Skip to main content

Experts regret: India's participation in global value chain 'stagnated' since 2008

By Arjun Kumar 

A #WebPolicyTalk on Global Value Chain (GVC) and participation in it of the Indian economy, organized under the series of ‘The State of Foreign Trade- #Talking Trade and by the Centre for Finance and Economics, Impact and Policy Research Institute (IMPRI), New Delhi, saw Prof Takahiro Sato sought to highlight the role of the Indian manufacturing industries and their place it GVC, even as seeking to contrast it with the economies of China and ASEAN countries.
The chair of the session, Mukul Asher, former professor, Lee Kuan Yew School of Public Policy, National University of Singapore, opened the floor, speaking of how the economy is changing from being liberal into a more fragmented form of economy and understanding the role of GVC during these changing times is absolutely necessary.
Takahiro Sato, who is professor, Research Institute for Economics and Business Administration (RIEB), Kobe University, Japan, gave a presentation in order to highlight how important the role of GVC is in the economic development of developing countries.
The firms that have enhanced themselves to be a part of GVC should take advantage of equipping themselves with the latest technologies and management practices to increase productivity, said, citing the examples of Toyota, Nike and TCS to discuss the relevance of GVC as a concept before highlighting the role of India in this specific context.
Elaborating on the flow of events in the global value chains, he took the example of the assembly of the Boeing 787 and showed that various levels are outsourced to different countries. Referring to his study, he highlighted how his findings were reached using data of both import and export activities of the country, specifically focusing on pure backward participation and two-sided participation.

India’s participation in GVC

He described how, in general, India’s GVC is low in comparison to the global standards but has relatively higher GVC in the area of mining, petroleum, chemical, and non-metal industries. He pointed out that from 1990 to the global recession of 2008, the degree of India’s participation in the GVC’s had been increasing. Since the global recession, GVC participation has stagnated, except that of metallic industries.
He emphasized how the existing studies in India specifically regarding this topic have maintained a bias for IT and pharmaceutical studies and there is a gap in the literature regarding the domestic value chain. Sectors such as oil refining still don’t have adequate literature to address it.
Prof Dev Nathan, economist, research director, GenDev Centre for Research and Innovation, Gurgaon, explained why the need for specialization was important. Increasing competency, sub-contracting and outsourcing is what will add value to GVC, which should be undertaken by India.
He stated that some of the international GVCs have a better approach than the domestic value chain, pointing towards the garment industry research, which was conducted by him on how the traders often find it difficult to navigate around getting reimbursements of goods and services tax (GST) from the government.
He said that the knowledge base of the different stages of the value chain is often controlled and kept away, especially through the utilization of intellectual property laws, thus making branding and marketing a more difficult stage to achieve than the manufacturing stage. The buyers’ and sellers’ comparative profit was also discussed by him in detail.

Domestic market and institutions

Amita Batra, professor, Centre for South Asian Studies, School of International Studies, Jawaharlal Nehru University (JNU), New Delhi, highlighted the role of the domestic value chain and how comparing the domestic and the international spheres value chains are distinctively different. She spoke about the capacity of doing smaller tasks and the performance of those specific skills is leading to enhancement within the domestic market.
She questioned the idea of how the performance by different countries entails the notion that different economies and institutions in place in terms of policy function differently, highlighting how the ASEAN countries have remained pro-active but not China, calling for a nuanced analysis of the countries.
She pointed out that the garment industry has adequate literature as it was the integrating factor for India to merge itself within the global economy. She wondered if India has increased its involvement in the manufacturing sector and if the wage increase marks with itself some degree of increment in levels of competency and skills, which should be introspected upon. She spoke about how important inter-trade agreements are and interregional cooperation is absolutely necessary for the benefit of the growth of the Indian economy.
Concluding, Dr Nalin Bharati, associate professor, Humanities and Social Sciences, Indian Institute of Technology (IIT), Patna, highlighted how important it is that India’s potential is fostered with an adequate measure for the country to thrive.
In terms of production, where the low cost of production can be cut by being not simply on the receiving end of providing services but the outsourcing country should also become an important knowledge hub by owning more intellectual property and upskilling of its people which will enhance the economy along with the betterment of the manufacturing sector.
---
*Director, IMPRI. Acknowledgment: Srimoyee Biswas, research intern at IMPRI

