It is a fact that good infrastructure is a prerequisite for economic prosperity. The richest countries in the world also have the strongest physical infrastructure – conversely, no country without excellent physical infrastructure has ever been rich!
Infrastructure is so inextricably linked to a nation’s wealth that US President Kennedy once observed, “America’s roads are not good because America is rich, but America is rich because America’s roads are good. He wanted people to know that it was the roads that made America rich, not the other way around – lest some come to the opposite conclusion. In an unprecedented time, his words hold an important lesson for India.
The harsh lessons of the pandemic
Since the pandemic, the world has changed irrevocably. Digital transformations that would have taken a decade or more were completed in weeks or months.
Increasingly, globalization is in retreat as countries realize how fragile global supply chains can wreak havoc on national economies. Leaders take a hard look at globalization. Many, including those in India, have concluded that self-reliance is the key to national prosperity.
For India, self-reliance does not mean giving up the benefits of globalization. On the contrary, India wanting to be self-sufficient enables Indian industry to excel and become world leaders. And being the best would not be a first for India. A nearly 1,600-year-old iron pillar standing near Qutab Minar bears witness to this.. The workmanship of the pillar was unmatched at a time when India was completely atmanirbhar. Therefore, for India, self-sufficiency is the default setting.
Far from becoming independent
Yet, as things stand, India is far from becoming self-sufficient. Whether it’s electronics, defense or a dozen other industries, India is – for now – almost entirely dependent on global supply chains and foreign countries.
Notably, the country is unnecessarily dependent on foreign players for building materials.
Infrastructure is one of the most important sectors in India. Over the next few decades – on India’s path to becoming a $5 trillion-plus economy – infrastructure will need to be built at an unprecedented rate across the country. President Kennedy’s words will indeed be heard! Yet it would be unfair to build a solid infrastructure by importing vital building materials from competing and, in some cases, antagonistic powers.
Along with a massive infrastructure push, India needs to buy more building materials from Indian manufacturers. Failure to do so would forever leave India dependent on powerful rivals and permanently hamper its great power ambitions. Conversely, buying domestically would strengthen indigenous manufacturers and industries.
Growth driven by GOI’s infrastructure in India
The Indian government is committed to fostering infrastructure-led growth. In 2022-2023, it has planned massive investments of 7.5 lakh crores in seven engines of growth – roads, railways, airports, ports, public transport, waterways and logistics. The multiplier effect of GOI investments will be 4 times the amount invested.
Of the 7.5 lakh crore, a very large sum will have to be spent on building materials. Buying building materials from local manufacturers will create immense prosperity in India. Thousands of new jobs will be created in the construction and support sectors. Conversely, overseas sourcing will almost certainly hamper Indian industry. However, despite tensions along the Indo-China border, trade between India and China has increased since the Galwan clashes – and not in India’s favour. While China’s exports to India increased by 34.5% to $57.51 billion between January and June 2022, Indian exports to China fell by 35.3% to $9.57 billion. dollars over the same period.. As a result, trade between India and China is heavily skewed in favor of the latter. The imbalance in this trade prevents India from becoming atmanirbhar and Indian industry from realizing its true potential.
Why India must wean itself off dependence on Chinese building materials
China lost the Opium Wars, but nearly a century later turned the tide by making Western consumers and businesses addicted to cheap Chinese-made products. As it did in the West, China has appealed to businesses and consumers around the world. Manufacturing and exporting cheap goods to foreign markets is part of a planned strategy. In the United States, where China invested profits from goods sold in the United States – in US Treasuries – which in turn kept the dollar undervalued against the renminbi – the strategy served its purpose. ..
A not entirely different strategy was implemented against India.
Consider that the size of the Indian building materials industry is $225 billion and this year it is expected to grow by 8% to 10%. India imports 14.63% of construction materials from China, 6.3% from the United States and 5.56% from Saudi Arabia.
India’s construction industry is unnecessarily dependent on China for building materials. This dependence is all the more disconcerting as there are high quality manufacturers in India.
Why self-sufficiency in building materials is the need of the hour
To achieve its global ambition of becoming an economic juggernaut, India will need to build a solid infrastructure across the length and breadth of the country for decades to come. The amount of building materials that will be used in such a construction will indeed be massive. Without sourcing construction materials from domestic industry, a significant portion of these materials will have to be purchased from abroad. In dollars, purchases will amount to tens of billions per year.
On the other hand, if India sources construction materials domestically – from world-class manufacturers of which there are many – the country can build all the necessary infrastructure and simultaneously directly benefit the Indian economy. Since the inputs used in such projects will be sourced domestically, there will be beneficial trickle-down and trickle-down effects throughout the Indian economy. Also, with the prospect of vast domestic sales, other key Indian industries could be galvanized to become more competitive and self-sufficient.
The opinions expressed above are those of the author.
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