Issues with the discussion paper on Industrial Policy 2017
The policy does not discuss ideas for creating jobs for and in Bharat.
It follows conventional approach that confines the scope of industrial policy to “manufacturing enterprises”, unrelated to agriculture and the services sectors.
This myopic industrial policy can have adverse consequences in the longer term.
It recognizes the importance of competition and strengthening global linkages and value chains.
But incentives to select sunrise sector will potentially disincentivize competition and innovation, and curb the growth of other sectors
This sector specific approachmight result in policies soon becoming out of sync with dynamic economic developments and with our World Trade Organization (WTO) obligations.
An effective industrial policy cannot be merely a collection of sectoral policies.
Way Forward
It must appreciate its linkages with agriculture, services policies and with trade, competition and sector-specific policies at a broader level.
A systems’ view informed by a whole-of-government approachis needed.
It will treat the economy like a complex human body, composed of many sub-systems, each of which performs a function to enable the entire system to remain healthy and grow.
The Indian economy has suffered from several ill-advised medications in the past, and more recently as well. Such experiments need to be prevented.
It requires different actors and government departments engaged in specific sub-systems to work with each other.
Stakeholders involved in the design of specific policies must interact with each other and optimize the functioning of crucial sub-systems.
A powerful nodal department in the prime minister’s office should be authorized to ensure coherence through coordination with different departments and related stakeholders, and enable swift decision making within predetermined time frames.
A new forward-looking industrial policy for India must have Bharat as its soul.
A long-term view needs to be taken on competition and trade-related issues, and the industrial policy should avoid the temptation of short-term benefits of over-protectionism.
The policy does not discuss ideas for creating jobs for and in Bharat.
It follows conventional approach that confines the scope of industrial policy to “manufacturing enterprises”, unrelated to agriculture and the services sectors.
This myopic industrial policy can have adverse consequences in the longer term.
It recognizes the importance of competition and strengthening global linkages and value chains.
But incentives to select sunrise sector will potentially disincentivize competition and innovation, and curb the growth of other sectors
This sector specific approachmight result in policies soon becoming out of sync with dynamic economic developments and with our World Trade Organization (WTO) obligations.
An effective industrial policy cannot be merely a collection of sectoral policies.
Way Forward
It must appreciate its linkages with agriculture, services policies and with trade, competition and sector-specific policies at a broader level.
A systems’ view informed by a whole-of-government approachis needed.
It will treat the economy like a complex human body, composed of many sub-systems, each of which performs a function to enable the entire system to remain healthy and grow.
The Indian economy has suffered from several ill-advised medications in the past, and more recently as well. Such experiments need to be prevented.
It requires different actors and government departments engaged in specific sub-systems to work with each other.
Stakeholders involved in the design of specific policies must interact with each other and optimize the functioning of crucial sub-systems.
A powerful nodal department in the prime minister’s office should be authorized to ensure coherence through coordination with different departments and related stakeholders, and enable swift decision making within predetermined time frames.
A new forward-looking industrial policy for India must have Bharat as its soul.
A long-term view needs to be taken on competition and trade-related issues, and the industrial policy should avoid the temptation of short-term benefits of over-protectionism.
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