Explained: Vocal For Local Meaning in Detail!!
On May 13, Prime Minister Narendra Modi addressed the nation amidst the coronavirus pandemic and the resulting lockdown. During one of the most difficult adversities in recent times, when the entire world was gasping for air, Prime Minister Modi delivered a potent speech during which he announced an Rs. 20 lakh crore economic stimulus package and the vision for a self-sufficient or “atmanirbhar” India.
“Every Indian must become vocal for local,” said PM Modi.
WHY INDIA NEEDS TO BE VOCAL FOR LOCAL
Vocal for Local has become the latest trending slogan which has emerged during the COVID-19 pandemic. However, the idea behind this movement is not new. It finds its roots in the Swadeshi movement which was popularised in 1905 during the Indian independence struggle. Developed and promoted by Mahatma Gandhi and the other great freedom fighters, Swadeshi was conceived as a way to imbibe nationalism and nationalistic pride among Indians.
If the coronavirus pandemic taught us anything, it is this: we need to make sure we can meet our own demand for products. With countries closing down their borders and consolidating inventories, the movement of goods and services across the world came to a virtual standstill. Nations were struggling to meet their basic requirements and to substitute for products which are generally imported from other countries.
Global integration and the promotion of international trade has taught us the advantages of division of labour — instead of producing everything you require if instead, you focus on a few commodities, your expertise in producing that commodity will increase several-fold. Division of labour is what led to the creation of widespread global supply chains.
It took a pandemic to show us the flaws in this seemingly perfect structure.
Global integration is, of course, commendable. So is the idea behind the division of labour and the specialisation in different products and parts of the production process. But it is equally, if not more, important to be able to satisfy the basic demands for necessities. It is also important to have substitutes in place so as to not have to scramble in panic as global supply chains break down.
There is also another reason why the vocal for local movement is so essential.
Vocal for local gives unequivocal importance to the domestic industries and the small-scale Kirana stores. In a time where we are struggling to maintain liquidity and regular cash flow, the vocal for local movement can also be seen as an impetus to reawaken demand and hence, to throw a lifeline to the small and marginal domestic industries which are struggling to survive in the wake of the pandemic.
If demand shifts in favour of domestic companies, then the advantage is three-fold. First, it will reduce dependence on foreign products, and hence, cut down on the import pressure. Second, it will give a fighting chance to domestic companies to survive through the crisis period. Third, it will fit in with the economic backlash against China, and place India in a strategic position to emerge as the new manufacturing centre of the world.
WHY IS INDIA LACKING?
The reason why self-sufficiency is a rare occurrence in today’s world is based on a simple premise — specialisation leads to competitive pricing.
During the Swadeshi movement, when nationalism was in vogue, domestic and indigenous industries developed a great deal. However, since liberalisation began in the early 1990s, Swadeshi took a backseat, and FDI stole the show. With the inflow of foreign capital and portfolio investments, the Indian markets soon got flooded with a plethora of options. Be it goods or services, these products were of better quality and priced more competitively. Domestic firms were hopelessly outclassed and gradually faded into oblivion.
Imagine your local shop vendor is offering you a bicycle which is completely manufactured in India and makes use of local materials. Being a prudent consumer, you also check the options available on Amazon. Here, you find a number of other bicycles, from various parts of the world, which are being offered at a cheaper price. Would you choose the locally produced, more expensive option or one of the cheaper options from Amazon?
There are several reasons why the development of domestic industries stopped after a point.
The primary reason for this is the presence of excessive bureaucracy and red-tapism. During the 1990s and the early 2000s, the Indian economy was characterised by the severe bureaucratic control. Although originally placed as a method of supervision rather than a hindrance, these methods were found to cause more harm than they did well. To understand why I will refer you to the popular English idiom “Too many cooks spoiled the broth”.
Since then, however, bureaucratic control has been gradually reduced and industries have been allowed more autonomy to make their own decisions.
Another reason is the lack of funding options. This is one of the primary causes behind the late bloom of the Indian startup ecosystem.
With the relaxation of controls, a number of private equity and venture capital firms have come up, both domestic and foreign. The effect of this can be seen in the development of Indian startups over the last decade. Companies like Paytm, OYO, Ola Cabs, Zomato and others have been able to take full advantage of the easy availability of investors and funding in the Indian economy.
Now, the vocal for local movement or the quest to become self-sufficient does not mean we have to completely cut down on all imports and all consumption of foreign products.
For instance, there are certain raw materials, like petroleum, which have to be imported as India does not have enough reserves to service the demand locally.
The idea is to promote local industries and consume local wherever possible so that the long term effects of an increase in demand can be used to develop the domestic industries and make them gradually self-reliant. This will help in the scale-up of production, and eventually, make India a manufacturing centre for the world.
At present, some of the sectors are heavily dependent on the import of strategic raw materials from different countries, while others are moderately or less dependent.
