Can Post-Covid India survive by emulating China?

The ship of job growth through low-cost manufacturing has sailed through the sea of automation. India has a good shot at the global consumer, if it becomes obsessed with quality and time-to-market in manufacturing and service sectors

Updated: Jun 5, 2020 03:05:36 PM UTC
Image: Shutterstock

As the Covid-19 crisis unfolds, the issues of transparency, bullying and sentiments of global consumers towards China-made products has increased the probability of trade wars with China. Can India break its own shackles and provide a viable and perhaps, a better value proposition to the world?

Higher and greener value chain integration
Indians have largely favoured organic and sustainable choices against synthetic consumerism, which led to National Geographic ranking India at No.1 for consumer choice in its greendex report in 2014. Indian scale can make new-age green desires of global consumers like non-meat based food supply chains, organic cosmetics and low-carbon products affordable.

India should not strive to replicate the Chinese way. In a lot of sectors, the ship of job growth through low-cost manufacturing has sailed through the sea of automation. British brand expert Wally Ollins declares that the era of postmodernism has come to an end, which is being replaced by ‘authenticism’, where authentic value propositions are gaining more and more traction. India, with its library of authentic and original modules, can combine it’s natural strengths with the state-of-the-art technology, to deliver a compelling partnership to the global value chain. It will be a challenging task: But no country ever moved up by solving easy problems.

Asian Development Bank Institute study reports that China exported iPhones to the U.S. at a unit price of US$ 179, but the value added in China only represented US$ 6.5. India should consistently skill itself and leverage its global R&D centers to deliver higher value chain partnership. Going green will help India skip a few steps to take a higher place in supply chains.

Indian bio-safe practices of namaste and 'no shoes' inside living spaces are gaining traction. India should pioneer pandemic-proof product design philosophies, standards and technologies to reassure the global consumer against future pandemics.

Expanding trust
In a potentially distrustful post-pandemic world, India’s rapid and evolving WTO compliant intellectual property regime garners attention. While China had to coerce global firms to set-up R&D in China to enjoy market access, India has naturally emerged as the world’s top global R&D centre destination, with firms like Apple, Microsoft and Shell set up here. Clean and advanced technologies need strong IP protection to thrive.

Transparency international and World Bank judicial independence platform ranks India better than serious GVC players like Vietnam, Brazil, Mexico, Thailand and Indonesia. Though India and China are at the same score, recent events highlighted the ground realities. India enjoys strong cultural ties to South-East Asia through its historical Chola dynasty. With global trade consolidating around regional value chains, India can form a forward-looking value chain partnership with South-East Asia. India should be obsessed with quality and time-to-market in manufacturing and service sectors.

Honest and open relations
It is a great advantage for firms setting up shop in India as they will enjoy high geo-political stability, especially in testing times. India, since independence, has delivered a demonstrated track-record of staunch honesty in geo-politics. During ‘Operation Raahat’, in Yemeni crisis, India not only employed diplomatic nous, but also deployed resources to rescue 960 foreign nationals from 41 countries, which includes Pakistan, the UK and the US. Among others, India’s honest engagement in rebuilding Afghanistan has won the hearts of Afghani people.

World-class conditions for business
While stringently managing the pandemic, India announced a $266 billion Covid-19 recovery package, placing it among the most substantial in the world, signalling that, in a crisis, India will do whatever it takes to support business and livelihoods, which sent Asian stock markets rallying.

India witnessed policy windows: The concept pioneered in John Kingdon’s interpretation of the garbage can model of organizational choice, where close stakeholder cooperation and political urgency/ viability in a crisis, might lead to a set of once-in-a-generation organisational choices. In essence, India has laid out a brightly lit red-carpet for business.

Leveraging scale
India has a track-record of enabling frugal innovation at scale, showing the world that quality can be affordable by focusing on the essentials and enabling scale efficiencies such as launching a record 104 satellites in one go.

Indian scale demands particular attention in the current pandemic. World-class drugs like Hydroxychloroquine (Covid-19 candidate) have a list price of $19 per course in China and $2 per course in India. It is estimated that about 65 percent of the children in the world receive at least one vaccine manufactured by India, the world's largest vaccine maker. India is one of the best shots the world has, to deliver billions of high quality and affordable Covid-19 vaccines to most of the population, as it has the scale, skill and the track record to deliver.

Indian ed-tech startups are already among the largest in the world, and can leverage scale to deliver visually enticing education to small towns of the developed world. Global firms setting up shop here will have the added advantage of a 700-million strong young population, who, in addition to delivering a productive workforce at scale, shape the marketplace demanding high quality. Virtual reality can be leveraged by Indian ed-tech companies to impart manufacturing  skills to digitally native younger workforce, better suited to handle the dynamism of industry 4.0.

A global social contract
In 2019, the UN General Assembly, quoting the Tamil poet Kaniyan Pungundranar's 3,000 year-old verse 'Yaadhum Oore Yaavarum Kelir' , which means 'we belong to all places, and to everyone', Indian PM Modi declared that this sense of belonging beyond borders is unique to India. If we can pull out all the stops, India made Covid-19 vaccine might mark the beginning of a social contract between India and the global consumer.

The writer works in the Energy and International cooperation in NITI Aayog, Indian Government's think tank

Click here to see Forbes India's comprehensive coverage on the Covid-19 situation and its impact on life, business and the economy

The thoughts and opinions shared here are of the author.

Check out our end of season subscription discounts with a Moneycontrol pro subscription absolutely free. Use code EOSO2021. Click here for details.