Industrial economy of the Subcontinent in perspective

Make in India is failing woefully to roar. Pakistan's professional economy is practically stagnant. And Bangladesh's export-oriented readymade garment (RMG), which dominates industrial economy, has been showing sign of stress. Despite some recent growth history, commercial economy of the Subcontinent has didn't grow as a significant global industrial force. However in 1750, present India, Bangladesh and Pakistan combinedly had a share of 25 % of global professional output, which came right down to 2.0 % in 1900. At the moment, this contribution is still insignificant-with little over 3.0 % share of global manufacturing outputs. Being blessed with huge labour force, large domestic market, availability of natural resources, and reasonably good way to obtain science and engineering graduates, why has the Subcontinent been failing woefully to get back its past glory? Despite getting the question about quality of education, a number of the science and engineering graduates of India, Bangladesh and Pakistan have been doing perfectly in advanced countries. Some of them are even at the helm of globally well-known technology firms. Underlying the depressing picture of industrial economy of the Subcontinent, what's the role of policy? Will there be a weakness in strategic thinking in these countries' development scheme?

Till 1947, the British rule kept the role of the Subcontinent as raw material supplier to feed the commercial economy of Europe and buyers of their finished products. Along with tax differential, they also followed harsh measures like chopping the thumbs of Muslin weavers of Dhaka to disincentivise the neighborhood industrial activities. Basically, the role of the Indians was to are farmers and miners to create recycleables for the British industry to process made outputs. To facilitate it, railway network was established in India, and factories were established in the United Kingdom. Upon getting preferential usage of raw materials supplied by India, the British industrial economy kept flourishing. To handle the labour shortage, British industry also focused on labour saving production machinery. With the proceeds of raw materials, Indians also became customers of British industry. Because of this, through the colonial period, the Subcontinent didn't get the chance to advance in technology and improve production techniques.   

In 1947, the Subcontinent was split into two different countries, that was followed by another split in 1971. After independence, India followed the policy of import substitution. Policy offered protection and incentives to replicate imported professional products. But this policy didn't provide incentives to keep redesigning and improving them. Alternatively, Indian scientists pursued basic research with the hope to fuel professional economy through scientific discoveries. But policy didn't bridge the gap between your progress of scientific research and the necessity of industrial innovations. Therefore, Indian industry kept failing woefully to maintain pace with the global trend. While organizations of the Western world and Japan remained busy in advancing their technology supporting the improvement of products and processes to produce, and innovating new ones, Indian companies kept making the same products. This journey eventually finished up as the failure of developing globally competitive professional economy, which compelled India to lessen protection and invite the entry of global organizations to India. Through this journey, although India acquired the ability to replicate, it failed to achieve the ability of technology advancement, redesigning and innovating for top quality at reduced cost.

Bangladesh and Pakistan too followed the policy of import substitution, to a lesser extent though. Bangladesh also followed the policy of manufacturing of jute products, that was disrupted by the emergence of substitution. Policy of import substitution through import of capital machinery and design of professional products showed certain growth of professional economy in these countries. Globalisation and technology progression also brought some export-oriented service and manufacturing jobs in these countries. But their policies didn't provide incentives to ideas and imagination to boost production method, update product design and innovate services. Because of this, their progress after independence had not been as fruitful since it should have been.

At the dawn of the 21st century, labour and raw matarial-based value addition of these countries to the global value chain is highly under stress. Similarly, globally, increased automation is reducing labour content in practically all commercial products, and on the other, automation can be increasing the product quality and reducing wastage, consequently cost. Moreover, the emergence of new technology core is posing disruptive threat to labour-based value addition using critical industries. For instance, electric vehicle requiring not even half the labour compared to gasoline vehicle is posing threat to the jobs of India's 37 million automobile workers. Similarly, Bangladesh presently requires less than one-third labour force than was required in 1980s to produce the same volume of RMGs. The recent success of high-tech device assembling through imported capital machinery and components can be under serious threat to China's re-innovation strategy.  To help make the situation worse, increasing automation is also posing serious threat for back-shoring. As result, whatever progress the Indian's Subcontinent made since 1947 in building professional economy appears to be under the risk of premature deindustrialisation.  

In this given situation, what ought to be the strategy of these countries to handle the unfolding threat of premature deindustrialisation, also to leverage new opportunities? The apparent answer is that they should provide incentive for talents and creative imagination to pursue innovation. But the competence needed for managing the journey of taking suggestions to market is apparently highly unclear to policy makers, investors, entrepreneurs and managers in these countries. During the last 70 years, the culture of earning money by following risk-free path is just about the habit in these countries. High tax differential for import substitution has encouraged local organizations to acquire the capability of assembling high-tech products. But this labour-based value addition isn't sufficient enough to be competitive in the global market. Focus should be on encouraging risk taking and efficient management for adding increased value through ideas. To leverage this approach, the challenge is to create a motivation structure that encourages competition to profit from talents and creative ideas for offering better quality goods and services at less expensive through local value addition out of intellectual assets. As of this age of globalisation, rapid technology transformation and the temptation of leapfrogging, it's time to concentrate on a clear vision, strategy, and policy in developing idea-based professional economy, as opposed one reliant on conventional labour, raw material, and imported capital machinery.