Make in India in the Eighties

The ‘Make in India’ initiative during the Eighties, which resulted in remarkably rapid growth of the Electronics and IT sectors, had a quiet beginning unlike the present one which began as a magnificent high profile media event. It resulted in electronics manufacturing in the country to grow and log eight-fold growth during the period of just six years! The main driver for growth then was the landmark Electronic Policy announced in Parliament by Indira Gandhi on August 26, 1983, that abolished licensing for the consumer and industrial electronic sector. That was the beginning of the end of the license-permit raj. This revolutionary change was later followed by several well-thought-out policy measures ensuring the sustained growth of the electronics sector through the 80s.

The results of scrapping licensing were impressive. From 1983 till 1990, India’s electronic industry output grew at an average annual rate of over 40 per cent! New brands like BPL, Sharp, Videocon, Onida, Uptron, HCL, ET&T, Wipro and others became strong competitors, making over 1.3 million colour television sets, calculators, Personal Computers etc. The SME sector was given a push, with the government assisting hundreds of units under the MTB Scheme by providing for free, proven technology, product design and even full sets of components and parts at low prices, bypassing on the benefits of bulk purchase, a benefit that SMEs always lacked. It was a unique form of cluster development. Participating units were allowed to brand their output with a common ET&T brand, which was promoted centrally through electronic media. The products covered were B&W and colour television sets, personal computers and later, the CDOT Digital Exchanges.  Soon after Rajiv Gandhi lost election in December 1989, I returned to Mumbai. Just a year later came Dr Manmohan Singh’s prescription for economic growth and most of the manufacturers disappeared during the Nineties. The software industry survived since no manufacturing was involved. 

The genesis of the ‘Make in India’ initiative of the Eighties can be traced to a late evening in October, 1982,  in Rajiv Gandhi’s living room at 1, Akbar Road. He was a Member of Parliament and I was his advisor on electronics. That evening I was with Rajiv, bitterly complaining about some policy announcement by the Department of Electronics. Suddenly, Indiraji walked into the room; probably because my protest was too vociferous!

Smiling, Rajiv told her, “Prabhu is complaining about the Department of Electronics.” She asked, “What’s wrong?” After all, she was also holding the Electronics portfolio. I said politely, “Madam, I do not want to say what’s wrong, but if you give me a suitable time, I would like to suggest a few policy reforms  to rapidly advance the growth of electronics and its wider usage”. She smilingly said, “I have time, tell me now” and sat opposite me. I was completely unprepared, but had clarity about the issue.

I said, “We should do away with the policy of industrial licensing of consumer and industrial electronics. The government need not control production volumes through licensing capacities. Why do we need to tell how many television sets Philips can make or how many switchgear components L&T should manufacture? Let the market decide the size.”  She stopped me and pointed out the need to regulate high foreign exchange consumption by this sector. I said, “Madam, currently giving dollars to this industry is increasing our revenue since every US dollar we give, fetches over Rs36 of revenue, while the exchange rate is a mere Rs12. We should, therefore, encourage such use. Besides manufacturing creates new wealth and much needed jobs.” I further added, “Widespread use of mass media like television would help us create an informed society since we have a massive problem of adult illiteracy. We have just witnessed how your decision to allow colour television network has been enthusiastically received by our people.” 

I talked for almost 20 minutes, pointing out that consumer electronic products would also help us in mopping black money and bringing it back into the system. I told her about the global recognition of Indian software skills, especially in UNIX programming. I also spoke about the need to progressively reduce import duties, so that the industry could export without complexities like refund of duties, taxes etc. After I finished, she smiled and said, “Why don’t you write a detailed note? Elaborate the points you made. I think we will consider and make changes.” 

I returned to Mumbai, but did nothing regarding the note. After a reminder from Mr Gopi Arora that the PM was waiting, we put together a comprehensive note. The new policy could not be the part of the budget. Mrs Gandhi introduced the new policy during the next session of Parliament. After the new policy was announced, Manubhai Desai, who brought me and Rajiv together in 1975, was with me all along. He decided to call 50 CEOs of electronic industries in India as well as the media on August 26, 1983, to meet Rajiv Gandhi and to link that policy initiative to Rajiv. Among those who attended was Ratan Tata, the then chief of NELCO. 

We discovered Sam Pitroda when he wrote to Mrs Gandhi in early August, 1981. He had expressed his desire to come to India and help in developing Rural Digital Telephone Exchanges. Rajiv Gandhi sought my comments over it. I found out that he had sold his telecom business in the US at a good price and wanted to contribute his knowledge to India’s telecom sector. I endorsed it readily. For a reason she only knew, Mrs  Gandhi was reluctant to take it further. Finally, it was only during Rajiv’s tenure that we could give Sam his chance to develop rural digital exchanges. Soon CDOT demonstrated direct international calling from a village in UP, using CDOT’s dust tolerant 500 line Rural Digital Exchange. Later Rajiv moved Sam to lead the ‘Technology Mission’, the job he liked because it launched him into prominence in the country.

I believe that the current attention to manufacturing with ‘Make in India’ focus is good. But, besides inviting multinational companies, our focus should have turned to local industries which ‘started up’ a while ago and are in need of help. Industrial policies are best structured with those knowing manufacturing and not the babus. Ask the young entrepreneurs what will help them grow fast and they will tell you what can cure the present despondency and helplessness.

The author, an entrepreneur and former Chairman, Electronics Commission, Government of India, was Advisor (Electronics) to Rajiv Gandhi