A younger breed of cricketers emerged in the 1980s who went abroad and played English county cricket — Kapil Dev, with Sunil Gavaskar, Gundappa Viswanath, Mohinder Amarnath, Dilip Vengsarkar and Ravi Shastri going on to win the 1983 World Cup, sparking Indian cricket. At the same time, India Inc also witnessed some internal liberalisation under a more youthful, tech oriented prime minister Rajiv Gandhi, which lifted India’s growth rate.
In the 1990s, with the arrival of Sachin Tendulkar, Sourav Ganguly, Anil Kumble and Rahul Dravid, India took on the world. It emerged as world-beaters after 2000, when it won many times outside India. Eventually, a swashbuckling side under Mahendra Singh Dhoni, with Tendulkar, Yuvraj Singh, Virender Sehwag, Virat Kohli and Zaheer Khan won another World Cup in 2011.
And to match India’s cricket performance, India’s economy took off with its fastest growth ever, averaging 8-9% between 2003 and 2012. Trade with the world exploded with India’s export GDP ratio reaching 25% of GDP. India became competitive abroad for the first time in a range of products such as auto, pharma and information technology (IT).
Had Indian cricket withdrawn after winning the 2011 World Cup, we would not have seen the glorious wins abroad of teams led by Kohli and, most recently in Melbourne, by Ajinkya Rahane —as well as in the women’s game, with a string of world-beaters like Mithali Raj, Harmanpreet Kaur, Poonam Yadav and Jhulan Goswami. These successes were built on getting the best coaches from across the world and exposing the teams to global competition.
Today, Indian cricket is at its zenith. But India’s economy appears to be moving inwards through its ‘Atmanirbhar Bharat Abhiyan’, and risks becoming less competitive if it’s not careful. Restricting imports against dumping, or to correct inverted duty structure, is acceptable, as is using domestic reforms to support our industry. But where to draw the line is often not easy.
Export Basket Case
Exports-led development remains India’s best hope, despite an increasing hostile global environment. India is now, presumably, the world’s fifth-largest economy, but remains a small player in global trade. It must integrate more globally to make the next leap forward to becoming the world’s third-largest economy. Shrinking back to protectionism is not the answer. A successful trade policy requires a competitive industrial policy and freedom to export agro-related products. The two go hand in hand.
To reach $1 trillion, exports must grow by 18% a year until 2030 — the same growth rate as in 2000-13. Some say in today’s difficult global markets, the era of export-led growth is over. But with abysmally low export shares, the upside for such a growth strategy for India is huge, even if global trade grows more slowly.
India has gone up the rank on the World Bank’s Ease of Doing Business index, but costs of doing business remain high. The new production-linked incentive (PLI) scheme is a good start, if implemented smartly. India could also consider several other measures to boost competitiveness and reduce the costs of doing business: Establish a new industrial development bank, or revive the Industrial Development Bank of India (IDBI), where 51% stake was sold to the Life Insurance Corporation (LIC), by bringing in dynamic leadership and selling government shares to private entities, and giving it the mandate to provide longer-term finance to industry.
Remove labour flexibility restrictions for firms hiring up to 500 workers. This has happened for up to 300 workers in several states, but needs to be part of a broader labour standards package.
Reduce energy costs to industry by removing cross-subsidisation to consumers and to agriculture. Establish dedicated export processingzones (EPZs) and encourage port-led development, with special incentives to export-based labour-intensive foreign direct investment (FDI). Bring external expertise to help run these EPZs. Shift corporate social responsibility (CSR) funding entirely to research and development (R&D), and encourage R&D in private industry through tax incentives. The resulting job creation is more important than current approaches to CSR. Rationalise rail tariff, and expedite commissioning of dedicated freight corridors (DFCs).
For a seamless and efficient road transport experience, introduce a ‘One Nation, One Permit, One Tax’ system. Establish a National Council of Logistics and Trade Facilitation outside the line ministries reporting to the PM. Private sector and trade stakeholders should be represented. Have target cargo dwell time reach levels comparable to the successful Southeast Asian countries.
Of Walls and Moats
Protecting India’s $2.8 trillion market will be short-sighted, when a global market of over $80 trillion should be its target. China, the world’s second-largest economy ($14 trillion), Japan, the third-largest ($5 trillion), and Germany, the fourth-largest ($4 trillion) do not regard their much larger markets large enough, and remain the world’s most aggressive exporters.
Why should India, then, want to protect its growing, but still small, market and cut itself off from the bigger prize? Just as our men and women cricket teams have become world-beaters, so too can India become a world-beater in industry and trade. Not by shrinking into Fortress India, but by boldly taking on the world.
The author is distinguished visiting scholar, Institute of International Economic Policy, George Washington University, US