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India has failed to grow its manufacturing base in multiple areas, despite huge domestic demand powered by more than a billion people. This has resulted in huge imports every year mainly from China and other western countries. From high technology products to things like toys and idols, India imports it all despite having the capacity and demand to “Make in India”.
The problem lies in how policy and regulations are formed by the top echelons of the government. Strong lobby groups of private entities and foreign companies manage to influence and shape policies which are strongly against the national interest. Given that imports are cheaper especially from China, it is in the interest of the private entities to procure cheap material and equipment from China rather than buy it from domestic suppliers. In the case of high technology items, it is not possible to source from India at all. This leads to foreign suppliers becoming even bigger and more powerful, while Indian companies become small and obsolete.
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This has already happened in multiple industries. Despite a huge telecom market in India with more than a billion subscribers, the country imports almost all the semiconductors and equipment required from Western and Chinese firms. India has virtually no 3G or 4G technology to call its own and as the world moves to 5G technology, the country will be importing billions of dollar in equipment every year enriching the foreign suppliers. While China managed to create national champions such as Huawei and ZTE using the power of its domestic market, India has nothing to show for it. Even in telecom handsets, Chinese firms such as Oppo, Vivo, Xiaomi rule the Indian market with hardly any Indian name. In the cause of cheaper costs, India has virtually destroyed the long term drivers of wealth creation.
In new technologies such as AI and machine learning, China is competing with the USA for the No.1 position with India to be seen nowhere. All the country does is provide engineers in their millions for a very cheap price to create IP for the foreign organizations, which is sold back to India. Even in renewable energy technology, India has sold itself off to the Chinese solar panel makers. In wind turbines where India had a strong industry, it is going the wrong way with strong WTG makers like Vestas and GE stealing market share from the likes of Suzlon and Inox. Unlike Japan, China, and South Korea, India does nothing to support and protect its domestic companies which are forced to fight on an uneven level playing field with strong foreign entities with much better financing and technological capabilities.
In solar energy where India is going to install 10 GW plus every year, Chinese suppliers rule the roost with more than 90% market share. Piecemeal efforts like putting a puny safeguard duty for two years has done nothing to nurture an industry which needs long-term support. Foreign controlled entities like Goldman Sachs’ Renew Power care two hoots about India’s domestic interests as they hanker for cheaper equipment from China.
2 Comments
Veryyyyy true article. I m from shipping industry. Almost 92% cargo is carried by foreign ships at whopping cost of 50 billion dollars as a fright rate.
British used India as market and today also same condition.
We need an ecosystem for innovation and indigenous development.
Hello Sneha,
Your articles are very informative and help me keep a track of the renewable energy markets happenings. Thank you for that.
While you present the above scenario, which in itself is identifying the problem, I think, one should also provide a possible set of suggestions to improve. If you have any suggestions in mind, they should be put forward, whether It may or may not be heard or implemented.
I think, in one of your earlier articles, I remember you to have said, in essence, the increasing import tariffs by the Indian Govt. on Chinese solar products, is increasing the costs to the customers, and is reducing the demand for solar market in India.
The two above thoughts if put together, it is difficult for one to come to a conclusion, what is the expected action. Precisely, the challenge everybody faces. I think, all of us, while raising questions, should also try to provide ways and means to give possible suggestions.
Thank you,
TMV