Relevance: GS-3: Indian Economy and issues relating to Planning, Mobilisation of Resources, Growth, Development, and Employment.

Key Phrases: Competitiveness Legislation, World Economic Forum, Improving India’s Competitiveness for Inclusive Economic Growth, Cuts International, Institute for Competitiveness, and Institute for Studies in Industrial Development, US Competes Act, Global Competitiveness Index, World Competitiveness Ranking, World Digital Competitiveness Ranking.

Context:

• India has been on a steady path of reforms for its economy to achieve better competitiveness.
• Economic reforms include digital growth, trade policy reforms, and a mix of inward and outward-looking measures.
• The agenda is to alleviate poverty and create better jobs.
• To raise its competitiveness one of the pillars is the need for a ‘whole of government’ approach, within the Centre, and with and among states.
• For this, it is time for India to consider the law and an institution that can persuade all organizations to pursue competitiveness.

Where the cue can be taken from?

• India can achieve policy convergence of both inward and outward-looking policies through overarching legislation with a supervisory body.
• For such a statute, India can take a cue from the US, specifically, the US Competes Act.
  • An Umbrella legislation that covers all US policies, is aimed at bolstering its global economic leadership.

Pillars for Improving and Sustaining India’s Competitiveness:

• A white paper on ‘Improving India’s Competitiveness for Inclusive Economic Growth, authored jointly by Cuts International, Institute for Competitiveness, and Institute for Studies in Industrial Development, discusses some of the pillars for improving and sustaining India’s competitiveness.
• Robust Institutional Structure: It is essential for achieving business competitiveness, capacity building, and supply chain resilience. It is also a prerequisite for negotiating free trade agreements (FTAs), which are crucial for our economy’s growth.
• Semiconductor Industry: There are parallel strategic interests in India’s policies and the US Act. Semiconductors have taken center stage as key inputs for a range of new technologies.
  • Experts have hypothesized that oil has been replaced by semiconductors (and digitization) in shaping geo-economics and geo-politics.
  • With supply chain disruptions triggered by covid, export controls by China, and the Russia-Ukraine conflict, both countries realise that a semiconductor manufacturing base is imperative.
  • In India, the Centre announced a ₹76,000 crore package for semiconductors by way of its Production Linked Iincentive (PLI) scheme. The US provides American manufacturers massive federal subsidies (of $50.2 billion) to incentivize domestic investment.
• Information and Communication Technology (ICT): India’s Department of Telecom (DoT) has constituted six task forces on 6G technology.
  • The Ministry of External Affairs, through Nest, its new emerging and strategic technologies division, promotes national interests and ensures India’s active participation in international forums on technology governance.
• Proper Co-ordination: A need to ensure better inter-ministerial coordination at the central level and inter-departmental coordination at state levels, with proper monitoring and evaluation of policy implementation strategies, would be helpful.
  • The issue to be tackled is an inherent lack of cohesion in our single-perspective approach toward competitiveness.
  • For example, the Ministry of Commerce and Industry has two departments.
    • One for commerce is entrusted with foreign trade policy, multilateral and bilateral trade relations, etc.
    • While another is for the promotion of industry and internal trade functions in the realm of domestic activity and overall industrial policy.
• Resilience in Manufacturing Capacity: Atmanirbhar Bharat and Make in India are aimed at domestic supply chains and heavy investment in manufacturing hubs.
• Strengthen Supply Chain: To strengthen its global forward and backward linkages, the country could leverage a supply chain resilience initiative with Australia and Japan, and also multiply its collaborative efforts with others in the Indo-Pacific region, covering ASEAN countries in particular.
• Strengthening of Trade Linkages and our Industrial Base: These include convergence that will limit inverted duty structures.
  • Action is also needed on non-tariff factors:
    • incentivize innovation,
    • strengthen the intellectual property regime,
    • reduce logistical costs and
    • ease the running of a business.
  • India must also leverage advanced technologies such as 6G, the Internet of Things, and blockchain. This will help anchor our position in FTA negotiations.
  • Exports of goods and services depend on domestic linkages and capacity. So, the proposed legislation can act as a unifying factor for overall economic gains at all levels.

• National Competitiveness Commission: A National Manufacturing Competitiveness Council was once set up, but could not make any impact.
  • However, a National Competitiveness Commission under a new law would provide a robust forum for policy dialogue to energize and sustain the growth of Indian manufacturing industries; empowered adequately, it would acquire the strategic and legal heft needed to ensure proper policy implementation.
• Skilled Human Resource: Enhancing national competitiveness through proper skilling of human resources isrequired. The New Education Policy can help in a manner to train the youth incognitive and socio-emotional skills and not just technical skills.

Conclusion:

• One must acknowledge that India is not a pioneer in any of these sectors. India’s priorities are competitiveness enhancement, self-reliance, and exports-led growth, apart from ensuring administrative reforms that act as enablers.
• Hence, India’s challenges and policies differ from those of the US in many areas, be it small-unit export promotion, regulatory hurdle removal, making businesses easier to run, or attracting investments.
• Yet, the pillars of competitiveness must envelop all policies. Emulating the US on legislative action, therefore, could be a good place to start.
• The idea of competitiveness-focused legislation needs to be floated and acted upon. It would enable India to carve out a position for itself on the global stage.

Source: Live-Mint

Mains Question:

Q. How can competitiveness legislation be a game-changer for the Indian Economy to achieve better competitiveness?

Q. What are the challenges to improvingthe competitiveness of the Indian economy? What should be the pillars for improving and sustaining India’s competitiveness?