Should India develop and sustain certain capacities, or allow them to be eroded?
Shyam Ponappa | April 5, 2018
The World Economic Forum and A.T. Kearney's "Readiness for the Future of Production Report 2018" is more positive, although with a warning regarding the future. Countries are classified along two dimensions, “Drivers of production”, and “Complexity and scale of production structure”.
One way is through equipment imports. Take solar equipment imports: The issue for India, with so much insolation together with other requisites such as technical skills and production capabilities, is how to formulate policies and regulations to support innovation in solar energy use, with incentives for R&D and manufacturing/marketing for such products and practices. The entire value chain has to be designed and set up comprehensively, instead of our typical piecemeal and/or episodic, or half-baked approach. Without this, such imports ensure that India, among the top five countries in terms of demand, remains a captive market for foreign producers. Similarly, domestic manufacturers of conventional energy equipment face foreign competition that has access to subsidised material and inputs, export incentives, low-cost funds, and better infrastructure. Imported equipment for solar or conventional fuels lasts for 25 years, blocking the best markets for developing local production capacity. This hamstrings local suppliers, who already lack comparable policy support, including government procurement and country-backed funding. In this situation, local production can rarely develop, if at all, to supply large but inaccessible local markets. We have to recognise all this, devise remedial ways, and follow through with implementation.