As the movement’ Vocal for Local’ got floated, the big and small desi companies in India have successfully exploited to whip up consumer sentiment in their favor in this era of the pandemic. While the pandemic affected the country’s economic growth and tensions along the India-China border arose, Prime Minister Narendra Modi issued a “vocal for local” statement, to which large and small Indian businesses responded by presenting themselves as “truly Indian” and attempting to attract customers. Any slogan used by the leadership, however, must be backed up by government policies and resources. This blog will dive into the subject to comprehend the significance of government actions and their effect on sustaining shared prosperity through global trade while also safeguarding the interests of domestic companies.
Vocal for Local
The program was launched by the Prime Minister of India, to revive local industries that had been neglected during the globalization period, especially after the 1991 globalization, liberalization, and privatization reforms. ‘Local’ describes a product that is used in the community and is produced by our industry, namely small, medium, or cottage. Also, it indicates a decentralized growth model and the use of domestic capital and skills, with India gaining a prominent role in the international market, by encouraging large-scale production of these goods.
The ‘Vocal for Local’ campaign isn’t just for the major brands. The campaign emphasizes India’s yearning for self-sufficiency and independence, which can be identified by enterprises of all sizes, including start-ups. The program fosters a sense of brand ownership in enterprises by instilling affinity with homegrown start-ups. When the COVID-19 pandemic pushed India into new terrain, entrepreneurs were the ones who drove supply. This demonstrates their potential and emphasizes the importance of national backing for such businesses. Rather than replacing foreign items, the purpose of ‘Vocal for Local’ is to promote Indian goods.
To encourage manufacturing in India, the government has recently adopted various policies and launched various schemes, which are discussed below:
- Digital India:
India is currently a net importer of electronic goods, the majority of which are smartphones and gadgets. The majority of imports come from China, so to reduce imports and balance trade, India wanted to increase electronic gadget manufacturing in the country, which would not only help to reduce our reliance on imports but also provide job opportunities for Indian youth. Only the digital economy, according to analysts, has the potential to increase GDP by $1 trillion by 2025. Local manufacturers will have a massive opportunity to tap this market, thanks to indigenous manufacturing and nationalistic sentiments.
Mahatma Gandhi once said, “India lives in its villages.” Digital India will empower a large population of people living in rural India and assist them in communicating with the rest of the world. It will also promote digital literacy among village residents and will aid in the development of high-quality human capital, which will draw foreign investment and promote manufacturing production.
With 915 million cellular subscribers and nearly 259 million broadband users, India has the world’s second-largest mobile industry and third-largest Internet market. Since tele density is only 45 percent in rural India, where more than 65 percent of the population lives, there is still a huge economic opportunity in India. Rural areas are projected to drive future growth in the telecommunications industry in terms of subscriber numbers, as urban areas are saturated with a tele density of more than 160 percent. Small indigenous businesses will play a critical role in attracting customers.
All government records will be digitalized under phase II of the Digital India initiative, with an emphasis on enabling individuals to register companies and firms online, which will aid in the fight against corruption and give India a competitive advantage as our ease of doing business ranking improves and indigenous manufacturing increases.
- Start-up India:
Start-up India is another big government policy initiative aimed at encouraging young people to become entrepreneurs. This move is critical because, even though local products are promoted, customers will not buy them due to a lack of preference and value. To be successful in the market, Indian businesses must innovate to keep their products competitive, which is why the start-up India program is so relevant. Indian businesses will benefit from Fast Tracking and an 80% reduction in patent registration fees under the start-up India Legal Support program.
Analysts have discovered that in India, people from villages and backward areas, despite having relevant skill sets, are unable to start manufacturing due to a lack of information about how to register businesses, and the legal system involved makes it much more difficult for them to do so. The policies enacted under this scheme would fix and overcome this issue.
