In May 2020, Prime Minister, Mr. Narendra Modi launched the Self-reliant India (Atmanirbhar Bharat Abhiyan) mission to promote Indian goods in the global supply chain markets and help the country achieve self-reliance. The mission was announced amid the pandemic when the government allocated funds worth Rs. 20 lakh crore (US$ 268.74 billion), which amounts to ~10% of India’s GDP, as a stimulus package to help recover the economy by promoting incentives for domestic production. It encompasses themes such as ‘Local for Global: Make in India for the World’ and ‘Vocal for Local’.
The key objectives of the ‘Self-reliant India’ (Atmanirbhar Bharat Abhiyan) mission are as follows:
- Develop India into a global supply chain hub.
- Build the government's trust in the private sector capabilities and prospects.
- Establish 'good force multipliers' for Indian manufacturers.
- Enter the global markets to export goods including agriculture, textiles, clothing and jewellery.
- Determine adequacy of each sector (e.g., defence, agriculture, healthcare, infrastructure, etc.), with the help of FY22 budget, to achieve self-reliance.
Need for Self-reliant India (Atmanirbhar Bharat Abhiyan)
The Indian manufacturing sector's share in gross value added (GVA) stood at 15.1% in FY20, over 18.4% in FY11, indicating an underlying inertia, despite the country's high and rising private consumption demand. Moreover, this downturn in the domestic manufacturing sector has resulted in greater reliance on imports to meet the rising demand.
In 2020, a report by Acuite Ratings & Research identified 40 sub-sectors (such as agro-based products, drug formulations, chemicals, automobile components, handicrafts, cosmetics and consumer electronics) that accounted for imports worth ~US$ 33.6 billion from China. According to the report, India’s domestic manufacturing possess capabilities to replace 25% of the total imports (indicating savings of ~0.3% of the GDP) from China without additional investments. It added that in FY22, the country could reduce US$ 8.4 billion worth trade deficit with China, by substituting imports from sectors such as drug formulations, chemicals, automobile components, handicrafts, cosmetics, and consumer electronics.
Benefits of Self-reliant India (Atmanirbhar Bharat Abhiyan)
The Atmanirbhar Bharat Abhiyan 2021 is likely to benefit numerous industries.
In this sector, agriculture, mining and fishing are the three key industries.
This sector comprises industries such as construction, manufacturing, utilities, MSMEs (Micro, Small, and Medium Enterprises) and cottage.
This sector includes key services—from retail, tourism, banking, real estate, media & entertainment, telecommunication to hospitality & leisure and information technology.
This sector consists of education, research & development and public sector industries.
This mission focuses on the following four key factors—Land, Labour, Liquidity and Laws. In line with these factors, the government introduced several initiatives, between 2014 and 2020, to help the country achieve self-reliance.
Government initiatives (between 2014 and 2020) to boost ‘Self-reliant India’ (Atmanirbhar Bharat Abhiyan) mission
Land & Labour
- To empower the country’s vulnerable society, the government launched schemes including Jan Dhan Accounts, Ayushman Bharat Yojana, Micro insurance schemes, DBT (Direct Benefit Transfer)-based reforms, PM Ujjwala Yojana and PM Awas Yojana.
- To empower farmers and enable land cultivation, the government started schemes such as PM Kisan Yojana, PM Fasal Bima Yojana, PM Krishi Sinchai Yojana and established a new Fisheries department.
- To strengthen the business environment, the government launched initiatives such as recapitalisation of public sector banks, PSB (public sector banks) merging, GST reforms, FDI reforms and ease of business reforms.
- To boost investments, the central government implemented numerous policy reforms, (including airport privatisation, reforms in the power sector and cleaning the mining sector) such as listing states based on investment attractiveness, promoting champion sectors such as solar PV and advanced battery manufacturing cells.
The key beneficiaries of this mission include Shramiks (labourers/workers); Kisans (farmers); daily wage earners, who work for the country's growth; ‘middle class’ people who pay income tax to the government and ‘upper class’ people who give the economy strength.
Self-reliant India (Atmanirbhar Bharat Abhiyan): Key Initiatives and Progress
The government announced an Atmanirbhar Bharat Abhiyan package (ANB 1.0) in May 2020 and launched two additional Atmanirbhar Bharat Abhiyan packages in end-2020 (ANB 2.0 and ANB 3.0) to maintain the progress. The overall Atmanirbhar Bharat Abhiyan package, including the RBI initiatives, was estimated at ~27.1 lakh crore (US$ 362.49 billion), or >13% of the GDP.
With the Atmanirbhar Bharat Abhiyan package, the government facilitated structural reforms such as redefinition of MSMEs, commercialisation of the mineral sector, agriculture & labour reforms, privatisation of public sector undertakings, One Nation One Ration Card initiative and production-linked incentive schemes.
