Strong manufacturing is of strategic interest

If you are looking at the Economic Survey for clues to the Budget, you need not look beyond the cover showing how trade may be the dominant theme. Within that the annual economic report card makes no bones about the need to push manufacturing, going beyond the usual policy prescription to call it a strategic imperative.“Manufacturing competitiveness and exports are important for maintaining long-term currency stability and strength. Moreover, when the security of supply of essential and infrastructure goods is no longer assured, manufacturing takes on a far greater strategic dimension,” says the 687-page document.The policy trajectory was not limited to swadeshi but underlined the need for a “calibrated shift” from import substitution to scale, competitiveness and innovation, all with a view to be part of the global value chain. “Rather than seeking complete self-reliance in every segment, India needs to build strategic resilience through diversification and creating depth of capabilities,” signalling a change in tenor.The survey cautions against high protection in sectors, such as steel, aluminium and textile fibre, arguing that costs rise for export-oriented businesses. While taking note of the strong growth in services, especially IT, the report flags that there can be no substitute for manufacturing exports.“Services have done much of the heavy lifting, creditable and macro-stabilising, but not a substitute for the goods-based export ecosystems that ultimately underpin durable external and currency stability… ”