One of the biggest economic reforms India had seen was in 1991. But as wording goes ‘History repeats itself’. With almost a year to the spread of covid-19 now, china (biggest manufacturing hub) has faced serious backdrops in the manufacturing sector. Various multinational industries are now shifting towards India which is a big opportunity.
However, considering that the gross domestic product (GDP) contracted by 24% in the June quarter of 2020, there is little doubt that India needs significant economic reforms to put things in order and establish a new phase of progress and expansion that can generate new employment opportunities. As India strives to become the world’s next development center, significant policy reforms have to be made to manage the upheaval after the Coronavirus pandemic and to make it simpler for foreign investors.
FDI or foreign direct investment is a big inflow of the Indian economy. There are simply four factors which determine the interest of foreign investors.
- Current Size of economy
- Geographical location
- Legal stability, and
- Political stability
Only after considering each of these determinants carefully any foreign investment gets attracted to any country.
Taking into account the current scenario of our country we need to improvise a few things which are as follows:
Establishing reliable and effective chains of supply
For any fruitful manufacturing and production hub, it is critical to set up a sound supply chain, for which India needs a productive network. Therefore, given its proximity to the nearest deep water ports or current/upcoming international airports, the sites for SEZs should be chosen. Next to underutilized public property, which could be converted into an affordable housing center, with excellent connectivity and efficient supply of water and electricity, a greenfield or brownfield site could be easily found.
Similarly, UDAN ‘s proposed airport development scheme may be a torchbearer for the creation of new cities. Sialkot in Pakistan, for instance, is a global manufacturing center for sports apparel. The local business community built the first private airport and power station in the country to fulfill the requirement because the government failed to build infrastructure. Most of the global sports brands now have their factories in the country, attracting more investment than any other area in Pakistan.
Better administration in special economic zones
India has about 238 Special Economic Zones (SEZs), covering approximately 500 sq km, particularly in comparison to 2,000 sq km in China. The lack of state-supplied facilities and infrastructure has made it extremely difficult for investors to view it as a worthy alternative to China. It was difficult for the government to even provide basic services as it is evident in the 100 smart cities, which are nowhere close to being finished after six years of its announcement. India needs to reduce the number of SEZs in order to handle these and concentrate on building bigger ones that have all kinds of services and facilities. These could be key areas of operation that could enable the creation of jobs, employment, and growth in their neighboring regions.
Emphasis on Skill Development Programme
India spent just 2.7 percent of its GDP on education in FY 2018 compared to China, which spent 4.11 percent. In addition to education, India must qualify its labor force in various industries from low (mining, agriculture-related, etc.) and specialized (textile & apparel, manufacturing of electronics, etc.). Increasing technological advances automate clerical jobs and demand for specialized skill sets, in particular IT skills, which, given the huge young population it has, can be a great advantage to the country. This aspect should not be overlooked by India and the skills required to remain globally competitive should be met.
Fostering good governance and setting up a solid law and order
In the event that lower assessments could pull in financial specialists to any economy, helpless nations would have been the initial ones to observe monetary turnaround. What unfamiliar financial specialists generally search for, is acceptable administration, where regulatory obstacles don’t influence their business and strong standard of law, where the neighborhood organization is ground-breaking enough to settle on strategy choices.
India is where land and work laws are in the simultaneous rundown, with both, the state and focus, skillful to authorize enactment. This prompts a great deal of disarray over contest goals and debasement. Different locales in Asia-Pacific are incomprehensibly not quite the same as India, where working together is on a very basic level simpler with less political cerebral pain.
In addition, the kinds of offers and incentives available to investors in India are restricted to easily affordable real estate and concessions. For individuals relying on the Indian eco-system to establish their production setup, there should be an added advantage and good governance is definitely one incentive.
China’s Tianjin example is a brilliant example of what could go totally incorrect if governance is not part of the economic reforms and bribery is tricked in. 70 percent of offices are vacant here in the Binhai district, once seen as China’s Manhattan, as many housing associations flouted zoning regulations by paying off bureaucrats and trying to exploit democratic links, thereby denting business opportunities here.
While the Indian economy continues to be enveloped by unpredictability, one can not deny that this could be a golden chance for the nation to become self-sustainable if we introduce more economic reforms. It is also a chance for India to become a hub for manufacturing and to play an increasingly important role in the global supply chain.
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