To make it in India, focus on anchor industries for domestic market

I refer to the commentary “Making a late bid to make it in India” (May 3).

Singapore’s Deputy Prime Minister Tharman Shanmugaratnam’s opinion that “there is scope for India to be part of the global value chain and be part of the supply chain linkages” encourages optimism.

But if India is to attempt a move towards the export-oriented manufacturing path, the caveat is that its rigid labour laws, low productivity and inadequate infrastructure, among others, are well-documented bottlenecks.

It is therefore vital to focus on manufacturing as an important niche in the larger ecosystem of the value chain, and not as a key to increasing employment for low-cost workers.

Manufacturing for export, the East Asian success story, would be a counter-cyclical industrial policy for India in today’s global economic landscape.

The success of any human endeavour has depended at least in part on the ability to imagine an outcome. And with the success of the Mars Orbiter Mission, Indian scientists may have inadvertently shown an economic pathway.

As it could not build a launch vehicle powerful enough, the Indian Space Research Organisation launched its spacecraft into Earth’s orbit first and slowly boosted it onto an interplanetary trajectory with the help of gravity-assist manoeuvres.

The aim was to build up the necessary escape velocity to break free from Earth’s gravitational pull. The result: A Mars shot at the cost of a Hollywood blockbuster.

Taking a cue from this, the answer may be to select anchor segments or industries launched for the domestic market, with policies and practices that boost volumes and develop sufficient thrust, resulting in an ecosystem of manufacturing plus services.

For example, the availability of Indian-made small cars has enabled a flourishing on-demand taxi sector that employs a larger number of service providers than the factory operators who build the cars.

Another opportunity may lie in productive public investment in both the demand and supply side of urbanisation.

If the number of Indian workers who have contributed to modern Singapore is anything to go by, there is a large number of jobs in recreating liveable Indian cities.

Then on one side of the big economic debate are those who insist that India must pursue policies that cut state capitalism and free up markets to spur strong, sustainable growth. But these changes are tricky; they threaten entrenched interests.

The “gravity assist” to leapfrog populism must be found in the energy of the youth and in policy innovation. Meanwhile, timing is vital; it is now.