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Sunday, April 21, 2024

Reduction in imports, growth of exports – concept note on way forward for a prosperous, self-reliant nation

All the COVID-19 losses to Bharat’s economy can be recovered by just saving one year of imports equivalent foreign exchange, thus creating 5 crore new jobs.

We are all aware that export & import of goods & services internationally uses US dollar as the currency for business transaction. Ratio of export value to import value along with fluctuation in exchange rate of US dollar versus Rupee significantly affects the trade deficit / surplus of our nation.

Weaker rupee against the dollar makes our nation poor against the world in relative terms. The trend of rupee becoming weak against the dollar during each decade after independence is very alarming. At the time of independence US$ 1 = 4 Rupees. But currently it is US$ 1 = 76 Rupees. So in relative terms we have become 19 times poorer against the dollar in terms of currency purchase power. This implies that after independence, our economy has become worse (poorer) relative to world, especially US & Europe. The roots/mystery of our poverty lies in this weak currency.

Such a weakening trend of currency can be detrimental to economic development of our nation specially weakening of purchase power as well as receipt of international finance at higher cost. Any nation with weak currency has to pay a higher interest on the international dollar borrowings taken by their government. This starts a chain reaction of making the nation poorer by drainage of national exchange reserves.

As the foreign exchange reserves becomes less, the more our govt. becomes afraid of the day to day needs of import bills for petroleum oil, defense equipments etc. Thus, they start bowing down to World Bank & IMF. These institutions in turn start dictating terms for our country’s economic policies. In this way it becomes a trap like situation. To come out of this trap, a techno-economic nationalistic action plan for reducing imports & increasing exports is needed.

Various salient features of opportunities, obstructions, limitations, solutions, emerging trends for reducing imports & increasing exports are highlighted as under:

  • Large scale exports can make a nation rich and prosperous by bringing foreign exchange to total national income which indirectly adds to overall prosperity of people.
  • Exports surplus would make our currency stronger and thus the value of Rupee relative to US dollar rises. Stronger rupee will in turn make imports cheaper thus it gives huge national savings. Gross National export income which comes from outside of the country adds to the total wealth of our people.
  • Due to large scale imports, valuable foreign exchange is drained out of our country resulting in trade deficit. It has far reaching & multi-faceted negative impact on overall weakening of our economy.
  • Due to undue competition by large scale goods imports, Bharatiya manufacturers are adversely affected. Job opportunities are lost by about at least 5 crore Jobs.
  • Long-term exports growth which brings much needed employment to our masses should be planned with a techno-nationalist approach. Only nationalist approach and way of thinking will open up creative ideas for bringing prosperity to the nation.
  • Exports of value-added manufactured finished products will bring us prosperity by distributing the export earnings in the form of employment to the masses. Such income spread brings overall inclusive economic growth.
  • Import substitute promotion institutions/corporations should be created in each state. Top priority import substitute product list should be prepared & required number of clusters with plug & play infrastructure to be set up all over the country. Targets to be set & equivalent infra for MSME to be established. Driver of this import substitution movement should be the MSME sector. This will create crores of new jobs, save on our huge import bill, as well as bring much needed self reliance  and pride to the nation.
  • Export of surplus agricultural produce can bring prosperity to rural masses without exploitation of nature. This will boost employment and economy at rural level which would ultimately strengthen eco/climate friendly growth. Agro-Processing & value addition clusters in each Taluka of the Nation may bring a revolution in agri surplus exports. Backward integration for this requires best water management with river-linking canals, agri clusters infra creation, agri science education, & latest agri-technology providing institutions.
  • Technology (AI) and software services are growth areas. Bharat has attained dominating position in the international market in this niche sector. Prominence in IT exports can bring large scale employment & economic growth.
  • Bharat’s techno-economic experts can plan for our own copyrighted value-added products to emulate SAP, Microsoft, WeChat type software, data-driven applications by Bharatiya companies, Apple equivalent brands, to bring much more prosperity (dollar income) as well as self reliance of our nation.
  • Techno-economic experts combined with techno-legal experts may find ways of increasing maximum permissible import duties & anti-dumping duties within the permissible limits of WTO agreement.
  • Techno-economic & techno-legal experts can further find ways to design national quality standards of each major product segments in such a way that imported goods may face increased hurdles in entering Bharat.  To match Bharat’s standards, their cost should increase, while our own MSME manufacturers may/should not face such cost increase. This techno-political tool is used widely by China & few other nations.
  • Provide level playing field to domestic Industries by providing each import substitute manufacturer their required finance at international standard interest rates.
  • Cluster-centric export consortiums can greatly boost competitiveness & strengthen each cluster in various regions of Bharat. About 700 major clusters have tremendous export potential.
  • A nationwide quality improvement drive and competition for Made-In-India products amongst MSME is needed for successful competition against imports. This should now be the real spirit of the Swadeshi movement (a similar cost reduction drive is also needed).
  • Out of overall exports at present, we need to do due diligence for minerals or natural resources like iron ore & petrochemicals as they are of limited stock and have to be preserved for future generations too. If these are exported exponentially, the resulting income may not be considered as real income but a crime done against future generations. We can’t sell the rights of future generations.  Since our country has heavy export deficit, we are not able to argue much for saving this precious natural resource. But history will judge us as a reckless & irresponsible generation.