Under the Self-reliant India (Atmanirbhar Bharat Abhiyan), the government implemented the following schemes:
- Introduced Production-linked incentive (PLI) scheme: To establish India’s manufacturing global leadership and boost the Atmannirbhar Bharat Abhiyan (self-reliant India) scheme, under the Union Budget 2021-22, the government launched a production-linked incentive scheme (PLI) across 13 sectors, at ~Rs. 1.97 lakh crore (US$ 27.02 billion), for the next five years.
- The allocated budget is an additional fund to Rs. 40,951 crore (US$ 5.45 billion), which was for PLI electronics manufacturing schemes.
- In addition, these PLI schemes have attracted foreign players to invest in India. For example, in February 2021, Amazon announced to establish a manufacturing plant for its electronic devices in India; in March 2021, Apple started assembling iPhone 12 in India.
- Strengthened Healthcare infrastructure: In the Union Budget 2021-22, the government introduced a new central healthcare scheme that will be implemented over the next six years to improve the country's healthcare infrastructure.
- Under Pradhan Mantri Atmanirbhar Swasth Bharat Yojana (PMANSY), the government allocated funds worth Rs. 64,180 crore (US$ 8.80 billion) over six years to strengthen the existing ‘National Health Mission’ and develop capacities of primary, secondary & tertiary care and healthcare systems & institutions to detect and cure new and emerging diseases.
- Strengthened other infrastructure: Under the Union Budget 2021-22, the government pushed for higher capital expenditure to focus on infrastructure upgrades for roads, rail and power delivery. The government aims to improve 8,500 kms of highways by March 2022; this will boost India’s competitiveness by lowering transportation costs and improving the network between production and consumption markets, in both domestic and international.
- Increased focus on women entrepreneurship: In 2015-16, the government, under the Department of Science & Technology’s ‘Science & Technology for Women’ scheme, launched women technology park (WTP) programmes to empower women by training them in skills to set up their own microenterprises and become self-reliant. In the last five years (until March 2021), ~10,000 rural women have benefited from this programme, 28 WTPs have been successfully completed and 12 parks are under progress across the country.
- The Defence Production and Export Promotion Policy 2020 (DPEPP 2020) highlights a framework to achieve a turnover of Rs. 1 lakh 75 thousand crore (US$ 25 billion), including exports of Rs. 35 thousand crore (US$ 5 billion), in the aerospace and defence goods and services by 2025.
- Achieving self-reliance in the defence sector: Under the Atmanirbhar Bharat Abhiyan (self-reliant India) scheme, the government launched policies to promote self-reliance in defence manufacturing. For example, the government increased FDI limit to 74% in defence manufacturing, placed ‘import embargo’ on 101 military items and introduced the Defence Production and Export Promotion Policy 2020.
- As part of the Self-reliant India (Aatm Nirbhar Bharat Abhiyan) mission, the Ministry of Food Processing Industries launched the 'PM Formalisation of Micro Food Processing Enterprises (PMFME)’ scheme to provide financial, technical and business support to upgrade the existing micro food processing enterprises. The government allocated funds worth Rs. 10,000 crore (US$ 1.34 billion) for this scheme, which will be implemented between FY21 and FY25.
The key achievements of the Self-reliant India (Atmanirbhar Bharat Abhiyan) mission are as follows:
- The mission has helped reduce dependence on imports of air conditioners, as between October 2020 and November 2020, India reported 65% reduction in imports of split ACs or air conditioners; this bodes well for the government's ‘Atmanirbhar Bharat Abhiyan’ policy of self-reliance. In October 2020, the Directorate General of Foreign Trade (DGFT) released a regulation restricting imports of air conditioners with refrigerants.
- Within 60 days of the mission’s launch, India’s domestic producers were able to generate an indigenous supply chain of personal protective equipment (PPE) kits, demonstrating the country’s self-sufficiency in PPE kits.
- In January 2020, the country launched the world’s largest vaccination drive with two ‘Made in India’ vaccines—Covaxin and Covishield—and demonstrated its determination to become self-reliant.
- Domestic supplies: As of April 14, 2021, India’s cumulative vaccination coverage crossed 110 million.
- International supplies: As of April 15, 2021, the country exported ~65.5 million indigenous COVID-19 vaccines to >90 countries.
India ranked 63rd out of 190 countries in the World Bank's ‘Ease of Doing Business 2020’ survey, indicating a favourable business environment in the country. The recent government reforms, such as allowing private companies to operate in key industries, introducing agriculture initiatives & labour reforms and enabling commercial coal mining, serve as strong pillars to aid development of India’s economy and present huge opportunities for the country to become self-reliant.
In addition, strong budgetary push for the manufacturing sector, MSMEs, along with supportive PLI reforms, will boost the domestic manufacturing companies and attract foreign companies to invest in the country; thereby, foster India’s path to achieve self-reliance.