Introduction

1. Often, the word "swadeshi" seems to conjure up limited visions suggesting dogmatic protectionism. This is probably triggered by collective conditioning of the mind to the term "swadeshi" than its rationale. The critics predict economic gloom and are eager to find contradictions - not between what actually is the rationale and the evolving policy but between their understanding and perceptions of policy. Simultaneously, there are several protagonists of "swadeshi" hoping to benefit personally from what they believe would be a revival of dirigisme irrespective of economic consequences. The recent debates in the media point to this - there are frequent speculations on the possible effect on consumers, flow of FDI and international relations on the one hand and on the other, appeals to stop imports of commodities and grains irrespective of the overall adverse impact.

2. In these debates there is a perceptible tendency to force-fit concepts and policies into predetermined stereo-types. Thoughtless clichés and wise-cracks from both the critics and some protagonists as well, only added to this stereo-typing. It may be pertinent to quote from the last para of Jean Dreze and Amartya Sen`s book on `India - Economic Development and Social Opportunity: "Policy debates in India have to be taken away from the narrow concentration on issues of liberalisation. The nostalgia of the old debates 'Are you pro or anti market?', or ' Are you in favour or against State activities?' seems to have an odd 'hold' on all sides , so that we concentrate only on some issues and ignore many - often more important- ones."

3. This short paper may not fit into any particular traditional discipline but intends to raise and reiterate a few important issues surrounding "swadeshi". This, obviously is not a research product but a personal exploration to find the strategy content in this philosophy/approach. Using some principles of strategic management, a directional matrix is also presented to the policy makers for initiating actions.

What It Could Be:

4. The term "swadeshi" should be accepted as a composite idea , a conception, representing the desire for securing, advancing and maintaining a national identity that is unique and respected through out the world. It should be a meta-policy or a bundle of policies and not just a single strand from the broad socio-cultural-economic approach. It should be seen as a dynamic process and not a mere snap-shot. Obviously, the past is integral to the present and both provide the leverage for attaining future ideals of `swadeshi'. If nations do not pursue their own national identity dynamically, how else can they be distinguishable in the context of increasing globalisation - some invited and much intrusive? How do we avert an identity crisis when physical borders are whittling down in the face of exploding "soft transactions" represented by exponentially growing flow of information and services ? Or, in the context of selective information and media storming which now requires, as Aldous Huxley put it, "Habeas Mentum" or freedom of the mind ?

5. National identity is firmly rooted in the sovereignty of our nation as well as our cultural distinctiveness. Every great nation has actively propagated its own identity both within the country as also outside - the Japanese, the Americans, the European, the Singaporeans, just to mention a few. It is indeed a process of creating " brand equity ", both within as well as outside the country. (The torch-bearer of free enterprise, the United States, exhorts its citizens, to buy American and be American, even if several goods are being made by the Japanese , Koreans and the Europeans in USA. And, they enthuse citizens in the sub-saharan countries also to sing "Born in the USA" with great gusto. The Japanese, have done this even more subtly and effectively, as their structure of preferences seem to make them indifferent to higher prices of Japanese goods - they buy their own rice which is priced thrice that of the American, placed along-side in the stores ).

6. Many have tried to caricature 'Swadeshi' as being blatantly protectionist and towing the interest of select and inefficient industrial groups. In the process, the critics sought to picturise the consumer as the ultimate victim . It is, indeed, a moot point that economic autarky, slow internal liberalisation and consequently, low domestic competition has left the consumer in a sad plight through the decades . It is naïve to expect a retrograde step at this juncture . `Swadeshi', in fact, can imply a strategic response to this plight. It should obviously believe in enhancing the choices for the consumer while enabling the domestic competition to quickly reach global requirements. The strategic approach, of internal liberalisation and creating domestic competition to make Indian products and services world class, implies that the eventual beneficiary is, indeed, the society at large and the individual consumer, in particular.

7. It is expected that "swadeshi" will address very soon, the kinds of oddities that have worked against the domestic industry and facilitate their competence through healthy competition. For instance, am importer gets a duty draw-back while the domestic supplier of the same product has to carry the burden of sales tax levies ; some defence related goods are imported on duty free basis and the domestic industry cannot compete in these; some defence related items are reserved for the PSUs but the Government imports the equipment from foreign private parties ; some items are reserved for the small- scale sector only but some of these can be imported, thus denying our country the benefits of economies of scale and scope.