Let us consider, for instance, the electronics industry. According to a report published by the CII, 88% of the components used to manufacture cellphones is imported from China. Similarly, the pharmaceutical and medical industry is also rather dependent on imports — both for medical equipment and medicines. 60% of medical devices are imported, along with raw materials for the manufacture of antibiotics, vitamins and other drugs.
The reason why these products are imported from abroad and not manufactured in India itself is that the manufacture of these raw materials requires large sources of clean water, energy and infrastructural investment. Not only is it cheaper, but you also get access to better quality products. Then, all Indian firms need to worry about is the assembling of the final product. It is also because of these reasons why it is challenging for India to reduce its dependence on foreign imports and produce domestic substitutes.
For example, one of the primary sources of import of chemicals for the dyeing of textiles is China. When the lockdown first commenced, 20% of India’s production of dyes was disrupted due to the unavailability of raw materials.
The manufacturing sector in India has to be developed in such a way that it can provide better and more competitive prices than the other contenders like Vietnam, Malaysia, etc.
There is also the fact that the Vocal for Local movement is not the first initiative to make India a manufacturing centre. It is simply the Make in India movement in a new avatar.
The Make in India movement was launched in 2014 to give an impetus to manufacturing firms in India, and with the vision of eventually replacing China as the manufacturing centre. Since its launch, however, the share of the manufacturing sector in the GDP actually fell instead of rising. This was due to a combination of factors — namely improper policy implementation along with unreasonable ambitions.
Vocal for Local can only be successful if it learns from the mistakes in the Make in India campaign, and adjusts its ambitions and policy implementations accordingly.
“In the midst of every crisis, lies great opportunity”. — Albert Einstein
This time around, PM Modi and the BJP government has picked the right time to bring forth such a movement. Amidst the coronavirus pandemic and the ensuing panic, we invariably turned to local products during the lockdown. This nation of 1.3 billion people is already rife with nationalism along with a mixture of compassion and empathy. In times of crisis such as this, every Indian will be open to the prospect of supporting fellow countrymen and domestic industries, especially the MSMEs.
Even more potent is the feeling of hatred towards China, the present manufacturing centre of the world. Whether it is by accident or by design, the Chinese economy has been largely blamed on international forums for being the fountainhead for the virus which has claimed over 12 million people. China has been on the receiving end of severe criticism on international forums.
In fact, led by the US, the Boycott China movement has been gaining traction as more and more countries follow suit. India too is one of them.
Using China as a scapegoat for all the angst and sorrow which has enveloped the world in the wake of the crisis, people have been burning Chinese made phones and other products. The government of India has participated in this movement by rethinking the plans for 5G tender, as well as by imposing a ban on several Chinese apps.
Thus India finds itself with the very unique opportunity to replace China as the world’s manufacturing centre. Realising that time is of the essence, the government has already rolled out several measures designed to attract foreign firms, such as long term measures to improve India’s ease of doing business, labour reforms and the opening up of other sectors to private and foreign investment.
The government has also revealed several measures to give a boost to the startup environment in India, such as changing the definition of MSMEs by increasing the revenue bracket.
Apart from that, a study by the Confederation of Indian Industry has identified 31 products which have significant potential for exports in the international markets.
“A targeted export strategy that identifies and boosts the right products is imperative for achieving double-digit export growth. CII has analysed and identified select export items where India can become a leading exporter and offers recommendations for boosting such products,” said the Director-General of CII.
CII’s approach to promoting exports rests on two legs — first is to scale up domestic production, and second is to take up strategic promotion in the targeted nations to build up a market for the products.
Among the list of potential products are textiles, apparels, drugs, furniture and others.
To boost domestic manufacturing, CII suggests measures such as investment in infrastructure, improved port connectivity, specialised initiatives to help people skill-up as well as incentives to promote greater adoption of technology and innovation.
The Vocal for Local movement has already succeeded in its first intention of rising nationalism and the inclination to use domestically produced items. However, this movement, especially given the timing, has the potential to completely disrupt the global supply chains and change the position of India for the better.
Already, the dominos have started falling. The canteens of the Central Armed Police Forces have completely stopped using all outside products. Close to 50 lakh people have already made the move from international to indigenous. The remaining population will soon follow suit, if not for all products, at least for a few.
The FMCG sector is emerging as the poster child for this movement. With brands like Nestle, Dabur and Patanjali performing at exceptional levels, there is simply no need to look beyond our borders. The textile and handicrafts sectors, too, are producing superior products locally. As for India’s service sector, namely software, IT and banking services, we were already at par, if not superior, in comparison to our peers. Even the Indian pharmaceutical sector has emerged as a global leader during the coronavirus pandemic.
The problem lies with the core manufacturing sectors, such as electronic equipment, automobile parts, solar equipment and other components. To develop these sectors, we require strategic policy implementation as well as infrastructural investment.
Apart from that, to make sure the Vocal for Local movement does not lose steam after the coronavirus pandemic ends, we also require specific guidelines and initiatives from the government. Right now, we are cruising by on an overload of adrenaline. But this movement needs to be sustained for the long-term.
Only time will tell whether India manages to replace China as the manufacturing centre of the world.
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