’. Both started their journey in late 1940s. China being communist country realized in 1978 that it needs to open its market in capitalist mentality. Whereas, India being democratic country chose to follow communist plans inspired from Russia until the fall of communist USSR. After the era of Mao Zedong, China understood the need to evolve itself in global sense in order to stand in Global Competition. They converted Karl Marx’s communism according to Chinese conditions. This move gave china such a momentum that it’s average GDP growth rate for next decade after adoption of reforms was 10.12%. (During the same decade GDP growth rate of India was 4.18% on average).

After Independence, India adopted closed economic policy and 5-year plan influenced by Russia. Nationalization of industrial sectors such as mining, telecommunications, insurance, and power plants, etc. was done in mid-1950s. Stiffness in decision making, over-regulation of industrial sectors and unhealthy bureaucracy diluted Nehru’s dream of creation of Soviet Union model in India. After Nehru, Mrs. Indira Gandhi was also not with aspect of economic reforms rather it was the period of political evolution for India. Later in 1984, Rajiv Gandhi and his finance Minister V. P. Singh also failed to liberate economy because of government’s involvement in scams. Till 1990, the inflation rate of country had reached to 14% (4.5% in 2019), gross fiscal deficit (difference between total income of government and total expenditure) of central and state governments was 12.7% GDP, the debts of government rose up to 53% of GDP and the Gulf war at Iraq hampered our economy. To overcome this crisis, government applied for the loan of $2.2 Billion to International Monetary Fund, which in return demanded deregulations. So, Prime Minister Narsimha Rao and Finance Minister Dr. Manmohan Singh led the process of cultivating reforms in 1991.  The policy changes were bold and impactful, RBI devaluated INR by 11%, tariffs were lowered, Licence Raj was put to an end and Foreign Direct Investment was allowed in Indian market. Exposure to foreign clients increased opportunities.

The Indian IT sector had major positive impact with a surge in demand. Former local companies like TCS, Infosys, Wipro evolved as global technical giants. Revenue of this sector rose from $100 million in 1990 to $1 billion in 1999. Increased global exposure, highly paid jobs were the reasons that more number of Indian youth got attracted to IT industry as a career option. This waves in education resulted in polarization of education. This hype of IT industry inculcated trend of engineering in Indian education. Later in time, we saw other trends like engineering, MBBS, civil services etc. This shows that large number of Indian students sees a single sector as opportunity and larger number follow them. This trends explains the empowerment of certain sectors and negligence to others like manufacturing sectors which is the main reason of our conflict with China which has become global manufacturing since some decades.

At the time when China’s economy is trapped in international politics it played the card of increasing Indo-Chinese border tension. This move may have two meanings; China aimed to divert the attention from investigation, it wanted to convey that if world thinks China is unsafe, then India is neither a safe option for foreign investments. Amidst this tension, ‘Ban Chinese products movement’ grabbed pace due to unclear and vague explanations given by ‘some’ people which left Indian citizens confused in context of ‘Atma-nirbhar Bharat’. Indian policy makers have consistently lagged in public diplomacy and public relations. Therefore, it is our responsibility to publicise the right meaning of our own policies and save ourselves from wrong interpretations. ‘Atma-nirbhar’ means we should be able to fulfil our own fundamental needs to avoid the toxic dependence over others. This doesn’t mean we have to boycott the products and services that are increasing our standard of living as a society. Considering the absolute ban, are we really ready to boycott anyone in this era of globalisation? Are our local businesses and entrepreneurs ready for future? A person with spending budget of Rs.1000 was able to spend Rs.900 on other products and services as he could get a Chinese product for only Rs.100. Whereas, if this Chinese product is banned, the person will have to buy similar product but now for Rs.200 which would decrease his spending capacity from Rs.900 to Rs.800 resulting slowdown of Indian economy. An example stated above requires a much detailed economic analysis, motive here is to give you glimpse of unseen side of our small decisions as a responsible citizen. It is clear that closing the doors of India as a solution to the conflict would lead us to repetition of mistakes in the ‘socialist’ India. Globalisation has paced the development of Indian community. Introduction of cheaper smartphones in India by Chinese company have apparently uplifted the Indian community towards the digital literacy. Restriction of competitive Chinese products in Indian market may decrease trade deficit with china but at the same time would make Indian businesses more lethargic and less competitive in global marketplace. Post 1991 reforms, BAJAJ couldn’t retain its largest market share in 2-wheeler vehicles due to its satisfactory attitude is an example of the same This raises the concern of keeping our businesses motivated even in the absence of competition. Therefore, rather than banning such products, we need to think why our entrepreneurs are not able to target these masses who needs cheap and easily available products.

