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A bill to fix Indian manufacturing

Sometimes, the things that are good for us are the ones people resist the most. Diet and exercise for instance. For a classroom full of kids, a baker distributing pastries is going to be far more popular than a doctor administering bitter medicine. And for voters, a government giving sops is more popular than a government taking tough decisions. However, we must diet and exercise. A doctor is more important than a baker. And a government must make tough decisions.

After decades of disappointing ourselves and the world, I think it is time India took some tough steps to make itself a proper manufacturing hub. It is time because this time the government is showing real intent and desire to achieve this goal. From broad initiatives like Make in India and Atmanirbhar to specific policies like PMI (Production Linked Incentives) that will cost the government lakhs of crores, there is definitely both intent and effort to push Indian manufacturing. These efforts are good. They have and will make some difference. However, we need more. We need a proper extensive Indian Manufacturing Bill to really turn India into a global manufacturing hub.

But first, we need to be honest about the key hurdles that prevent global manufacturers from coming here in droves. We need to acknowledge that China has fared much better than us in this regard. Instead of copying Chinese apps, perhaps we need to emulate what they did right to become a global manufacturing hub, that too just in the last three decades.

We can too. However, it requires the doctor, and not the baker. It requires fixing things that are broken. It requires one big bill that will solve all the problems that Indian manufacturers face in the country. Yes, there will be protests. Left-wingers, the same guys who keep prodding the government for more jobs, will oppose this manufacturing bill that creates more jobs. People with wonderful, eloquent English but no real stakes in the economy will write articles on how ‘poor farmers’ will suffer and ‘poor labourers’ will be hurt, without actually ever suggesting a way on how the prefix poor can be removed from farmers and labourers. A few thousand people will block Delhi roads (sorry Delhiites, it is always you guys who face the traffic snarls). Some will call it the murder of democracy (even though an elected government will pass the bill). A few western publications will use words like ‘draconian’ and ‘Indian government tramples workers’ rights’, assuming workers had a lot of rights in the first place. Opposition parties will rally poor people and try to convince them that ‘everything’ is being ‘taken’ away from them by rich capitalists.

They will tell people the government should be giving you pastries (because, of course, it has endless money) and not bitter medicine.
And yet, it is time to be the doctor and not a baker. Just like the farm bills, the manufacturing bills will have to be pushed through. Without that, Indian manufacturing will never boom, millions of Indian youth will remain unemployed or under-employed and we will not see the economic recovery we want.

These are the five main problems manufacturers face in India. One, the land. You pay upfront for the land. Then, a neighbour, a villager, a panchayat, a local NGO — anyone at all can file a case against you. Worst case you lose the case, best case you lose several years. Your project calculations go haywire. Land acquisition has to be foolproof, just as it was for the Delhi Metro project. Second, labour management. Set up decent, minimum standards for labour for sure. But after that factory owners should not have new labour headaches every week. Ideally, labour should be sourced off labour agencies so the factory owner is not liable for managing them. Three, import and export of machinery and finished products. Global manufacturing requires easy movement of goods across borders. Custom duties are one thing, custom delays are quite another and cause much more damage to a manufacturing setup. Free imports of machinery are a must. Four, taxation and compliance. The government itself has admitted that there is too much compliance burden, and it slows down work, not to mention the constant tedious filings. Five, transportation infrastructure that needs to be excellent for factories to compete globally. All of the above five items listed above need to get resolved if we want to get anywhere. Hence, we need one comprehensive Indian manufacturing bill that gives full protection to anyone who wants to manufacture anything in India. Manufacturing creates wealth and jobs. It builds the nation. Factories are our new temples. We must guard them and let them function with the same sanctity. Only then we will achieve our vision of India as a global manufacturing hub.

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Disclaimer

Views expressed above are the author’s own.



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