Progressive dilution of the national movement's vision of self reliance
The vision of self reliance in the post-independence period was conceived within a capitalist path of development. Even in the initial years we sometimes erred by resorting to imports, resulting in technological dependence in many areas. By not developing a strong research base that would allow us to develop indigenous technologies, India started lagging behind in areas that were seeing rapid technological changes, particularly in electronics. It must be noted that the current abandonment of economic sovereignty has its roots in problems related to the way self reliance started becoming, progressively, an empty slogan. By the 1980s, as we discuss earlier, global economic pressures were already pushing the country into the trap of a globalisation. Successive governments did not actively resist the entrapment of India into a global economic market that was governed by rich countries, large corporations and capitalist banks. Later our governments became collaborators in the process and are today willing partners of global capital, ready to hand over the levers of our economy to foreign forces.
Here lies the contrast with China. China instead, protected its huge internal market and forced foreign capital to fully transfer technology to Chinese public sector firms. The electricity and telecom sectors are examples, where India had a lead over China and yet it is China that has become the home of power plant equipment and telecom equipment today. Bharat Heavy Electrical Ltd. (BHEL) was founded well before China invested in power plant equipment manufacturing. BHEL was capable of producing equipment for installing 4,000 -5,000 MW capacity per year for the power sector of quality comparable to any in the world. At that time, Chinese companies were well behind. Today, there are at least four Chinese companies that have capacity to produce equipment many times more than BHEL and these companies have overtaken all the global firms, who used to lead this field earlier, such as Siemens, General Electric, ABB, etc.
Similar is the case in the telecommunications sector. C-DOT exchanges were entirely indigenously developed, and were technologically on par with what was being produced elsewhere. Instead of using our own technological capabilities, India opened its market to foreign equipment, essentially reducing ITT and C-DOT to minor players. China instead, used its internal market to force major telecom equipment manufacturers to transfer technology, the same way it had done with the power sector. Today, Huawei is one of the global leaders in telecom equipment and is ahead of most global players. In electronics including mobile phone handsets, China is again the manufacturing hub of the world. China is not just copying others, it is becoming a global leader in hardware and software innovation.
In the same period that China developed its technological capability, India opened its market to global capital. It invited foreign capital to not only bring in technology, but also to develop its infrastructure. This dependant economic path led to significant industrial stagnation in manufacturing, with economic growth primarily coming from the service sector. Thus, for example, in spite of the huge local market in telecom, spurred on by the cell phone 'revolution', equipment manufacturing declined. The bulk of the handsets are imported, with only some Indian manufacturers joining the fray. Even here, the major part of the manufacturing is done in China. Even in pharmaceuticals, where Indian generics have created a significant global presence, the bulk of the active therapeutic ingredient are imported from China, with Indian companies doing the formulation and packaging.
China is not only continuing with its Five-Year plans, but also with medium and long term plans, spanning decades. It is planning its infrastructure, its cities, education, science and technology development plan and even a plan for developing innovation. Interestingly, it has recently launched a Made in China 2025 plan. Contrast this with what the current government is doing -- it has dispensed with the Planning Commission, abandoned all planning and we are left with a toothless Niti Ayog. The rejection of planning for our economy goes hand in hand with handing over the economy to market forces that are governed by foreign rather than national interests. We ask the question again, is this not anti-nationalism at a grand scale?
What the current government does not recognise is that knowledge is key in technology today. Take Apple Inc., which is the biggest company in the world (in terms of market capitalisation) -- its economic might is bigger than all but 19. Yet, it does not own a single factory. It “produces” I-phones and Mac computers. How does it do this? It owns the designs, the software and brand of Apple. With this, it can force a Foxconn in China to manufacture Apple branded products, such as I-phones, and pay them a pittance. A calculation shows that Apple gets about $300 for each I-phone it sells, while Foxconn gets only about $7. This is the nature of the knowledge economy.
This focus on inviting foreign capital without building peoples capabilities is certainly not a 'nationalist' move. Not surprisingly, in spite of the publicity on 'Make in India', industrial sector growth continues to shrink. While 12 million people enter the job market every year, only 7% find jobs in the organised sector. The rest are unemployed, or find only casual employment, living a precarious existence.
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