13/07/2020 - Indian Economy | Mainstorming

IAS Parliament 4 years

KEY POINTS

· The misadventures have indirectly made this an issue of boycotting Chinese products. However, boycotting is a fraught proposal since China is a crucial source of raw materials for local industries, like APIs in pharmaceuticals, components for electronics, etc.

· The Indian consumers today are showing an increasing preference for Indian products, with a greater sense of pride about supporting the ‘vocal for local’ call. However, due to a lack of disclosures from sellers and companies, it often is difficult for consumers to distinguish between imports and domestic products.

· Thus, there exists asymmetry of information regarding product origins, which could affect consumer behaviour. One way to address this would be through a certification system for products ‘Made in India’ akin to ‘certified organic’, if certain standards related to local value-addition are met.

· Unlike recent guidelines mandating e-commerce products to declare the source of origin, the focus here is to brand and promote Indian products rather than singling out imports based on their origins.

· These standards must reflect the realities of particular industries instead of a one size fits all approach. For example, 100% local value-addition is not possible in smartphone manufacturing, as India doesn’t have adequate capability to make microchips and other core components.

· So, the standards here would naturally have to be lower. Complementary to ‘Made in India’, an ‘Assembled in India’ certification having a lower threshold for local value-addition, could also be developed.

· Thus, foreign firms would not only have a cost incentive to assemble their items locally (supply-side measures), but also the possibility of higher demand from Indian consumers.

· Simultaneously, awareness campaigns must be undertaken to inform consumers about these certifications. These measures would help create a ‘brand’ for Indian products both locally and globally.

· This idea of promoting local industries isn’t a new phenomenon. In fact, ‘Made in India’ or swadeshi was one of the hallmarks of our freedom struggle. However, instead of merely replicating the swadeshi of our past, we must fine-tune it to the realities of the 21st century.