NEW DELHI: Swadeshi Jagran Manch (SJM) has traditionally been opposed to foreign direct investment (FDI) into India. However, Ashwani Mahajan, national co-convenor of the organisation, which is an affiliate of the Rashtriya Swayamsevak Sangh (RSS), now makes a distinction between 'good' and 'bad' FDI. Foreign investment in e-commerce, he holds, is bad because it takes away jobs. On the other hand, he welcomes investments from companies moving away from China — such production shifts would create employment, he told Mint. Edited excerpts of the interview:
What does self-reliant India mean to you, Mr Mahajan?
I would link it to the past. In the decades after independence, policy makers said that the public sector would do everything because the private sector was weak.In 1991, they said the model has failed and so we should globalise. The BJP regime in 2014 started with the same tenets of globalisation. All the ills of the past continued, like Chinese imports, lower tariffs, and huge trade deficit.
About four years ago, SJM came out with an anti-China campaign. The government got sensitised and imposed anti-dumping duties, higher tariffs. Every department was instructed to go for standardisation. Using standards, we could stop imports of crackers, plastic goods, even toys to some extent. And the government eventually said they would hike tariffs to protect domestic industry. For the first time, we trusted our people. But our import bill in telecom and electronics were still huge. The trade deficit was causing a huge amount of job losses and in a way, we were exporting jobs and importing goods. The whole scenario needed a re-think.
SJM has always been of the opinion, for that matter RSS too, that we should move more towards decentralisation, small-scale industry, and think about rural industrialisation. Today, there is a realisation that our local production has helped us in need. We should go for more local production. That way, we can create more jobs in our neighbourhoods.
SJM has been rallying against e-commerce multinationals and FDI. But you seem to be okay with manufacturing companies shifting from China…
There is a difference. When you come here with e-commerce, you are killing jobs. When you come to India with production centres and with domestic content requirements, you are generating jobs directly and indirectly. We are not averse to foreign capital — we are okay with foreign companies coming to India, shifting from China because that would help build our ecosystem. We have the experience of the automobile industry, which uses local components and exports. The only downside is that companies take away royalties.
Though we are opposed to FDI in general, this is an opportunity and a sudden one because of coronavirus. Multinationals would be happy to come to India because we are a good destination to invest in terms of corporate income tax, manpower, skills, wages. But there must be three conditions — impose domestic content obligation, an export obligation and third, they must not take away the royalty.
The belief is you can either do import substitution with the carrot of the local market or become an export-oriented economy by being globally competitive. You can’t do both…
This is a wrong argument. By lowering tariffs, we have killed our industry and killed the possibility of making our industry more efficient. We have solar equipment capacity and raw material, for instance. But we allowed dumping of solar equipment and our industry couldn’t become efficient. When our industry becomes efficient, they can export as well.
In a situation where there are high tariff barriers, will we not short-change the consumer? They will have to pay more.
In the short run, because of dumping, Chinese companies can sell cheaply. But dumping has got an ultimate objective, which is to capture the market. Once they have the market, these companies start raising prices. This has happened in the case of APIs (Active Pharmaceutical Ingredients), where the Chinese have raised prices manifold. We had to pay through our nose. The consumer is the loser in the long run.