Domestic Procurement as Industrial Policy for a High-Tech India!
We have written to the Prime Minister’s Office appealing that the provisions for domestic procurement in Government tenders, embodied in the Preference to Make in India Orders, not be diluted.SITARA has espoused a strong Industrial Policy focused on R&D investment and domestic procurement, a strategy followed by both the US (as attested by experts and eminent economists like Fred Bloc, Vernon Ruttan, Mariana Mazzucato, Linda Weiss, Margaret O’Mara, etc.) and China to grow their high-tech industries.
Domestic procurement is an essential Industrial Policy tool for India too and has resulted in – among other positive results for India’s high-tech economy – the launch of indigenous MIMO, an essential part of the 5G stack. Tejas Networks/ Saankhya were able to invest resources in R&D to develop this key technology after winning the reformulated BSNL tender which was originally skewed in favour of foreign companies. Very few companies/ countries have this technology on which 5G is based. Indigenous 5G capabilities are going to be critical in any adversarial situation, as its low latency supports real-time combat via autonomous unmanned weapons.
The launch was inaugurated by Shri Jyotiraditya Scindia, Union Minister of Communications, in a show of support for an indigenous technological breakthrough. This is a huge testament to the transformative capability of domestic procurement, which at 20% of India’s GDP, can single-handedly lift India out of poverty if deployed properly to promote domestic industrial and high-tech growth.
The Indian proponents of FTAs and WTO Plus instruments have only succeeded in widening the trade deficit without any benefits in R&D or manufacturing growth, and Chinese imports have flooded our market in the absence of a concerted policy environment to strengthen Indian industry. The late Professor Muchkund Dubey had described how we surrendered our rights and industrial policy space in “An Unequal Treaty”. In a letter to the future US President, Joseph E. Stiglitz, former Chief WB Economist, has echoed his arguments and said that the US has enacted two massive bills – the Chips and Science and Inflation Reduction Acts “after decades of telling other countries that they should not undertake industrial policies”. He also adds: “Industrial policy makes sense. It makes sense for developing countries to try to close the gap in knowledge that separates them from developed countries—this gap is even more important than the gap in resources. These efforts were proscribed by the WTO—it’s as if the WTO was designed to maintain the competitive technological advantage of the developed countries”.
We too have analysed how China opened up only after ensuring its ICT industry was strong enough to take on the world (to be published soon). We are for FTAs, but only after we have made our industry internationally competitive via proactive Industrial Policies.
Our advice has yielded tangible fruits for high-tech development. Our muse is Robert Solow, Nobel Prize winning Economist, who proved technology contributed to nearly 90% of growth in the United States. We wish to apply the same formula in India, but a vast agenda awaits to be fulfilled, starting with domestic procurement, along with a mainstreamed vocational education system on Swiss/ German lines, genuine Ease of Doing Business, and attracting Indian talent and high-tech companies to stay domiciled in their own country.
China has resisted external pressures to open up domestic procurement to foreign companies. We must also resist pressures to dilute it through FTAs or from companies only doing assembly in India.
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