The idea of indigenous or Swadeshi is not new and was used for the first time by the leaders of our freedom struggle who issued a clarion call to boycott foreign goods and adopt Swadeshi goods as a way to root out the British Empire from the Indian soil. As the world grapples with COVID Prime Minister Modi has given a call for Swadesi for making India economically independent amidst prevailing geoeconomic uncertainties across-the-board created by the pandemic.
Indigenization is the act of making something within the country with the help of native manufacturers and workers. It is high time we collectively reduce dependency on other countries for our needs. But various factors determine whether it is easy and practical to move towards the Swadeshi model.
It is to be noted that whenever there is a pressure of adopting indigenous products on public, Fast-moving Consumer Goods (FMCG) is the first, or perhaps the only, sector they find wherein it is easier to switch their respective choices as indigenous alternatives are easily available. A day after Prime Minister’s speech, social media was flooded with posts comprising an incomprehensive and erroneous list of foreign and Indian goods. Erroneous in the sense that people, in general, have limited understanding of things around them.
Most people are unaware that Peter England, Louis Philippe, Van Heusen, Havells, Allen Solly, Monte Carlo, Belmonte, Oxemberg, Yardley, Provogue, Da Milano, Luxor, Munich Polo, Flying Machine, La Opala, Spykar, Ray and Dale, Eveready, Franco Leone, Madame are all Indian brands and Indulekha oil, Taj Mahal and Taaza tea, Annapurna salt, Hamam and Lifebuoy soap are all produced by Hindustan Unilever Limited in which Unilever holds 67.25% equity.
Similarly, many of us don’t know that Fiama Di Wills is an Indian brand and Gudang Garam is Indonesian. The point here is that it is not easy for people to understand the nitty-gritty of business around them. For instance, Flipkart, in which Walmart holds 81.3% stake, is an Indian company but registered in Singapore due to obvious reasons. Roughly, 95% of the stakes in the company belong to foreign-based shareholders. Many of us don’t know that Glucon-D was recently sold to Ahmedabad based Zydus Cadila by a US-based company, Kraft Heinz, since both the names are alien to us.
It seems contradictory on the part of the government that favours a liberal FDI but talks about indigenization now and then. The fact is that we are in a state of complex interdependence, a term coined by Robert Keohane and Joseph Nye, that the idea of complete indigenization seems highly difficult, if not impossible. We are living in the time when Jio Router is Made in China and Redmi Note 8 is Made in India.
Despite being an ardent advocate of indigenization, I strongly believe that the situation will remain more or less the same, no matter how hard we try to adopt indigenous goods in the FMCG sector. The reason is that India is heavily dependent on other countries when it comes to consumer electronics be it smartphones, laptops, computer accessories, AC, refrigerators, washing machines, TVs, printers, speakers, headphones, and so on.
Indian smartphone brands like Karbonn, iBall, and Lava are struggling very hard to stay in the market and compete with their Chinese counterparts. India simply doesn’t have an adequate consumer electronics manufacturing environment. We are struggling with outdated chip technology, unavailability of a semiconductor fabrication plant, microprocessor units, displays and panel manufacturers, and most importantly lack of research and development.
Chinese smartphone companies Vivo, Xiaomi, and Oppo have their patents registered while Indian companies are continuing with outdated technologies and are heavily dependent on outsourcing. They buy phones from lesser-known Chinese OEMs and make minor changes in design. The same is the case with laptops and other computer accessories like printers, speakers, etc.
In short, when it comes to consumer electronics, our companies such as Voltas, Onida, Micromax, BPL, Videocon, etc lag behind products of China, USA, South Korea, Japan, and Taiwan. The same reason can be applied to our defence production where indigenization remains a dream.
There are two ways the Swadeshi model can work. Either Indian products become competitive in the market or there is a change in consumer behaviour as a response to the call made by the Prime Minister. However, it is unrealistic to expect a sudden change in the choices of consumers.
For this to happen, values of quality and affordability must be overpowered by the idea of Swadeshi accompanied by inherent nationalism, which is highly unlikely to happen since consumer behaviour doesn’t change so easily and abruptly.
People accede to the appeal of their leader only to the extent their comfort zone allows.
Apart from the affordability and quality, another factor that shapes choices of consumers is the branding or marketing of a product. We need to introspect how Patanjali, Himalaya, Hamdard, and Dabur made ‘herbal’ their ISP and captured markets worldwide.
Old monk is especially known for its unique product design, cheap price, and superior taste which made it one of the most popular dark rums in the world. Similarly, Amrut whiskey is considered as one of the best single malts.
We also need to see how FabIndia became a common name in global markets. Its success story tells us how local is made global. But it is uncommon and hard to see such examples in India. As of now, a total of 361 products have been assigned GI Tag in India including Channapatna toys of Karnataka, Mysore sandal soaps, sandalwood oil, Kangra Tea, Santiniketan leather goods, Nirmal furniture of Telangana, Nashik valley wine, etc. These local products can become global if sincere efforts are taken by the authorities concerned. But these things don’t happen overnight.
It doesn’t require extensive research to suggest that indigenization is usually beneficial for the economy. Globalization can’t be ignored since it is the harsh reality of today but it is indigenization which will eventually ameliorate our socio-economic profile. As I said earlier, it is not wrong to choose quality and affordability over the vague idea of Swadeshi in the globalization-led era.
However, it is not impossible also to choose indigenous products over foreign-made goods when the qualities of both don’t differ much, for instance, using Wildcraft over American Tourister and Puma, Milton over Tupperware, Good Night over Mortein and Eveready or Surya over Philips.
In the meantime, companies need to address quality inconsistency issues while moving ahead with market and product expansion. The government has to play its role by reducing control and excessive bureaucratization, adequate spending on R&D, branding of products and provide a favourable business environment in the country.