Q. Chinese government has proven itself to be the engine of support for Chinese business to extend its inﬂuence globally. In the same vein, discuss the role played by the Indian government in extending international footprint of Indian business abroad.
A. Ever since Deng Xiaoping embarked on the liberal reforms to generate double digit GDP growth rate, it transformed China into a global manufacturing powerhouse with considerable political inﬂuence. The leader asked the country to ‘lie low’ and avoid confrontation in foreign affairs, so that the domestic matters can be the primary focus.
The country’s approach can be highlighted from the following:
1. Enabling Environment encouraging exports: Special Economic Zones and exporter-friendly policies provided the required foundation for the future growth
2. Manufacturing base: The country was at the top of the economic upsurge in the 1980s and followed the textbook economic progression by moving to the secondary sector from the primary by providing a large manufacturing base to consumerism
3. Investment in Infrastructure: Connectivity, uninterrupted power supply and quick freight movement helped sustain the large manufacturing base
4. Large Consumer base: The domestic market at home was so large that it attracted foreign investment. Moreover the consumer base was such that foreign companies might as well produce and sell in the same country
5. Investment in R&D: With investment in manufacturing, there were all the way more reasons to invest in research and development for increased efﬁciency, speedy production and better technology. In fact, China produced the largest number of scientiﬁc articles in 2017, surpassing USA
Although missing the bus in late 20th century, India directly jumped to become a service-sector driven economy. The government has recently tried to promote manufacturing as well with a lot of initiatives to fulﬁl the gap:
1. LPG Reforms: The opening up of Indian economy made it easier for the exchange of technological know-how as well as movement of ﬁnance across the nation’s boundaries
2. Promoting Brand India: India Brand Equity Foundation (IBEF) helps generate awareness about Make in India in the overseas markets and generates trust about Brand India
3. Healthy policies at home: Government programmes such as Startup India are providing the much required environment of innovation. Startups such as Oyo Hotel and Homes intend to put the majority of its funding for expansion in overseas markets
4. Negotiations at WTO: India is pushing at the WTO for a Trade Facilitation Agreement in Services so that the service sector, at which India excels, can also reap the beneﬁts just like the Chinese did in the manufacturing sector
5. Dispute Resolution at Home: International Centre for Alternative Dispute Resolution (ICADR) has been set up at New Delhi to settle disputes quickly
With a lot of enabling provisions and the government’s focus to increase exports as well as promote Indian companies to venture in foreign lands, India seems to set itself on the right trajectory. Increase in the entrepreneurial culture and favourable demography can further set the ball rolling in India’s favour.