Military & Aerospace

India’s War against COVID-19: Impact on Defence and India’s Emergence as a Global Manufacturing Hub
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Issue Net Edition | Date : 02 May , 2020

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Ever since the outbreak of Coronavirus Pandemic, a plethora of literature has appeared on various  aspects  of  the problem . Adverse  impact on business and financial sectors has been  analyzed by numerous economists. The latest forecast  of  India’s GDP growth rate of around 1.9% by the IMF does not paint a good picture for the Indian Economy in FY20, yet it surely is a breather in the backdrop of the projected Global GDP of around -3%.

If these projections are to be taken seriously, then many advanced countries would be hovering around a heavy economic slowdown and probably even a negative GDP Growth rate.

The rise in the severity of the prevalent health crisis is gradually compelling governments across the globe to implement lockdown seriously. Few experts predict an impending unsustainable period of recession. Not only is the impact adverse on the economy worldwide, but the COVID-19 is also having a negative influence on the Defence and Security apparatus all over the world.

The contribution of  the armed forces, whether in the form of mobilization of resources, manpower or specialized deployment of force in relief and rescue operation, is receiving great and well deserved appreciation. Indian defence establishment and decision makers are working out myriad strategies to somehow exorcise the looming spectre of  COVID 19.

The sudden increase in infiltration and militants attacks on military personnel and installations has caused serious challenges to our fighters in combating these obstacles while simultaneously maintaining surveillance round the clock amidst the pandemic.

In addition to this, the military is facing a daunting task of  maintaining a regular workforce to ensure round-the-clock surveillance as the majority of the armed force stays busy protecting and safeguarding the lives of people. Defence deals, military exercises (internal and multilateral), and regular training are getting postponed due to the increasing tentacles of Coronavirus. Striking a cord of cooperation between the units involved in rescue operation and those involved in civil authorities has become an uphill task.

The assignment of several troops with the key responsibility of dealing with the pandemic relief modalities has further added to their responsibilities.  There are a few regions where there is a steep decline in the production, particularly commercial production, as the freights and deliveries are at a halt. Aircraft manufacturing sector is already experiencing the heat as there has hardly been any demand for aircraft and fighter planes during the past few days.

There have been serious debates about the inevitable pressure on resources which may culminate in the form of de-prioritization of defence budget. Besides this, postponement of important items on the agenda, travel bans as a result of social distancing and lockdowns, and exchanges of items related to defence procurements have virtually suspended the military development process.

A few experts view lockdowns and imposed quarantines as a hurdle in the maintenance of security and defence establishments in the event of extension of such remedial measures. The defence forces world over are busy providing respiratory masks and ventilators and ensuring prompt delivery along with maintaining security.

The on-going speculation about a likely cut on defence funding, temporary or permanent delay of projects, defence contracts and freeze on military recruitments are signalling a need for troubleshooting.

The Army, the Air Forces and the Navy of most countries are wholeheartedly engaged in evacuation, delivery and contact tracing missions in efforts to win the ongoing war against the novel coronavirus. They truly deserve acknowledgement and indebtedness for their relentless efforts in keeping us all safe both during war or during natural calamities.

Even though the going is getting tough globally, the time seems to be ripe for India to emerge as the perfect choice for manufacturing and assembling. Although foreign direct investment is considerably higher in other advanced countries than in India, investment returns are better in India due to its superior corporate pattern of clean governance and the high quality of commercially driven companies.

In addition to these, India has the added advantage of having a vast market which makes it even more attractive to the prospective foreign direct investors. This further compensates for the steeply discounted cost of manufacturing in the South Asian nations. Furthermore, India is well renowned for its numerous indigenous business experts and investors who have carved out a niche for themselves overseas, particularly in the field of information technology, biotechnology, pharmaceuticals and healthcare. Even so, India needs to be wary of the majority ownership of its equity assets, and of the frequent swings in its financial markets and real estate sector.

The export-led manufacturing progress of advanced countries is mainly based on FDI, which is hardly a substitute for home-grown entrepreneurship. We have the brains and the potential to become a renowned global hub of economic activity and we can thrive by taking this opportunity to endorse ourselves and our factual positives.

