The systematic destruction of India’s manufacturing sector, particularly in small and medium enterprises, has not been adequately scrutinised from a national security prism 

Ever since the ‘Make in India’ initiative was rolled out in 2014, a series of public policy initiatives have metamorphosed this into a flagship movement, driving India, gradually but consistently, towards self-reliance in many manufacturing sectors. Yet, it has been increasingly felt that the initiative needs to be judged and propelled through a ‘national security prism’.

While the Russia-Ukraine War may have influenced this thought process, strategic writings, and academic discourses have touched upon the theme only tangentially during war-times, and not as an integral part of the national security discourse.

The ongoing war has certainly impacted India, along with other countries. Oil prices have gone northwards, supply-chain for significant portion of India’s bilateral commerce has been badly impacted, the SWIFT payment system has banned transaction with Russia, which in turn had affected timely delivery of many weapons and spare parts to India, and above all, there is a burning effect over many key manufacturing sectors due to global impact of US sanctions on Russia. Semiconductor chips, for example, may soon dry down as a trade item that would badly affect production in domestic automobile industries apart from other industries.

Such national vulnerabilities during war times or even otherwise arise due to India’s high dependence on international market for critical supplies. For instance, India’s inability to develop an indigenous flight engine, despite almost four decades of technological-financial investments, has affected the complete indigenisation of the Light Combat Aircraft (LCA) project. India has to perforce in-source the same from international market.

Such procurements often come with a price tag, and militate against national security interests. National security vulnerabilities are probably most visible in retail manufacturing sector where China’s export strategy, based on cheap manufacturing advantages, has decimated India’s domestic manufacturing in many areas. Today, China-made items have flooded the Indian market, ranging from high-tech gadgets such as laptops and mobile phones to low-end items such as thermometers.

From an economic perspective, certain constraints prevent the ‘Make in India’ initiative becoming part and parcel of the national security discourse. First, the very culture of national security in India is underdeveloped, and doesn’t adequately cover all themes affecting national security. The national security discourse has been traditionally limited to military themes. Barring few exceptions, advocating ‘a strong domestic manufacturing base as part of building the national security resilience’ has hardly appealed to strategic writers.

Second, even with reference to China, the national security discourse is largely about the unresolved border issue and the military threats from China. The systematic destruction of India’s manufacturing sector, particularly in small and medium enterprises (SMEs) has not been adequately studied or scrutinised from a national security prism. Industry and business leadership have not yet been successful in developing a collective response mechanism and cost-effective alternates to Chinese products in India.

Third, the procurement environment is still benign and neutral. There is not much in the General Financial Rules (GFR) 2017, different procurement manuals and even Government e-Marketing (GeM) that encourage procurement from domestic sources and, in turn, proliferate domestic manufacturing. The only exception is the defence sector where several editions of the defence acquisition procedures have gradually enhanced the space for domestic players. Beyond public procurement domain, e-procurement platforms in retail sector are still hesitant to identify all products by country source.

Fourth, India may have become the second ‘favoured’ manufacturing destination, but the domestic manufacturing environment is plagued by low levels of technology, generic absence of industrial-scientific culture, absence of skill development culture in our school, college and university curriculum, and above all, absence of industrial-scientific research and innovation that is the sin qua non for enhancing manufacturing capacity in the country. Decisions to go for new manufacturing units are often based on political-bureaucratic considerations than cannons of industrial location principles.

An important lesson from the ‘Make in India’ journey so far is about significant communication gaps and compartmentalised approach among stakeholders. As a result, many policy intents are not metamorphosing into actionable plans due to absence of correct inputs. The draft defence production policy is one such example that has been pending for finalisation due to lack of appropriate feeder inputs.

The challenges of living with economic dignity, particularly self-reliance, are too important to be ignored by the national security enterprise. In the long term, the ‘Make in India’ initiative has to rid the nation of intermittent vulnerabilities arising out of global obstacles in critical items. Therefore, we need a paradigmatic change in the national security thought-process and widen the national security discourse.