Self-reliance: No, India’s swadeshi wheel has not come full circle

Modi’s recent reinterpretation of what it implies is helpful—both to thrive in a world girdled by links across borders and in the specific context of US tariffs skewing trade and slowing global growth.

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A policy obsession with self-reliance might seem to be at odds with the reality of  our gains from globalized growth. Trade has notched up GDP shares in the 45-50% range, even as we make and export millions of mobile phones that use imported parts, count as a big exporter of software services and host thousands of Global Capability Centres that employ local talent and do research for foreign businesses. Yet, as a rhetorical device that harks back to a campaign against colonial rule that inspired Indians to be self-reliant, it has its uses. 

India’s share of manufacturing in gross value added remains stubbornly below 14%. If we  literally try to go for indigenous supply chains, that share would only shrink. Hence, Modi’s nuance is welcome. 

Speaking at the opening of an export-focused factory for electric vehicles set up by Maruti Suzuki, a subsidiary of Suzuki Motor Corp, he said: “It doesn’t matter whose money is invested—dollars, pounds, black or white. What matters is that the sweat of my countrymen has gone into production. The money may be someone else’s, but the sweat is ours. The production carries the fragrance of my motherland, the soil of Bharat." 

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This rids today’s self-reliance of any taint of autarky. Clearly, it is not a throwback to our closed  economy, as it seeks foreign investment for job generation; if there’s any chain of value addition that delivers a good or service globally, we want a slice of it. 

Such an outlook can help local producers wedge themselves into transnational supply chains—especially if aided by lower import duties—while a push for fully home-made stuff would have made it harder to make export headway.

Modi’s pragmatism echoes that of the Chinese leader Deng Xiaoping, who said that the colour of the cat did not matter so long as it caught the mice, a dictum that drove China’s rise. Entrepreneurs, of course, would take the black-or-white binary at face value only at the risk of law enforcers knocking at their doors. Figuratively, a colour-blind red carpet for investors suggests we are open for business even with hostile neighbours; here, security caveats must apply. Even so, in general, the Prime Minister has affirmed India’s openness.

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Modi’s definition of swadeshi is not just apt economics in today’s context, but also savvy geopolitics. While calling for a boycott of US goods for shutting out our exports with a steep 50% tariff may be impolitic, urging us to buy Indian products targets nobody. Since such goods cover anything with local value addition, the signal sent overseas should nudge global investors eyeing our market to generate jobs here. 

So, while the spirit of swadeshi has been invoked in the face of US tariff aggression, our policy has not come full circle. It isn’t an inward turn. Nor should it lead to one.