As Indian exports face pressure from high tariffs and growing global competition, there’s a noticeable shift toward supporting local products. This is embodied in the rising demand for Indian-made goods and innovations like Mappls, a navigation app developed locally.
During his recent Diwali address, Prime Minister Narendra Modi highlighted a surge in preference for local products. The Confederation of All India Traders reported that this year’s Diwali season saw sales reach an impressive ₹6.05 trillion, with 87% of consumers opting for Indian-made goods. This shows a turning tide towards swadeshi, or local, manufacturing.
Launched in 2014, the Make in India movement aimed to boost both local and foreign investments in manufacturing. Yet, over the past decade, the share of manufacturing in India’s overall economic output has barely budged, from 17.2% to 17.5%. This stagnation invites questions about why the movement hasn’t achieved its goals.
To understand the current landscape, we can look back at the Industrial Revolution, which transformed economies worldwide. Starting in the 1750s in Great Britain, this period marked a significant shift from agrarian economies to industrial powerhouses. The rapid technological developments changed where and how goods were produced, fostered urbanization, and gave rise to new social classes.
By the mid-1800s, Britain had emerged as a global leader, often referred to as the “workshop of the world.” This transformation was not just technological; it was deeply tied to colonial exploitation. The British Empire extracted resources from colonies, amplifying its industrial strength at great cost to local economies.
In India, this was termed the “drain of wealth.” Prominent figures like Dadabhai Naoroji highlighted how India’s surplus was transferred to Britain, supporting its industrialization while crippling local industries. Economists Prabhat Patnaik and Utsa Patnaik emphasize the dual nature of this drain—internally through taxes and externally via exports. Indian producers were effectively paying for the privilege to export their goods, with profits diverted back to Britain.
This led to a significant decline of India’s handicrafts and cottage industries. The influx of cheap British goods decimated local markets, making it difficult for artisans to compete. Scholars like Amiya Kumar Bagchi have documented this deindustrialization as a direct result of colonial policies that favored British manufacturers.
The impact was felt not just economically but socially. Historian Tirthankar Roy points out that in the 1800s, 15-20% of India’s workforce was involved in traditional industries like spinning and weaving. However, many artisans lost their livelihoods and were forced into uncertain agricultural jobs as these industries fell apart.
Interestingly, some historians argue that the decline of traditional industries was also influenced by evolving market dynamics, where less efficient producers were unable to survive. A notable trend is the decline in women’s employment in these industries, reportedly dropping from 40% in 1881 to just 13% in 1971. This shift reflects broader socio-economic changes as industrialization progressed.
Today, India still grapples with the legacy of its colonial past. The manufacturing sector still exhibits a “missing middle”—a lack of medium-sized enterprises leading to a concentration of large firms and many small, low-productivity operations. To revitalize this sector, experts suggest focusing on fostering medium enterprises, enhancing technology, and strengthening industry linkages.
In summary, while the push for local goods under initiatives like Make in India shows promise, historical context highlights the challenges India faces in transforming its manufacturing landscape. Moving forward, addressing these systemic issues is crucial for sustainable development.
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