Certain sectors feeling the brunt of large scale cheap imports are listed below as few examples:

  • Majority of our defence procurement is done from foreign suppliers. This has left us at the mercy of foreign manufacturers who dictate their prices & terms of business with corrupt practices. Foreign governments use this as a leverage to push us into signing of unfavorable trade agreements. The draconian impact created by foreign manufacturers means almost 19% of our budget is allocated to defence spending.
  • Electronics and Computer hardware – 98% of these products are coming from China / other countries. Our complete ecosystem of manufacturing in electronics has got damaged due to the increasing imports from China.
  • The complete hardware equipments of all telecom companies are dependent on the foreign suppliers, including their crucial maintenance & parts supply. This has resulted in an absolute national security threat. The forthcoming new telecom technology of 5G should be given a new thought to save our self reliance.
  • The complete digital economy is dependent on the imported equipments. The Internet system network equipment of the country is totally at the mercy of foreign entities. This is an alarming and vulnerable security threat which could lead to hacking & data theft from foreign lands.
  • The web portals of all the financial and government departments are dependent on servers placed in some foreign land. This could lead to a big security breach.
  • Substantial portion of our imports are in the form of finished goods. This has a very devastating effect on our economy as all links of the whole chain stand to lose business & hence large scale unemployment & huge revenue loss.
  • Similarly, machinery manufacturing sector is facing undue competition from under-invoiced cheap imports.
  • Solar energy production is encouraged in big way but yet equipments are imported.

Bharat has vast pool of technical skills in all disciplines of engineering. The intelligent Bharatiya mind is capable of cost-effective solutions and if congenial environment is made available, we can perform miraculous tasks & can achieve commendable milestones in respective fields. Examples like ISRO, missile technology, nuclear achievements, white revolution; Indian Railways, Indian IT sector etc. are indicators of our capabilities.

Consortium/forum of industrialists, exporters, management institutions, retired govt. officials with representation of policy makers, few political thinkers etc. can come together to work for this goal. Every region may have such forums. Not fully dependent on government alone, the leaders of society should get together to lead & spread this movement, creating intellectual opinion, thus forcing the government to fulfill their part.

Let us all join our hands to strengthen this techno-economic forum to start the techno-nationalistic thought movement with the objective of making our nation prosperous.

-by Hitendra Joshi

([email protected] || 9824018765
Convenor, India Techno-economic Forum
Coordinator, Hindu Economic Forum, Gujarat

(Featured image source)

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