Question: The government is aiming to build a self-reliant economy by promoting local industries but majority of industries are import dependent. Suggest measures to overcome import dependency and strengthening domestic supply chains.
Answer: The Aatmanirbhar Bharat Abhiyan aims to boost domestic economy by manufacturing and buying Indian goods. But considering the importance of imported raw materials in domestic manufacturing, it will take lots of support and finances to build a completely independent economy.
Measures to build strong domestic economy
- Government subsidies
The biggest strength of foreign exporters such as China is the support provided by the government for expanding their business. The support ensures that China is able to sell products at cheaper costs than it takes to manufacture it domestically. In order to compete with Chinese products, our firms need support to make their products competent in local and global markets.
Ex: Cheaper taxes, electricity, free transportation etc.
- Taxation on imports
Government has the power to forcefully reduce the amount of foreign based goods entering Indian market by increasing more taxes. This will increase the price of imported goodsto be at par with Indian products and make the market more competent.
Ex: Anti-dumping duty on Chinese electronic products.
It is necessary to create awareness in minds of customers to choose Indian products when making a choice so that domestic companies have chance to survive. The money from profits will be invested back in domestic economy rather than taken back by foreign company.
Ex: Swadeshi jagaran movement.
- Impact on consumer
The measures to increase duty on imported products will be unfair on consumer who will lose out on cheaper and better products. This will create artificial inflationary trends impacting purchasing power.
- Violation of free trade
Restriction on imported products and preventing people from buying and selling imported products is a violation of international free trade agreement. This will be matter of international concern.
Thus, it is necessary to create competitive domestic industry by aiding their rise in free and fair manner without violating rules of free trade. This will be the game changer if India wants to be a global supplier of products and services.