Modi urges small businesses, states to back swadeshi movement

Prime Minister Narendra Modi on Sunday appealed to states and micro, small, and medium enterprises (MSMEs) to play a key role in boosting the domestic manufacturing sector with globally acclaimed quality products that will fuel India’s pursuit of prosperity on the back of a swadeshi movement.

In a televised address to the nation, Modi also said the middle class, the 250 million people who have come out of poverty in the last 11 years—a neo-middle class—as well as the poor will benefit from the goods and services tax (GST) rate reduction taking effect on Monday on a host of products and services.

People will find it easier to realize their dreams of buying aspirational goods, building houses, and travelling on account of the dual benefit of GST rate reduction and the tax relief of income up to ₹12 lakh offered earlier this year, the Prime Minister said.

The main opposition Congress party accused the prime minister of taking "sole ownership" of the amendments made to the GST regime, and said the current reforms were inadequate, with no resolution to the states' demand for an extension of compensation for another five years, PTI reported.

It slammed the reforms as "applying band-aid after inflicting deep wounds" and said the government should apologise to the public for its GST on essential items. Senior Congress leader Jairam Ramesh said Modi addressed the nation to "claim sole ownership of the amendments made to the GST regime by the GST Council, a constitutional body. “The Indian National Congress has long argued that the Goods and Services Tax has been a ‘Growth Suppressing Tax’”, Ramesh said, according to the PTI report.

The Prime Minister also said that citizens will benefit by ₹2.5 trillion as a result of the GST rate reduction and the income tax relief given.

Modi also sought to make the use of locally made goods a matter of pride for every citizen and business, as it would help make the country prosperous.

Experts said the Prime Minister’s address spells out the strategic focus on production and consumption within the economy. “Going forward, India will be more domestically oriented in terms of consumption and production. That is crucial for the Vikasit Bharat (developed India) strategy because other countries have become unpredictable and the whole world is de-globalizing,” said D.K. Srivastava, chief policy adviser, EY India.

Srivastava explained that India’s strategy of Atmanirbharta, or self-reliance, refers to domestic production and swadeshi, which refers to consumption of domestically produced items, seeks to reduce our dependence on other countries for raw materials, intermediates, and finished goods.

Economic strategy

The Prime Minister said the GST reforms that are effective from Monday will accelerate India’s growth story.

Modi’s emphasis on the swadeshi movement and the tax relief on consumption and income highlights that the government’s economic strategy now centres around stimulating household consumption, the biggest driver of India’s gross domestic product (GDP).

The Modi administration is betting on boosting domestic demand for goods and services, as it will encourage the private sector to invest in capacity expansion and add more jobs at a time when external trade is fraught with uncertainty on account of the trade war triggered by the US.

The government has been spending on infrastructure development to attract private investments. It has also lowered the corporate tax rate earlier to facilitate private participation.

Modi said this year’s festive season will be one of GST savings for everyone, including the poor, the middle class, the neo-middle class, farmers, women, shopkeepers, traders, and labourers, who will benefit from the tax rate reduction that he promised in his Independence Day speech and announced by the GST Council on 3 September.

The Prime Minister said the GST reforms, which reduce the number of slabs from four to two by dropping 12% and 28% tax slabs, and simplify procedures, will accelerate India’s growth story.

“This will make doing business easier, attract investments, and make every state an equal partner in development.”

“Reform is a continuous process. When times change, the needs of the country, too, change,” Modi said, explaining that the next-generation reforms are being implemented keeping in mind the current requirements and the nation’s aspirations.

While highlighting that self-reliance and the swadeshi movement can energize India’s pursuit of prosperity, he highlighted the role the movement played in India’s struggle for independence from the British.

Modi said achieving the goal of a developed India requires unwavering commitment to the path of self-reliance, adding that MSMEs and cottage industries have a major responsibility in making India self-reliant.

“Whatever meets the needs of the people and can be manufactured within the country must be produced domestically,” Modi appealed to the industry.

States' participation

The Prime Minister also urged state governments to accelerate manufacturing activities in their states. “Knowingly or unknowingly, in our daily lives, a lot of foreign items have come in. We don’t know if the comb in our pockets is foreign or locally produced. We need liberation from this dependence. Now buy made-in-India products in which the labour of our youth, the sweat of our boys and girls, went into. Every household has to be the symbol of swadeshi. Every shop has to be adorned with swadeshi,” the Prime Minister said, while advocating pride in buying and selling locally made products.

This, he said, will speed up India’s prosperity. “My appeal to states is to actively support the Aatmanirbhar Bharat and Swadeshi campaigns by boosting manufacturing in their regions with full energy and enthusiasm, and by creating a conducive environment for investment. When the Centre and states work together, the dream of a self-reliant India will become a reality. When every state becomes developed, India will become developed,” Modi said.

He reminded small businesses that they were the major pillar of India’s economy in the past and appealed to them to ensure that their products are the best in the world. “What we make in India has to cross all quality parameters in the world. India should be recognized for its product quality. We have to work towards this end,” the Prime Minister said.