#VocalForLocal is not so local

It all started on 12th May,2020 when PM Modi addressed the nation and as a part of his speech said this” “we know in this time of crisis we have been saved by the local. Local Markets, local manufacturing, local supply chain. Local is not a need but a responsibility.” Subsequently he has spoken about power of local on as many platforms as he could.

Since then there has been a raging debate in India about local companies. The self-appointed spiritual guru of India, Baba Ramdev went to the extent of saying “don’t just avoid global brands, hate the global brands.”

May be the PM’s statement came out from the frustration that India is facing in form of the Covid-19 pandemic, or maybe it was a very carefully crafted statement to give the Indian Industry the boost it needed. In either case it has created huge division within the country. This has led to greater anger against China and brands with Chinese origin, and lesser against any other global brand.

There are two issues at play here, and both have had a role to play in the push for local. First is the economy, and frankly the second is economy too.

Indian economy had slowed down to an almost crawling pace last year, and was showing no signs of an upward growth trend. India had seen GDP growth upwards of 7% from 2002 to 2008. 2008 was the year of the global slowdown and Indian economy had crawled to a halt growing at a miniscule 3%. India hasn’t recovered since 2008 and the demonetization of 2016 reversed the gains India had made since 2010. The pandemic hit the economy when it was really struggling and will push India into degrowth phase. Something that no political system can take as the history may not be kind to them.

The second reason is also economic, or a narrow version of economic structure that exists within the ruling dispensation. The current political party that rules India has in past believed in “Swadeshi” or Local. Swadeshi Janjagran Manch (SJM) was a very influential economic thinktank in early 2000 when BJP was in power and always pushed India First agenda as economic policy. Indian economy belongs to India first and to Multinational companies later has always been the agenda of them, and the same thinking took center stage after the PMs address stating Vocal for Local.

Combine it with the fact that Independent India has had a difficult relationship with trans-national corporations. Over 150 years of British Raj in India has made a whole generation of Indians be vary of the ‘expansionist’ mindset of transnational corporations. There have been many Indian companies, large and small, that have played on this emotion and have built a substantial business for themselves.

It looked like the PMs call for #VocalForLocal couldn’t have been timed better.

The biggest trouble with the local investment and business push is that there are no guidelines. There is no definition of what is local? Will a brand like Apple that assembles its phones in India be called local? Or Suzuki, which is India’s biggest car maker be deemed not local despite extensive investment in India? How will we treat Tata Motors or Mahindra who own brands abroad?

Thus even bigger question: India’s growth has been fueled by the opening the country to global players and inviting Foreign Direct Investment. Just last year India attracted USD 50Bn in FDI, though we can argue that for a USD 3 Trillion economy this FDI is really small and may not make a difference. However, we all know that this comparison is really not a fair comparison as the impact of investment is far greater as it spurs local jobs, local economy and local markets.

All things that PM spoke of in his address.

Everyone knows that it takes FDI to make a country vocal for local, despite the message not being so explicit.

While India does seem to have deep rooted cultural issues with trans-national corporates, India was not always this insular. India was very big exporter of its products, produce and people.

In ancient times India was a big trading partner of civilizations as far away as Greece, Rome, Egypt, Arabs, Japan and Java. To increase its trade, India invested in Kingdoms of Siam and Sumatra. Such was the influence of India that we can still see remains of that time in form of temples and folk tales. From Angkor Wat to Stupas in Japan, we know India had influence that was global. India was called “Sone Ki Chiriya” of the Bird with Golden Feathers owing its riches that came by trading for cotton, utensils, metalcraft, spices and perfumes.

It was the wealth of India that made Christopher Columbus set on for a voyage to discover an alternate route for India. To an extent the continent of America owes its discovery to the riches of India.

All this was achieved by a group of rulers, as India wasn’t a sovereign country with a single ruler. The politics of India of those days was very different from the politics of today.

Such was the importance of India that Chinese traveller Xuanzang visited Kanchipuram during Pallava rule. It’s the Pallavas who built the now famous UNESCO world heritage site of Mamallapuram.

It’s the same venue where PM Modi hosted Chinese President Xi Jingping for summit meeting, and this was a moment that was beyond symbolism.
China today is India’s biggest trading partner. 18 of the 23 unicorns in India have significant investment from China. India’s burgeoning mobile handset market is dominated by brands of Chinese origin. From roads to ports, to automobiles to medicines, there isn’t a segment where the Chinese aren’t the dominant partner. China’s exports to India was to the tune of USD 75Billion and India’s exports to China being mere USD 18 Billion.

In contrast India’s trade with US is more tilted towards India. India imports from US stood at USD 33Bn and exports from India to US was at 54 Billion.

Today, when India talks of #VocalForLocal, the country needs to know that we cannot be an isolated island any more. India’s was a global player at the height of its economic prowess, and today when it wants to improve quality of life of millions of poor, it needs to play a bigger role at global stage.

We should not miss the significance of what Jio is doing around the same time when India went vocal for local.

Jio has become the magnet for FDI in India with Facebook investing USD 5.7 Billion in Jio Platforms. Jio has attracted another USD 1.5 Billion from General Atlantic and Abu Dhabi Invest Authority. At the same time, Amazon is looking at picking up minority stake in Airtel.

The real power of local lies when these companies help the foreign brands leverage the opportunity that India provides, and when the Indian companies start to look at life beyond Indian borders.

Let me comeback to what PM said in his address. “Local Markets, local manufacturing, local supply chain. Local is not a need but a responsibility.”

The message is actually more layered that it has been interpreted by the media.

If there is an opportunity called India, then the opportunity cannot be fulfilled by being insulated. India has to compete with the best in the world. Indian industry needs to build products, processes and services that are best of the best. China transitioned from being cheap to cutting edge by learning from best, and creating uniquely Chinese eco system. Vocal for local cannot mean that India will buy products that aren’t world class. India needs to innovate, invent, file for patents and stand up to be counted. Vocal for local should mean that India can do what China has done and what many more countries are doing.

India is an opportunity that can be leveraged by being local. By being present here, by investing in India, by helping India progress. Let’s do this by being world class

The original was published by World Advertising Research Council (WARC) as a part of their coverage on #VocalForLocal. This is exact reproduction of the piece

 

 

 

Managing Partner and CSO, Bang in the Middle

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