Anticipating the Unintended #29: Make in India = Not (Make in China)?

This newsletter is really a public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: how do I think about a particular public policy problem/solution?

Welcome to the mid-week edition in which we write essays on a public policy theme. The usual public policy review comes out on weekends.

I can live with the lockdown for some more time. I’m made of sterner stuff. I can watch Uttar Ramayan daily too. But I can’t countenance another op-ed speculating on the post-COVID global order. But I’m sure you, dear reader, in sharp contradistinction, are happy to read another such article. Aren’t you?

Well, I’m happy to oblige.

‘Gated globalisation’

That’s where we are headed if you listen to global trade experts. Globalisation won’t be the giant sprawl that it is today where the strands of global value chains (GVCs) are so widely distributed that companies and countries often don’t have a complete map. Instead, comparative advantage, super specialisation, and near-zero inventory will be titrated with resilience, redundancy and trust to arrive at reset GVCs of the post-COVID world. Globalisation will continue but within a smaller circle of trust. Organisations will reshore their manufacturing capabilities among countries that share common values and adhere to bilateral norms.

China, that was already seeing a mini exodus of manufacturing over the last year because of rising labour costs, a trade war with the US, and its own desire to move up the value chain, will lose more as companies count their lessons from this crisis. China exports about $2.7 trillion of manufactured goods annually. Over the next 3 years, it is possible about a quarter of this ($0.7 trillion) might find new bases. India should set its sight on capturing 20 per cent of this opportunity. That will add between 4-5 per cent to its GDP annually without counting the multiplier effects. This is an unmissable opportunity.

Read the full edition here.