Any tariff protection to promote local manufacturing in India will come with an in-built sunset clause, NITI Aayog Vice-Chairman Rajiv Kumar said on Friday, asserting that the country’s self-reliance mission must not be equated to it becoming a ‘protectionist’, closed economy.
The government is set to extend the production-linked incentive scheme for manufacturing pharmaceuticals, medical devices and electronics announced under the AtmaNirbhar Bharat package , to six more sectors, Mr. Kumar said.
“We will pursue self-reliance; we will want to give our domestic entrepreneurs the best situations to go forward. We will, while attracting FDI, also repose our faith and trust in those who have already invested in India. We want to recognise them by giving them much better logistics, infrastructure and more flexibility in the use of land and labour,” he said.
Explaining the rationale for the PLI schemes that, he said, will soon become valid for ‘nine to ten’ sectors from four at present, Mr. Kumar said this is meant to incentivise investors already in the country to put up globally comparable capacities in scale and competitiveness.
He emphasised that India’s efforts towards self-reliance are not dissimilar to what other nations are doing to insulate themselves from global supply chain shocks and revive the economy.
‘In global context’
“But it will be done in a global context. It will be done with India remaining open and trying to regain its share in global and regional production chains, it will be done with respect to rule-bound multilateral trading orders. It will not imply in any sense, any form of isolation, closed economy or protectionism,” he said.
Mr. Kumar added that the India will do its best to increase the share of trade in its gross domestic product (GDP).
“If there is any support that will be given to domestic enterprises, it will all be targeted towards creating globally competitive capacities and any support that we give them through tariffs, would have an inbuilt sunset clause. I wanted to emphasise India’s commitment to a global economy with open order,” Mr. Kumar said in an address to the Confederation of Asia-Pacific Chambers of Commerce and Industry.
India has recently barred the import of several products, ranging from split air-conditioners to certain types of television sets and tyres, while imposing higher import duties or restrictions on import of several items.
Job creation concerns
Mr. Kumar also called for a more empathetic and humane approach to assess economic growth beyond GDP numbers and flagged concerns about the impact of the COVID-19 pandemic and the onset of technologies like robotics, machine learning and artificial intelligence on job creation.
“The threat to human employment from machines is becoming real. For the first time ever, there is a technological revolution on our hands, whereby enough jobs may not be created compared to those that may be lost. So we need to bring in another aspect in our thinking of the economy – empathy,” he said.
“Very often, we in the government and the private sector forget that there is a human aspect to be considered and taken care of,” Mr Kumar said, stressing that COVID-19 has exposed how many countries had paid little attention to social sector spending on health, education and nutrition.
“COVID-19 has rung those alarm bells that we do not pay enough attention to the social sectors at our own peril. In our attempt to achieve this balance between lives and livelihoods, we realised their huge importance,” Mr Kumar said, terming it as the most important lesson from the pandemic.
