Raghuram Rajan, Rahul Gandhi think we are incapable…: Jaishankar makes a case for manufacturing

External affairs minister S Jaishankar said there has been a considerable shift in India’s thinking on manufacturing, which is contrary to the Raghuram Rajan, Rahul Gandhi’s view that “we are incapable of it and we shouldn’t be doing it”.

The minister was speaking at an Economic Times event. Former RBI governor Raghuram Rajan had questioned India’s push towards high-profile projects like chip manufacturing instead of doing the work to fix the education system. 

Rajan has been stressing that India need not focus on low-cost manufacturing, as China did, instead look at alternatives such as expansion of services.

Jaishankar, however, had a different view.  “We believe strongly we are capable of manufacturing and it is necessary to manufacture because without manufacturing you won’t get technology, you won’t be able to develop your technology. However tough it is, however hard it is, we have to get into the manufacturing game more seriously.”

The minister said though the initial years will be difficult, considering established players in the game, but once India ups its level, it will open access to markets. The minister cited scope in India’s defence sector with the new intent. 

“Once you become a defence manufacturer I would say stands to reason you will become a defense exporter. Everybody else exports defence products and services, why should you be holier than the rest of them and bind yourself down.”

“This the kind of thinking you were missing earlier”. 

Rajan believes India is not attracting enough manufacturing through the China Plus One (a strategy with which companies have looked to build manufacturing units outside of China). Mexico and Vietnam are attracting lots of manufacturing.

India need “not go the China way” by focusing on low-cost manufacturing. “Let us look at our competitive advantage. Let us not blindly say this is the only way to go. There are alternatives”.