The UK India Business Council (UKIBC) has recently published a report titled, ‘Road to a UK-India Free Trade Agreement: Enhancing the Partnership and Achieving Self-reliance’. In this report, the results of the annual Survey on Doing Business in India are presented, with an overwhelming 77% of UK companies viewing the Atmanirbhar Bharat campaign as an opportunity. This article delves into the specifics of the report and the key points it presents.
Opportunities Brought by Atmanirbhar Abhiyan
The Atmanirbhar Abhiyan or ‘self-reliance’ campaign should be regarded as an expansion of the “Make in India” initiative launched in 2014. Both share the core objective of attracting manufacturing investments from both domestic and foreign businesses. The campaign offers financial support for the weaker sections of society, small and medium-sized enterprises, along with the agricultural sector. As a part of this programme, several sectors, including defence, atomic energy, agriculture, insurance, healthcare, and civil aviation have been opened up for foreign investors.
Concerns Raised: Limitations on International Trade and Investment
Despite the opportunities, there are aspects of the programme that could potentially limit international trade and investment. Increased tariffs, non-tariff import restrictions, and import substitution are concerns raised. Non-tariff barriers, which include quotas, embargos, or sanctions, are used by countries to promote their political and economic objectives. Ad-hoc policy changes by power distribution companies (DISCOMS) can also cause challenges, particularly in the renewable energy sector.
Potential Policy Issues
Potential difficulties have been noted in India’s Intellectual Property enforcement regime. Gaps in the pharmaceutical sector regulations, drug price controls, and norms related to data localisation and governance might present challenges. Data localisation could limit local companies’ ability to compete globally, restrict investment access and customer reach.
Specific Sectors: Space and Defence
The significant decision to open up the Space sector to private investors was welcomed but lacked clarity on several procedural aspects. The Indian National Space Promotion and Authorization Centre (IN-SPACe) provides a level playing field for private companies to use Indian space infrastructure. In the defence sector, the import embargo on 101 items is set to be implemented over four years, impacting foreign investment.
Strategy Suggestions for the Future
To secure success, India needs a long-term approach that entails regional supply chain consideration and strategic location decisions. India should attract investors based on its strengths rather than resorting to tariffs as a business driver. There is need for focus on education in STEM, digital, creative and critical thinking skills that will empower the leaders and workers of tomorrow. Also, development of an innovator-friendly intellectual property policy is crucial.
Digital, Data, and Sustainability
Given the global importance of digital and data services, India has an opportunity to integrate sequentially with other significant democratic markets. Active investment in areas like Artificial Intelligence and digital technology is recommended. Placing sustainability at the core of India’s trade and investment strategy can support the poor and protect the environment.
The Atmanirbhar Bharat Programme
Launched by the Prime Minister in May 2020, this programme was accompanied by an economic stimulus package totaling Rs 20 lakh crores aimed at achieving self-reliance. This package, which included already announced measures from the RBI and the Pradhan Mantri Garib Kalyan Yojana payouts, accounted for 10% of India’s GDP in 2019-20. The aim is to reduce import dependence, improve safety compliance, and enhance the quality of goods to gain a global market share. It promotes “local” products, but does not suggest isolationist strategies; instead, it seeks to provide a helping hand to the world.