The potential of a successful future lies in devising a secure, flexible and all-inclusive technology-based system of working which would increase efficiency and ensure sustainability even in the face of a crisis like that of the existing COVID-19 pandemic. India’s strength lies in reinforcing its internal markets as it already has a fast growing middle class.

Currently, financial dealings in India are not as simple as they appear since all such transactions fall under the ambit of compliance and regulatory authorities. Foreign investor sentiments can be enhanced if India opts to ease the tax rates and the existing protocols without compromising on security. Doing this would not only save paperwork, taxes and time for the typical investor, but also further ease their decision in settling for India as a first choice. 

The immense faith that India has generated across the globe provides all the requisites required for establishing a good business-friendly environment for investors to prefer India for import as well as investment. Undoubtedly, India needs to work on its high savings rate, good infrastructure and manufacturing sectors along with its services-driven areas and institutional stability, deeply interwoven in pluralism and democracy.

Furthermore, the post-pandemic period may not be very stable and may throw up some tedious challenges for the civil aviation, tourism and hospitality sectors. On the brighter side, the extensive web of operational and support networks, ranging from rural to urban areas in India would  gradually ensure a much higher rate of return on assets and therefore, may patch up the loss. With inner confidence, prudence in decision making and clinical approach in handling the spectre of Coronavirus, we may be able to transform India into the hegemonic economy of world order in the next couple of years.

Although the existing threat of pandemic and the emergence of new challenges every day have adversely affected Stock Exchange and Savings network, but until recently foreign investors had pumped in a huge amount of more than $23 billion in the Indian stock markets and about 245 new foreign investors had already registered with the stock market regulating body (SEBI) during the last few years. This may contribute to India slowly coming out of economic paralysis.

But the primary problem would be for startups which mainly thrive on the availability of instant liquidity and constant demand. India would need to catch on with its IT industry which can help in establishing a new era of Indian companies by aggressively capturing overseas markets.

Notwithstanding India’s limitations due to continuing havoc of the novel coronavirus pandemic, in all fairness, it should be acknowledged that overall the Indian economic structure and insight of policy makers represent a move in the right direction and, if treaded carefully, can leave an indelible mark across the globe in handling the crisis and emerging out as the champion.

Economic reforms with a humane and receptive approach involving educational facilities, jobs and development of new channels of communication and FDI will certainly give birth to a new system of status evolution as an economic giant of the world.

There is a need for a combination of a careful, humane and robust strategy of development. Measured by this yardstick, India has achieved great opportunities and has been able to reach several milestones both in the field of economic aggrandizement and improving scientific and technological prowess in a short span of time despite many infrastructure related issues. Needless to say India has carved a niche for itself with regard to social reforms and consumer rights.

India has made all efforts towards strengthening transparency in all spheres of life. However, some critics are of the view that privacy and personal security may be compromised. Besides this, there are challenges with regard to the rigid labour market and more importantly the need for job creation and long awaited market reforms.

If the UN Dept. of economic and Social Affairs’ report about the global economy hitting down to 1% is to be considered a serious indicator, we need to be highly cautious to emerge not only as a survivor but also as a victor  and get to virtually see Bob Thiele and Louis Armstrong’s  ‘what a wonderful world’.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Manvi Hindwan

Author is a Risk Advisory Consultant with a Big Four Firm and an Engineering Graduate.

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7 thoughts on “India’s War against COVID-19: Impact on Defence and India’s Emergence as a Global Manufacturing Hub

  1. This is a good account of the pre-conditions for accelerating India’s manufacturing growth. The current global crisis is seemingly presenting India with the opportunity to become a global manufacturing hub. However, there is apparently a fundamental weakness in the implementation of best-laid plans, because of which some of the most celebrated missions have not delivered the goods. Of key importance is the need to improve the Ease of Doing Business across a wide spectrum of manufacturing sectors, covering urban and semi-urban regions alike. Ancillarisation and merit-based MSME development are also critically important. Infra for industrial development is another aspect to be focused upon.

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