Starting a business with constructive funding and rewards at multiple levels, India will help improve entrepreneurship and economic growth by ensuring that people with the ability to innovate and, start their own company, are encouraged. Many young minds, who want to start their own company don’t have the financial means to do so. As a result, their innovations, creativity, and skills go untapped, resulting in a loss of income, economic development, and jobs for the nation.
As per the government’s 19-point action plan, the emphasis on research and development will be enhanced to encourage entrepreneurship among the youth, and to that end, many implantation centers with funding and tax exemptions will be developed across the country so that local businesses can innovate more and compete with their global firms.
- To encourage local manufacturing and promote manufacturing and production of goods and services in India, the Centre issued the Public Procurement (Preference to Make in India) Order, 2017 to grow income and employment. All ministries, agencies, and autonomous bodies controlled by the Indian government, as well as government-promoted businesses, are mandated to take measures to encourage indigenous contribution to development programs under the terms of the order. For example, the Ministry of Road Transport is required to build roads using indigenous materials and vehicles.
- The Department of Telecommunications (DoT) has set out guidelines for promoting locally made telecom products and local manufacturers in the department’s procurement of telecom equipment. All government-purchased equipment for use in government offices must contain at least 50% indigenously produced components.
- The government also launched the Production Linked Incentive (PLI) scheme in 2020 to boost India’s manufacturing capabilities and exports. The scheme was created to entice foreign companies to set up manufacturing operations in India. The Scheme of PLI, which was created to minimize India’s dependence on electronic equipment imports, was later expanded to include ten other high-value industries. Companies that sell their goods outside of the country can receive discounts as well as tax exemptions under this arrangement.
Outcomes For Vocal For Local
- Manufacturing has increased, with the demand for local products such as smartphones manufactured in India, Indian cosmetics, and so on. It is one of the best results that the Vocal for local movement can have. Demand for local goods and small business sales would rise, ultimately leading to an increase in manufacturing.
- Increased manufacturing activity would provide financial incentives for local businesses to hire more workers, resulting in more job opportunities for local youth. For example, the establishment of a manufacturing plant by Tata in Durgapur, West Bengal, has resulted in a significant increase in local youth jobs.
- Human resource development: India currently has a large population, especially among the young. The establishment of local industries would aid in human resource growth by providing more job opportunities and raising educational income levels; in addition, income generation skills will become more important, and small local industries will benefit.
- Cultural and social implications: Indigenous culture will gain prominence around the world, as a result of local production and export. For example, Indian textiles and handicrafts have a lot of potentials to compete with their western counterparts, and with large-scale production and a global texture, they can tap into a huge global market. Increased manufacturing activity (as seen in western countries during the industrial revolution) would aid in the war against social evils.
- India is a net importer of products, which means that we are importing more than we are exporting. India’s imports include electronics, heavy machinery, crude oil, and other products, and India has significant trade imbalances with countries like China. To address these, we must increase our exports.
Vocal for Local is a program aimed at increasing domestic manufacturing and usage, for which numerous government policies and plans such as “Make in India, Start-up India, and Digital India” have been created. Companies that manufacture their goods locally were also given tax breaks and other incentives. However, the ultimate direction of the scheme will be determined by people and how they approach it, as there are several obstacles to overcome, such as a shortage of locally produced goods and rivalry among companies, but if successful, it can provide a significant boost to the country’s economy, benefiting both people and businesses. Vocal for local can offer India a chance of becoming a manufacturing powerhouse and can help in maintaining trade with the world.
It can also have some damaging consequences on foreign relations with other nations, but with planning and strategy, the effect can be mitigated and Indian interests can be encouraged. A balanced approach is needed to ensure that Indian interests are not harmed as a result of international events. Another approach will be to place investment limits on foreign firms to protect the interests of local producers. Subsidy caps on Indian companies may also be introduced to encourage competition and allow local companies to innovate more and compete with global firms. In the end, how good it is will be determined by time, citizens, and national governments.
Author(s) Name: Shruti Suman (Hidayatullah National Law University (HNLU), Raipur)