Comments

TRENDING

'Flawed' argument: Gandhi had minimal role, naval mutinies alone led to Independence

Counterview Desk Reacting to a Counterview  story , "Rewiring history? Bose, not Gandhi, was real Father of Nation: British PM Attlee 'cited'" (January 26, 2016), an avid reader has forwarded  reaction  in the form of a  link , which carries the article "Did Atlee say Gandhi had minimal role in Independence? #FactCheck", published in the site satyagrahis.in. The satyagraha.in article seeks to debunk the view, reported in the Counterview story, taken by retired army officer GD Bakshi in his book, “Bose: An Indian Samurai”, which claims that Gandhiji had a minimal role to play in India's freedom struggle, and that it was Netaji who played the crucial role. We reproduce the satyagraha.in article here. Text: Nowadays it is said by many MK Gandhi critics that Clement Atlee made a statement in which he said Gandhi has ‘minimal’ role in India's independence and gave credit to naval mutinies and with this statement, they concluded the whole freedom struggle.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah*   The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual. 

Don't agree on domestic subsidies, ensure food security at WTO meet: Farmer leaders

Counterview Desk  The Indian Coordination Committee of Farmers Movements (ICCFM), a top network of farmers’ organizations in India, in a letter to Piyush Goyal, Minister of Commerce and Industry, has asked him to “safeguard food security and sovereignty, even as ensuring peasants' rights" at the 13th Ministerial Conference of the World Trade Organization (WTO MC 13), to take place from 26 to 29 February 2024 in Abu Dhabi.

Students, lawyers, professors detained in Delhi for demonstrating in support of farmers

By Our Representative  About 25 protestors, belonging to the civil rights network, Campaign Against State Repression (CASR), a coalition of over 40 organisations, were detained at Jantar Mantar for holding a demonstration in support of the farmers' stir on Friday. Those detained included students, lawyers and professors, including Prof Nandita Narain and Prof N Sachin. 

Sharp 61-85% fall in Tech startup funding in India's top 'business-friendly' States

By Rajiv Shah Funding in Tech startups in top business-friendly Indian states has witnessed a major fall, a data intelligence platform for private market research has said in a series of reports it has released this month. Analysing Tech startup data of Telangana, Maharashtra, Delhi NCR, Gujarat, Tamil Nadu, Karnataka and Kerala, Tracxn Technologies Ltd , the Bengaluru-based research firm, finds that except for Kerala, funding witnessed a fall of anywhere between 61% and 85%.

Solar energy funding dips 9% in 2023; 2024 'kicks off' with US$1 billion investment

By Lakshmitha Raj*  Solar energy tech companies have already secured slightly over US$1 billion in funding in 2024 (till Feb 7, 2024) after total funding into Solar Energy companies in India fell 9% to US$1.55B in 2023 from US$1.7B in 2022. A total of 39 $100M+ rounds have been closed till date, with Delhi leading the city-wise funding, followed by Gurugram and Mumbai.

Maize, bajra, jute, banana cultivation banned off West Bengal border: Plea to NHRC

Counterview Desk  West Bengal-based human rights defender Kirity Roy, who is secretary, Banglar Manabadhikar Suraksha Manch, and is national convenor of the Programme Against Custodial Torture & Impunity, in a representation to the chairman, National Human Rights Commission, second within few days, has bought to light one more case of trespassing and destruction of a fertile banana plantation by BSF personnel along the Indo-Bangladesh border, stating, despite a written complaint to the police has taken "no initiative".

India second best place to invest, next to UAE, yet there is 'lacks support' for IT services

By Sreevas Sahasranamam, Aileen Ionescu-Somers*  The United Arab Emirates (UAE) is the best place in the world to start a new business, according to the latest annual Global Entrepreneurship Monitor (GEM) survey. The Arab nation is number one for the third year in a row thanks to a big push by the government into cutting-edge technology in its efforts to diversify away from oil.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Mahanadi delta: Aggressive construction in flood plains, reduced fish stock, pollution

By Sudhansu R Das  Frequent natural calamities, unemployment, low farmers’ income, increase in crime rate and lack of quality human resources to strike a balance between growth and environment etc. continue to haunt the state. The state should delve into the root causes of poverty, unemployment and natural calamities.