Make in India should not entirely focus on global market: Raghuram Rajan

Rajan underlined the need for modifying labour laws to promote manufacturing and encourage companies to grow large.

“… another concern has been labour laws. Deputy Chairman of Niti Ayog has often argued that because of our labour laws we have firms that are too small. They tend to be too small that they don’t want to grow too big to be subjected (themselves) to labour laws and that make them inefficient,” he said.

Rajan said once the atmosphere is conducive for manufacturing in the country, it should be best left to young entrepreneurs to decide what they want to do.

“There is lot of debate… should we do this or should we do that. My point is let us make the basics, create appropriate regulations,” he added.

The conditions that promote industry, he said, include decent infrastructure, power, connectivity, human capital, good business regulation.

“…that mix of good regulation, good infrastructure, good human capital has not been present in this country. The end result we have is that we have underperformed on manufacturing,” he said.

As India is a huge market of 1.2 crore people, most companies focus on domestic consumers, he added.

“We ourselves are giving thrust to manufacturing. We are quite a big country. We are a big country because on the GDP basis, we are USD 2 trillion economy … we look at purchasing power parity, we are five to six trillion in size. If you look at number of people, we are 1,200 million people. So we have a big market ourselves. Therefore the notion is if we can sell in India, let us sell in India,” he added.

He further said it has been easier for service companies to do business as they do not rely much on infrastructure.

“Many service companies can work without being subject to whole lot of business regulation,” he said.


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