Writing is like T20 batting. If you block, you might as well retire to the pavilion! -- Pete Langman
Expat in Germany

Wednesday, June 4, 2014

The P.M, the BMW and the Message

"I am Narendra Modi. I request all my fellow Indians to buy products manufactured only by Indian Companies for the next ninety days. Please kindly keep rotating the rupee in the country and contribute to its strengthening." This is a message being circulated in social networking applications like Facebook and Whatsapp. The prime minister has not given any such official statement. He has not held any press meet nor did he post a tweet. It is quite ironical that, when the entire country and even the world is interested to see what plans are in store for foreign investment by the cabinet of the man who now moves about in a BMW 7 series, here we are, telling among ourselves that the prime minister has urged the country to use only 'Indian products.'

Do not buy BMW, Audi, Ford cars. Buy only TATA, Maruti Suzuki and Mahindra cars. This is a nice call. We can and should encourage Indian companies to rise. Government policies can be made to help indigenous power. However, we have to understand few things. Almost all the known automobile companies have manufacturing plants in India. Tamil Nadu is a hub of the automobile industry. It is well known that Chennai is called the 'Detroit of Asia.' India exports a lot of automobiles too. Hyundai and Ford companies are two of the largest automobile manufacturers in India. Many of these manufactured automobiles are exported. The Hyundai i10 is manufactured only in its Chennai manufacturing plant, is exported globally and is considered a highly successful car! Most of the automobile companies, well, except BMW, have a Research & Development wing in India. According to Business Line, India is set to become the top R&D hub of the world in coming years. What if we do not buy and encourage the products of these companies?

The government of India allows Foreign Direct Investment (FDI) in many sectors except fields like real estate, cigarettes, atomic energy, betting (legal in many countries) and chit funding. Apart from increasing competition and subsequently leading to an increase in the quality of products and decrease in the cost, foreign investments will clear a lot of budget deficits. Personally, I feel that FDI is very much important in our defense sector which is limping with second hand equipment. The only major complaint is job production. This can be taken care of, by policies adopted by the government. Indian companies can be encouraged by the government in its own way. There might be as many drawbacks due to FDI as many benefits there are.

But what the message being circulated says is that the rupee should be kept in India itself so that its value rises. But if we keep our cards to ourselves, can we achieve that? It all depends on how much we import and export. The more the exports are, the more is trade surplus and higher goes the value of the rupee. If the imports are higher than the exports as is the case in India, more is the account deficit and lower the rupee value. So, we need to improve on exports. How do we do that? Solution: more manufacturing plants in India. If we do not encourage any foreign company into India, how can we expect a surge in exports and in the rupee value? And what about job production?

Apart from all these, we have to consider one more thing. I do not remember if any Indian automobile company (TATA excluded) has done this but I know that Ford India invests a lot in Corporate Social Responsibility. From educating poor children to relief funds, they do a lot of social work in India. Cocacola has come up with the concept of 'Open Happiness', Live-in denims launched eco-friendly jeans made out of waste plastic bottles. We should be strong and accept the competition from foreign companies and make sure that Indian brands are equally good. That doesn't mean that ideas are copied from the foreign market into the local one and low quality replicas are sold at cheap prices. No, Indian companies too should invest in Research & Development a lot and with the potential India has, we can definitely keep up in the race!

It is not only very immature to use the name of the newly elected prime minister to forward such messages but also, it does no good to the country as it is being propagated.