National Security Adviser (NSA) Ajit Doval has reportedly asked policy think tank NITI Aayog to prepare a list of goods and services that are likely to be in demand in international markets once the covid-19 pandemic subsides. There is a global sentiment among major foreign corporations to move out of China. The falling oil prices are unlikely to rise considerably because of changed approach and life style post COVID. The entire demand architecture is likely to change Many industries world over are going cheap. The new types of business will emerge that will encourage efficient operations from home. Having successfully learnt to operate from home, the demand for commercial office space is going to change. More routine procurements will shift online, cutting foot falls in malls. Embraer, a relatively successful aircraft manufacturer has hit an all time low on the stock markets, and is looking for strategic partners. The big question is will India be able to enter the vacating space. It is time to strategize and prepare for the aggressive moves.
Replace China As Manufacturing Hub
China has been long accused of stealing foreign designs, reverse engineering, and infringing intellectual property rights (IPR). This has helped China quickly accelerate developing products, and selling them much cheaper in the very markets they had infringed designs from. Most large companies and advanced nations want to move out manufacturing. Over the years India has proved high quality large scale manufacturing in automobiles, mobile phones, petrochemicals, textiles health care products, and has become the go to place for pharmaceuticals. With good skilled manpower, India has great potential. India is also respected around the world for fair practices and a just legal framework. All India has to do is to quickly improve the ease of doing business and cut the bureaucratic chain. The second is to cash in on this anti-China sentiment through effective diplomacy. Low-value items and services could have high demand in the initial post COVID years. Government will have to earmark funds for low interest loans, and support such moves. It is time to look for “low hanging fruits” and cherry pick. Such a move would also raise India’s global stature.
Global Acquisitions or Global Investments
Most major global economies are declining. Most COVID years are going to see major downturns, albeit to some extent even in India. However with India having a large local market and partially insulated on this count, the recovery will be much faster. Unlike many other advanced countries India’s Debt-to-GDP ratio is at around 65-70 percent. Compare this with over 105% for USA, 238% for Japan, 85% UK and 98% for France. Most Western economies are growing at below 2 percent. As per IMF India is expected to grow at 1.9% in FY21, recover to 7.4% path in 2021-22. India has to have a two-pronged approach. First is to acquire technology or high brand companies in Europe which are available cheap and will bring strategic technologies. The second is to attract investments in major Indian corporations to bring in funds and technology to support “Make-in-India“. Many defence majors like Lockheed, Boeing and Airbus could be good contenders. It is time to make airliners in India, certainly midsized jets.
Post Oil Collapse
Over the years the oil production has begun to exceed the demand by a large margin. The International Energy agency (IEA) now sees global oil demand at 99.9 million barrels a day in 2020, down around 90,000 barrels a day from 2019 due government-implemented lockdowns. And the demand is down to a level last seen in 1995. Global capital expenditure by exploration and production companies in 2020 is forecast to drop by about 32% versus 2019 to $335 billion, the lowest level for 13 years. Most countries strategic storage capacities are full. Refineries have unsold stocks and stopped intakes. The petroleum producing countries, have huge annual budgets and for the first time many countries are going into the red. Also with large number of electric vehicles the oil consumptions will start declining further in due course of time. The golden days of oil are coming to end. As a net importer of oil, India will have to re-strategize and take advantage of the dynamics.
Indian Middle East Expatriates
According to an Ministry of External Affairs (MEA) report, there are 28 million NRIs and PIOs residing outside India. As per the United Nations Department of Economic and Social affairs, India remains the largest country of origin of international migrants with a 17.5 million-strong Diaspora across the world. The Middle East dominates with nearly 4 million each in Saudi Arabia and UAE, Another nearly 800,000 each in Kuwait, Qatar, and Oman. 170,000 in Bahrain. There are many more Indians elsewhere, but under current circumstances of dropping oil markets and post COVID era, Middle East is important. These expats bring in close to $ 80 billion every year in remittances. That is a huge amount. India’s oil imported bill in 1019-20 was $112 billion. It is likely drop to below $100 billion this year. Oil import still remains higher than the remittances. As some Middle east economies start slowing down, some Indian labour will surely has to return. The expatriate numbers will keep going down every year. These numbers of skilled people would have to be absorbed and alternative jobs evolved.
Post COVID Counter Terror Operations
Despite Lockdown the number of terrorist incidents have been on the rise. Out of 60 terrorists killed so far this year, 46% (28) were in April. All belonged to Pakistan based terrorist organisations. The last time the Jammu and Kashmir police, army and the Central Reserve Police Force (CRPF) eliminated so many terrorists in a month was in May 2019 (28). There has been no let up due Covid-19, in fact they have intensified, because terrorists tried to take advantage of India’s national lockdown. Pakistan has also resorted to continuous ceasefire violation to cover infiltrations. As per reports, Pakistan has violated the ceasefire around 1,400 times this year. This number was 3,168 in 2019 and 1,629 in 2018. Defence minister Rajnath Singh last week asked India’s top military commanders to ensure the country’s adversary is not allowed to exploit the Covid-19 situation. Clearly India has to prepare for more terror incidents as US forces withdraw from Afghanistan and Taliban become freer for forays elsewhere.
The originator of the COVID, China has already started recovering. It has also started muscle flexing in the South China Sea through coercive acts designed to put pressure on Taiwan. China is also trying to reap dividend by supplying, often sub-standard, medical kit and expertise to nations in dire need during the pandemic. The Afghan governments appeal to Pakistan backed Taliban to lay down arms for the Islamic holy month of Ramzan, has been rejected by them. Externally funded and supported attempts continue to be made to weaken the India’s synergetic fabric even during COVID by creating divide through fake news. China can also be extend further support to debt-ridden Pakistan and renegotiate some debt. Pakistan’s dependence on China will likely increase. It is clear that post COVID strategic competition between China and USA will intensify. With declining western markets China will also like to woo India to benefit from its huge growing consumer market. India would have to tread carefully and intelligently. Meanwhile India must remain vigilant. It must continue to grow its military capability and strength. These are going to be make or break times. India is sitting at a vantage point, all set to launch off to higher positions in the comity of nations, and it must not let itself falter and fall.