Swadeshi is Not Self-Isolation but Meaningful Integration:

8. Conscious pursuit of national identity through "swadeshi" does not mean self-imposed isolation or marginalisation. It does not mean raising of barriers with the world as an end itself. Nor does it imply that acceptance of certain types of strategic alliances and refusal of others as opting out of the global trade regime. It obviously refers to a process of strategic integration based on common values, principles and larger & long-term interests of our people while maintaining distinction. It is the balancing art of dynamically advancing economic interests while creating and maintaining ones identity and self-respect - the intelligent way of averting permanent self-effacement. This is, indeed, the manner in which individual regions or States fashion themselves in large countries - while they maintain their individual identity, they are an integral part of the national cause and movement. It is the manner in which several `trading blocs' have come into being and function. While the initial reaction to trading blocs such as ASEAN, NAFTA, EU and the many bilateral agreements were seen as countering free trade, there is another perspective that these complement global integration and do not necessarily counter it. This should support the structured response by our country in the process of integrating with the world.

9. Promotion of national identity does not mean tribe-like protectionism but generating a structure of desired preferences among consumers - both domestic and international. This would eventually lead to a better trade-equilibrium and greater integration which is just and mutually respected. We all realise that the global tide cannot be stopped, even if painful and inequitable for some - it is indeed an irreversible process. However, relating oneself to this tide is important. A wrong move will drown us. On the other hand, as a respected American Economist pointed out in the context of India, this big wave can be seen as an opportunity for those who have mastered the art of using the current in ones own favour and skiing effortlessly for miles at a stretch.

Globalisation And Swadeshi:

10. That nations have to participate in trade is not new learning for our country . It is, in fact, effective trade, particularly in textiles, that created wily actions from the West to de-industralise our nation for a long period. It is now common knowledge that there never was and will never be a truly free trade in the world - even allowing for GATT and its successor, the WTOs active interventions. It is always " Managed Trade" - the more powerful being in a position to structure and manage the patterns, flows and also the ground rules for the same. The evidence for this is not far to seek as hard data generated by multi-lateral organisations is unambiguous. It is acknowledged by the Human Development Reports that if all barriers to flow of goods, services and importantly, people are removed there will hardly be any need for aid to the developing countries. They can thrive on their comparative advantages - the advantages of cheaper physical and human resources. However, the dynamics of the trade regime impose selective restrictions which developing countries have to address with strategic responses.

11.The world, is undoubtedly an unequal one and the inequalities are only growing . The trade flows, the control over trade in commodity/primary products , the aid flows, the differences between the poorest nations and the richest etc., seem to pursue a logic that is countering just human development in the world. If nations are to subject themselves thoughtlessly to these powerful winds, they will sacrifice not only their economic interest but also forgo the opportunity to create and sustain a national identity . This national identity is an intangible force that binds our people together, makes them distinctive and generates long term global advantages - we carry the implicit trust of future generations in this.

12.Integrating with the world is an essential part of creating this national identity - it is only the short sighted who would propagate that creating this national identity is equivalent to self isolation or mindless protectionism. Though there is no way of measuring, it is reasonable to conclude that China has done this better and succeeded in attracting large FDI from its ethnic groups world-wide while India has failed miserably. India had a share in the global trade which was four times the current at the time of Independence . Our Governments have pursued autarky in planning, foreign investments , and the like for long, and in effect, presided over the decline of India`s national identity and its global presence . The least that is required now is to regain our position.

Competitive Advantage and Swadeshi:

13. The principle of "swadeshi" obviously believes in achieving this goal through a strategically cogent approach. Such an approach implies a transformational process which leverages on internal capabilities to exploit external opportunities - mastering the art of riding the powerful waves. In some segments of industry and services, the internal capabilities are such that they are already globally competitive - due to reasons of cost, resource base or technology (which includes management technology). In others, there is need to improve the internal ambiance and individual strength before inviting global competition. Theories on Competitive Advantage of Nations emphasise the need for internal liberalisation and domestic competition as an essential feature of attaining global competitiveness.

14. A level playing field (by now a pedestrian term) between the malnourished and atrophied firms with the globally experienced should not be seen as a simple matter of applying common rules and conditions. The sufficiency to the proposition arises when it is "Just", as well. A common set of rules creates a level playing field all right, but an unjust play between the handicapped and the champions. It is again common knowledge that several developed countries have been the beneficiaries of discriminations over the centuries that they are now comfortably positioned to seek level playing field without necessarily reciprocating it in some sectors.

15. To integrate our industries and the firms in them, to global competition, requires an approach of corporate development . This corporate development process involves exposure to high degree of internal competition, supply of goods and services to specialised segments in the economy which are close to the global standards and the like. This process is a creative one of managing the in flow of requisite technology, tacit knowledge and real time development of capabilities at the micro level. While the process of corporate development itself is in the domain of individual firms and industry groups , the role of governance is to develop, sequence, prioritise and monitor the flows through appropriate signals. This calibrated approach is probably appropriate to those industries such as steel, automobiles, banking and insurance.

16. There are also industries which have already been exposed to global competition and which have the capabilities of leading our country`s conception of 'swadeshi' . These are possibly in the software, gems & jewellery, garment, and some pharmaceuticals, construction, technical consultancy, auto-ancilliary segments.