Since last decade, China is the largest trade partner for US constituting highest US foreign reserve. Withdrawal of this foreign reserve can shake the economy of US in small time, in turn affecting India whose second largest trading partner is United States. Thus, we can see a closed loop of India-China-US in which disturbance created by one would lead all three to bear high costs. Therefore, we cannot neglect the possibility of cold war ahead due to this ban, which is all set to affect the lives of human community as a whole irrespective of country. Does that mean we need to be quite in this conflict? A clear answer is a big ‘NO’. Tolerance shown by India at this time can be interpreted as weakness not only by China but also by rest of the world. Continuing with the same attitude would be dangerous as this may create unhealthy competition for Indian entrepreneurs. Moreover, now is the time to take appropriate steps to answer China for its non-transparent and noisy policies. How do we do that? Answer to this is to change our mentality towards markets, industries and most importantly our own people who are still in search of amenities. With around 65% population of India residing to rural areas, there lies vast scope to reach out to these masses to uplift their standards. Indian entrepreneurs are often seeking opportunities in the outside world neglecting huge customer bases within India. Common Chinese businessman introduced a ‘tulsi necklace’ for Rs.20 in Indian villages which was previously sold for Rs.120 by Indian businessman. This shows the Chinese penetration in our local market with a rigorous market research which we have lacked since our foundations. The huge difference in the cost of tulsi necklace is nothing but a result of high end industrialized product which costs less as compared to the traditionally manufactured necklace here in Indian villages. Thus we have to move from ‘Why should I?’ to ‘Why can’t I?’ Many such instants call us for change in our mentality to restrict ourselves from innovation. To increase pace of Indian businesses, incubation of small businesses by established companies is necessary.  Relatively established companies and giants have to focus on including more and more Indian suppliers in supply chain and empowering them to meet global standards. The state has is to free up the environment for businesses in terms of deregulations, tax relaxations, and easily available liquidity so that setting up new units and expanding an existing one becomes easy.

As Indians, our choices should be based on the concept used in Indian culture– ‘Samyak Sankalp’ which means choice of the median path. Rather than going for extreme movements, we can always give preference to Indian products over Chinese products wherever competitive options are available which doesn’t lower our living standards. Therefore, our entrepreneurs have to work hard to meet global standards and quality of service. In this era of globalization, any product doesn’t belong to a single country. We ought to co-operate with global powers in order to create our significant presence. A Chinese smartphone might use sensors from Japan, battery from South Korea, software and processors from USA and assembled in India. Saying ‘NO’ to this Chinese smartphone is our disagreement to globalization and also restricting our own development. We need extensive FDI from diverse backgrounds to move forward. At the same time, we should prefer such investments which are significantly able to benefit us in terms of employment, industrialization and uplifting our rural population. Blind banning is not the only option to come out of this. Today our conflict is with China, tomorrow it can be with any other global power. We must understand that our conflict is with ‘rulers’ of China and not with Chinese citizen and our actions should indicate the same. We may Therefore, we need to emerge as a global economy which uses competition for its own growth rather than staying out of it which will make us ‘Atma-Nirbhar’ in true sense!