View: These five steps can power an industrial revival post COVID-19

By KT Rama Rao

The global coronavirus pandemic is leaving its scars quite visibly on the industrial manufacturing sector. Production has come to a halt due to lockdown, and even when relaxations have been given, the supply chain is not yet in place to support full-fledged manufacturing.

At the same time consumption is also severely dampened, closing opportunities for cash flows and revenues. Within the manufacturing sector MSMEs are the hardest hit, with many of them getting close to bankruptcy.


While battles against the coronavirus pandemic continue unabated, leaders and strategists are also sensitive towards many opportunities that this pandemic presents. At a global level, there is a very clear indication that companies that are doing business in China are now looking to consider other attractive investment destinations. Potentially, India can take the lead and present itself as the most compelling destination to receive overseas investments compared to its immediate competitors.

Given the fact that Make in India campaign is on since past five years, and in the backdrop of India reducing corporate tax rates significantly, India’s investment attractiveness should have stood out by itself. Yet, worryingly but at the same time not too surprisingly, initial trends show that India is getting a very negligible piece of this action, and the bulk of the shift goes to Vietnam, Indonesia and Malaysia. It is clear that certain fundamentals that are required to instil confidence in investors are missing.

The following imperatives need to be attended on topmost priority by the nation as a whole to revive the fortunes of the manufacturing sector, and also to position India as a serious value proposition for attracting new investments.

Carry out essential reforms: Soon after launching the Make in India campaign, the Union government facilitated many business process reforms, collectively termed ‘ease of doing business’ (EoDB). This exercise has indeed brought in lots of important reforms in the way permissions and approvals are granted to industries. The far-reaching and business friendly reforms carried out by Telangana called TS-iPASS have been recognised as amongst the best in the country. There are similar best practices in EoDB from other states too.

It is time that the most result oriented and useful EoDB practices from across the country be mandated in all the states uniformly so as to increase the overall attractiveness of the country as a whole. Time is also ripe to introduce long pending reforms in labour laws, bankruptcy laws etc.

Another critical reform that is extremely important at this point in time is guaranteeing consistency in state policies. During the WEF Summit in January, most of the questions directed at Indian delegates related to this concern about governments in India not honouring prior commitments, sometimes even making a 180° shift in the policy, literally overnight.

Create industrial infrastructure as a mission over next year: The biggest USP of China has been its large scale industrial parks with the highest quality of infrastructure. India will always be compared unfavourably with China if it cannot come closer to matching this.

The Centre should work with states to develop large self-contained industrial parks and industrial corridors. The states can contribute land while infrastructure funding can be provided by the Centre. China also scores in its ability to mobilise trained workforce in large numbers for these industrial parks. We need world class ITIs in every state.

Improve competitiveness of exports: It is well-recognised that India’s global footprints in the form of exports are far below its potential. Export markets offer a good opportunity for domestic manufacturing to tide over the present crisis in a short period of time. To pursue this objective, one needs to carefully identify the main reasons which have pulled down India’s exports in all these years, and offer targeted solutions to each.

This also requires an aggressive scouting of markets, and creating a deal better than what competing nations offer. To enhance the quality of products that are going to be exported, soft loans for procuring best quality machinery are needed, along with training of staff to maintain international standards in production. An attractive package of incentives on exports is another must.

BailoutforSMEs: The most obvious prescriptions are direct financial assistance for the SMEs in the worst affected sectors, easy and very soft credit for others, along with deferment of statutory dues. Another easy way of helping SMEs is to place priority government orders. The present circumstances are such that some SMEs are definitely going to go belly up, leading to job losses. Providing unemployment allowance and re-employment assistance for those laid off is to be seen as the duty of the government, and the Centre and states need to work together for this.

Empowered Strategy Group: Methods to revive the manufacturing sector as well as attracting new investments to the country require bold and pragmatic vision as well as a detailed implementation plan.

This requires a national consensus as well as working of the best minds and talent available. An Empowered Strategy Group comprising central government representatives, few state governments, industry leaders, bankers, policy experts can be tasked to work on this urgent imperative.

(The writer is Telangana Minister for Industries, IT & Urban Development)