Was it that catchphrase changed in the wake of damage to import intensive industries during pandemic, which were over dependent on China? He wondered whether it a ruse to overshadow the failure of Make in India. He apprehended whether India would revert back to localization policy and import substitution. Against these backdrops, how ANB can be overstated to give a new polarization in Indian manufacturing, particularly when the nation is grappling to recoup the economy, he quipped.

Perceptibly, there is a thin difference between ANB and Make in India. Both bode well for rebuilding Indian manufacturing. Difference lies with dependence on sources of inputs and role of domestic entrepreneurs. First, while success of Make in India was polarized on global integration, irrespective of import based supply chain, ANB will harp on domestic supply chain. Second, Make in India planned for sectoral growth, irrespective of the role to be played by the categories of entrepreneurs, large or small. ANB will make special focus on MSMEs to play an active participation in restructuring manufacturing sector. Besides, ANB overhauled old industrial policies, such as commercialization of coal mining, higher FDI in insurance and defence, revamping Production Linked Incentive Scheme, new power tariffs and others.

Given the manufacturing sector failing to respond to make in India, debates aroused over the doable of ANB. Make in India lost the steam. Production decelerated. Growth in manufacturing declined from 5.9 percent in 1917-18 to 0.03 percent in 2019-20 in the GDP growth chart ’Unemployment skyrocketed. Prime Minister Narendra Modi was silent on the report card of Make in India in Independence speech on 15th August, 2019 from the rampart of Red Fort. This was despite the fact that government initiated major reforms to encourage investors, such as slashing corporate tax, at par with South East Asian countries and squeezing multiple labour laws in fewer labour codes.

ANB is seen as a new lease of life to Make in India. Make in India was reinvented with focus on self reliance and domestic supply chain. However, self reliance is not new. During Indira Gandhi era, self reliance was deployed with multiple schemes for protectionisms, such as import substitution, localization of industry and high tariff. Eventually, India was isolated and delinked from global integration. Manmohanomics opened the economy in 1991 with major reforms, outdoing the license Raj. Modinomics rebooted the open economy and pitched the nation for global hub for manufacturing.

Given the lacklustre growth in Make in India, Modi 2 government drafted a new “Strategy for India @75” – a master plan to decode the new challenges to boost the economy. NITI Aayug was the main architect for the new strategy.

NITI Aayog observed an imbalanced investment in the economy indulged in failure of Make in India. It unveiled that capital intensive industry was given priority, such as in automobile and drugs and pharmaceutical. This left non-capital and labour intensive industry in the fray. As a result, bank loan became the paucity for the growth of this sector. Eventually, MSMEs had to harp on black money. With black money dried away by demonetization, a large number of MSMEs, nearly 40 percent, downed their shutters As a matter of fact, India is known for poor banking to the private sector. In 2018, domestic credit to private sector by banks as a proportion to GDP was 50 percent in India. This is in comparison to 141 percent in South Korea, 158 percent in China, 112 percent in Thailand and 61 percent in Brazil.

Further, big entrepreneurs stayed away from investing in MSMEs. They opted for high capital or skilled labour intensive industries. Eventually, it let a number of labour intensive industries shifted to technology oriented. These resulted shrinkage in employment.

ANB was an important dynamism in the economic policy, while announcing the Budget for 2021-22by Finance Minister Nirmala Sitharaman. In May 2020, government announced first ANB financial package. Subsequently, two more ANB packages were announced. These, including RBI measures, accounted for 13 percent of GDP. Besides financial packages, government adopted several reforms to give a new shape to this sector. It redefined MSME, enlarging the scope for higher participation in the economy. It focused on health care, physical financial capital on infrastructure, reinvigorating human capital and innovation in R&D.

Already, Government of India set off to revert to import substitution programme. In 2017, the government made it mandatory to procure railway equipment for metro projects from domestic sources. According to the policy, a minimum of 75 percent of metro coaches and critical signalling equipment were to be procured from domestic sources by the Central and State level metro project authorities. Ministry of Defence rolled out new policy to boost level of indigenous content in defence equipment. The local content varies in between 45 to 50 percent in selected defence items. A general policy for Public Procurement was introduced in 2017, whereby local content up to 50 percent was mandatory where the country has enough capacity to produce.

Budget 2021-22 reinforced the momentum for protectionism under ANB. It removed custom duty exemptions on 80 items. It has decided to review 400 items more for withdrawal of custom duty exemptions. Expectedly, more are in the offing. (IPA Service)