Lenin could have asked “What Is To Be Done?” indeed.
Many industries in India are under stress because of Free Trade Agreements and cheap imports. Since the aim is to upgrade Indian industry and make it internationally competitive, rather than hike tariffs, all efforts should be made to reduce transactional and input costs arising from shortfalls in the business environment and government policy. The other vector for action should be to introduce Technology Upgradation or R & D Support Schemes such as exists in the textile sector in any sector which requires it. These should focused on SMEs in particular.
An example is the green Bicycle Industry. The article “Bicycle Industry Suffering” reports that the Indian bicycle industry is under stress from Chinese competition and from Free Trade Agreements. It says the Ludhiana Bicycle manufacturers, accounting for 90% of bicycle production, have urged the government to reduce high interest rates on loans for SMEs. It adds while “India’s exports of bicycle to other countries have grown at a compounded annual growth rate (CAGR) of about 17 per cent”, “imports grew at over double the rate of about 35 per cent mainly on account of uncompetitive pricing”, as per the ASSOCHAM study in which it has recommended (1) imposition of “strict anti-dumping laws on rising cheap imports of bicycles and components from China which has been dumping its products into India”; and (2) reduction of various input costs which inflate the cost of production and place Indian industry at a disadvantage to cheap imports. These include reduction of:
- Capital costs for SMEs
- Power tariffs
- Freight charged by the government on raw materials imported from other States.
- Excise duty and VAT on bicycles and expediting release of VAT refunds.
- Inflation – “input cost inflation like rising steel prices (largely due to rising exports of iron ore pellets), poor condition of roads esp. in rural areas”.
This is the way to go rather than resort to protectionism. But all this has to be done – our industries should not be abandoned to face the gales of international competition on their own, especially as other countries are promoting their industries very, very proactively. The aim should be to increase competitiveness of India’s manufacturing sector, and of this precious green industry.
This should be the Indian State’s new “Mission”.