17. `Swadeshi' evidently does not limit to gate-keeping of the in-flows alone. In-ward flows of Foreign Direct Investment (FDI), Joint Ventures (JVs) etc., is culturally/emotionally sensitive and hence draws undue attention. Swadeshi involves export-optimism - an aggressive posture to avail of the several opportunities and garner market share. It is, in this sense, that Strategy (which primarily refers to positioning one-self in the future) is an integral part of Swadeshi. Aggressive exports alone will help India reach its ideal of creating a national identity - it is obviously in relation to other nations that a distinct identity can be achieved, not in a void. Apart from the export attractiveness to the West of some goods, there is great potential in the middle income and low income countries for the 'not-so-world-standard' industry segments. Possibly some FMCG (Fast Moving Consumer Goods), acccounting/management services, electronics and light engineering. The CIS countries and the SAARC region are of high potential and under exploited. A market penetration strategy is required to establish our presence and to capture the market share from Western competitors.

18. Some companies both in the public and private sectors, have registered their presence in other countries well. Swadeshi would obviously imply encouraging joint ventures abroad - we should see a spate of them as the benefits are multiple. It will be heartening to see Indian corporates establishing companies that will give them the opportunities to export to India while availing of the resource-based advantages in other countries. This will be gaining some measure of control over suppliers . Joint Ventures Abroad give not only the promise of good profits but exposure to international management and organisational learning of immense potential.

For the Policy Maker - Directional Matrices:

19. To stimulate further thinking on these lines among the policy makers and management experts, I propose two Matrices - one for the inward bound flows (imports, FDI, strategic alliances, Joint Ventures etc.) and the other for the outward bound (exports, strategic alliances, Joint Ventures Abroad etc.). These may be used for each industry / service segment separately.

INWARD BOUND
(Imports, FDI, Strategic Alliances, JV`s etc.)

x - axis ……..IMPORTANCE SCORE May be measured by looking at 1. Synergy benefits ( like technology, international-standard skill; third country venture/export possibilities); 2. Fiscal concerns ( like in Infrastructure projects); 3. WTO/International expectations; 4. Immediacy.

y-axis………. COMPETENCE SCORE : This may be derived from 1.Ability of the top Indian players in the chosen sector vis-à-vis global companies in Critical Success Factors for the industry. (If they match the score should be the highest); 2. Ability to internalise learning through the inflow, build on them and gain competitive advantages in real-time.

OUTWARD BOUND
(Exports, Strategic Alliances, JVA`s)

X-axis………EXPORT MARKET ATTRACTIVENESS SCORE. This may be derived on analysing by each country the 1. Demand-Supply-Price dynamics; 2. Stickiness of Current Exporters; 3. Risk Factors and 4. Synergy Possibilities.

Y-Axis………COMPETENCE SCORE This may be derived from an analysis of 1. Competence of the top players in each product/service in matching the current standards of the importing country; 2. Bench-marking with current players on Critical Success Factors.

COST OF STRIKES AND LOCK-OUTS
INDIA RANKS SECOND HIGHEST IN WORLD

India has taken to second place only after Peru, in terms of industrial disruptions due to strikes and lock-outs. A study titled ' Global Report on Industrial Disruptions in Manufacturing Sector' by the Hyderabad based Yaga Consulting has come out with the findings that India is possibly foregoing 2% of manufacturing share in GDP due to such disruptions every year. Amongst the 33 countries study and ranked, India is high in terms of man days lost and the duration of disruptions which have a combined high impact on the economy. Amongst those which have least industrial disruptions and economic impact are Egypt, Hong Kong, Switzerland, Malaysia and Japan. The report argues that industrial relations climate will impeach on competitiveness of firms and the economy. The study covers the period 1986-1995 and analyses the disruptions in the manufacturing sector from different angles. Analysing the economic impact the report shows that the average gross output foregone in India could be $ 1236 million; and the estimated value added foregone about $ 3220 million.

The report estimates on actual wages foregone by the workers could be as high as $ 102 million. Analysing the economic impact from different perspectives, the report indicates that those industries or services which have high connectivities with other segments in the economy can have a ripple effect contributed to far higher loss than estimated.

Though the report is related to manufacturing sector, it mentions about the massive impact on the U.S. economy when the employees of UPS (United Parcel Services) went on strike. The loss is estimated at $ 650 million to the company alone without reckoning the ripple effect on other segment in the economy. The recent prolonged postal strike in Sri Lanka is also reported to have caused serious damage to the economy. The beneficiaries in such a situation have been both the unorganised as well as organised private courier and cargo services. Though the shift in business could lessen the impact, the net loss still may not be recoverable. This could be particularly so in the case of a crucial service like the Postal.