COVID-19 pandemic: Making more goods in India

The era of globalised supply chains, which was being built up with its epicentre in China, is falling apart.

As the pandemic spread, the system that relied on factories across the world feeding each other with components came to a grinding halt with plants shutting down, and flights and shipments getting stuck.

This has underlined the need for localisation, at least of products that a nation believes are essential to its economic and medical security.

Luckily the Indian government, for a different set of reasons, had long been planning to break free from global supply chains by forcing manufacturers in certain key sectors to make most, if not all, parts of their products on Indian soil.

The government last month announced plans to set up hubs that could supply drug manufacturers with raw materials currently shipped in from China. The Centre has also moved to incentivise electronics manufacturing, again something that India imports mostly from China and East Asian nations.

Indian engineers and firms have started making personal protective equipment for healthcare workers, while car factories here are trying their hand at making ventilators for sick patients. Need, they say, is the mother of all change.

Obviously, the government is not going to stop with forcing changes in the structure of just these two industries. It has more ambitious plans. It wants to encourage ‘Make In India’ in a number of spheres, ranging from defence and shipping to aviation and renewable energy.

While the new boost to the initiative—which started in the early days of UPA-1—is welcome as it will help create jobs at a time when joblessness is increasing, we have to realise that there are limits to it. No nation can produce everything.

We cannot shift back to autarky or to small-scale localised manufacturing. As the global economy gets back to normal over the next few months or years, it will again demand that every nation buys at least as much as it sells.