"Shadow owes its birth to light."
—John Gay (American, 1685-1732)
Word for the day
Debonair (adj)
Courteous, gracious, and
having a sophisticated charm.
Malice towards none
While in Delhi, Congress
leaders, especially P. Chidambaram, are clamoring for reduction in taxes on
fuel, their government in Karnataka has announced 2% hike in tax rates for
petrol and diesel.
First random thought this morning
Tata Nano was once hailed as revolution by many. It was celebrated
as the best example of Indian Jugaad (low cost innovative solution); and
marketed as most affordable mobility solution for rising middle class of India.
After a massive controversy was raised in West Bengal, the
original location for Nano's production, the plant was shifted to Gujarat near
Ahemdabad. The then Gujarat government marketed it as harbinger of its business
friendliness.
In June 2018, Tata Motor produced just one (and perhaps the last)
unit of Nano. Management experts will perform the autopsy to find out what went
wrong and management students will be taught how not to do things.
Focus on strengths
As I mentioned yesterday (see here), the government has been repeatedly stating that
increase the domestic production of energy and electronic products to
substitute import.
The government has placed
significant focus on renewable sources of energy, especially solar, and
incentive for producing electronics products within the country under Make in
India program.
There have been some notable
achievements in these areas in recent years. For example consider the
following:
- FDI grew 4.4 times in Electronics & IT sector- from $2.77 billion (2011-14) to $12.24 billion (2014-17)
- 1.9 lakh crore of electronics products manufactured indigenously in 2014-15.
- Highest ever wind power capacity addition of 3,300 MW in 2015-16.
- 140% increase in solar power capacity addition during 2014-16 as compared to 2012-14.
- 34 solar parks of aggregate capacity of 20,000 MW sanctioned for 21 states.
- 31,472 solar water pumps installed in 2015-16, highest ever since 1991.
I believe that “roof top solar panel” has the potential greater than
what has been seen in the mobile telephoney in past 15years. The government has
been giving decent cash subsidies for installation of solar panels and roof top
solar is gaining momentum in many states, but still it is not being done on
mission mode. This needs to be transformed into a peoples' movement to
accelerate the outcome.
A change in housing policy to
mandatory accommodate the solar panels in all new building designs, especially
in affordable housing projects, may help to great effect in my view.
Reducing energy intensity of water
and developing a world class public transport infrastructure on priority basis,
especially in tier II and III cities, and strict legal enforcement of energy
efficiency are two other steps that are urgently needed to reduce the reliance
on energy import. (Also read here)
Insofar as increase in the production of electronic goods in India to
substitute the import is concerned, I totally differ from the Make in India
approach taken by the government.
So far whatever actual investment
or planned investment in electronic production I have heard is mostly in
assembly lines with low value add products like plastics sourced from India.
The key components like semi conductors, micro processors, memory chips etc.
are all still imported. With this practice, not much help could be expected on
trade balance in my view.
Establishing highly capital
intensive integrated manufacturing facilities for electronic products within
the country may not be a good idea after all. Especially, when significant
capacities are available globally to cater to the Indian demand,
If we consider the high and still
worsening obsolescence rate in technology and need for heavy recurring
investment in new technologies and upgrades, this becomes even more avoidable.
Imagine, a US$20bn manufacturing business suddenly going out of business due to
technology obsolescence!
The better idea would be let
Indian entrepreneurs to lease manufacturing facilities in Asian countries,
produce their and import into India.
The government should rather focus
on, in partnership with industry, investing in development of new technologies.
It should make provision for training of millions of young IT professionals,
who can then serve the global industry and earn enough foreign exchange to pay
for import of mobile phones and television sets.
The emphasis should be on building
on our strengths (manpower) rather than wasting scarce resources on building
vulnerable and redundant factories.
...to continue on Tuesday
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