Atmanirbharta of the Welders, by the Welders and for the Welders

While it is commendable to note that India’s Merchandise Exports have crossed $400 billion this year, there is no hiding from the fact that over the last two decades, India’s import figures have also registered a sharp increase. The figures have grown from approximately $50 billion in FY 2001 to USD $ 610 billion in FY 2021-22. India’s top choice of nation to import from has consistently been China during the last decade. While Indian imports from China were valued at around $87.5 billion, Indian exports to China were only $22.9 billion (FY21). The implicit trade deficit has resulted in significant outflow of India’s foreign exchange, which is a matter of concern. While the Government of India has taken several steps to increase self-dependency or “Atma Nirbharta,” including launching policies that provide preference to domestic suppliers, there is a need to further create a supportive ecosystem with infrastructure creation, development of indigenous value chain, and increasing the competitiveness of Indian manufacturers.

The Indian manufacturing sector has faced numerous challenges due to the Covid-19 pandemic. One of these challenges is the huge increase in input costs for manufacturers. Apart from raising prices of domestic goods and reducing profitability for Indian manufacturers, it has also resulted in increased cost for developing infrastructure. The cost of essential items such as steel, cement, bitumen, and diesel have grown in the range of 20 – 30 percent, and at some places, even to the extent of 50-60 percent.

Besides the global impact of Covid 19, supply chain disruption is one of the major reasons why these challenges exist. The input cost for the manufacturing sector needs to be normalised by shifting the value chain in the country and putting up measures to restrict cheap imports. In place of exporting raw materials, India should aim to export finished goods, which will help in employment generation, value creation and also save foreign exchange in the process.

The next major challenge for India’s manufacturers is the heavy dependence on a single source country for imports. For instance, India’s heavy dependence on Chinese imports for raw materials for several sectors is a reason for worry. While vulnerabilities are being addressed for major sectors through sector specific policies, certain strategic sectors still require interventions. Welding is one such sector, which despite its highly strategic application, it is still heavily dependent on imports from China. The sector has major applications in manufacturing and infrastructure industries and has the potential to employ a large number of people in the country. According to a study, India requires more than 12 lakh skilled welding professionals. This number has the potential to further increase as 50 percent of the sector is unorganised in nature. However, 30-40 percent of the domestic welding equipment are being imported by India. Additionally, India contracts highly skilled welders from abroad, while it has the potential to provide these opportunities to welders within the country.

There are many other sectors which face similar challenges. The optimal integration of distributors and dealers with a complete solution model is another supply chain challenge for such sectors. Manufacturers ought to improve their service portfolio and broader their market reach to increase their penetration into both traditional and new end user industries. But attempts for capacity building are threatened by the dumping of cheap imports in the country, which further increases market risk for these manufacturers.

With initiatives such as Atmanirbhar Bharat, India’s endeavour to take steps to identify priority sectors and design necessary interventions to promote local manufacturing and employment, are apparent. By incentivizing R&D initiatives targeted at modernization of the manufacturing sectors, imposing duties against dumping of cheap finished goods, the GoI can create a level playing field for domestic manufacturers. The Government has adopted an approach of duty rationalisation for the Chemical sector, where higher duties have been imposed on articles with sufficient domestic manufacturing capabilities. The move will create domestic demand availability for local manufacturers, thus increasing their confidence to invest in capacity enhancement. Higher incentives will not only upgrade manufacturing capabilities, but also uncover vast employment potential in India. Furthermore, reducing the cost of financing and relaxing tax measures will encourage the industry to focus on upgradation and adoption of newer technologies such as AI.

India is set to develop indigenous capabilities and strengthen the manufacturing sector. While policies and programs have been launched keeping this in mind, effective implementation, and creation of a conducive ecosystem with right infrastructure and supply chain support must become a priority. The focus on implementing targeted measures to push local value addition across the value chain shall give rise to several Semiconductor Chip movements in the country.

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