Journey of Public Sector in India towards Socio-Economic Development of India
Public sector has played a leading role in the emergence of modern India. Despite the fact that in the post-reform period the discourse on public sector has been largely critical in nature, the fact remains that PSUs??? contribution to the Indian economy has been significant. According to National Accounts Statistics (NAS) public sector currently contributes about a quarter of the GDP of India. Out of the total value added contribution by the sector, administrative departments contribute 8 to 9 per cent of GDP, natural monopolies such as railways and postal systems add another 3 to 4 per cent and the non-departmental enterprises roughly contribute 12 to 13 per cent of GDP. The non-departmental enterprises comprise of public sector financial enterprises that includes banks, RBI and LIC and the non-financial enterprises includes other undertakings which mainly produce goods and services. Currently there are about central 290 public sector undertakings and more than 1000 PSUs under state and municipal governments. Government companies account for a third of the paid-up capital of the companies registered under the Companies Act. The central PSUs account for about 15 per cent stock market capitalisation through 50 listed firms. Based on eligibility criteria related to annual turnover, annual net worth and average annual profit after tax PSUs are categorized as Maharatna and Navaratna and Miniratna. There are at the moment 7 Maharatnas and 17 Navaratnas 56 companies in the Miniratna Category I and 17 in Miniratna Category II.
However, a question arises whether the existing relationship between the government and PSUs is conducive for the enterprises to play their assigned role. For instance, has listing really helped inculcate market discipline or the listed PSUs are hemmed between the market and the policymakers? What explains their lacklustre record at technology development? In this regard, while learning from the experiences of China and other emerging economies, India, given her own political system, would have to devise own ways. A project proposal was submitted to Standing Conference on Public Enterprises (SCOPE), New Delhi for financial support.
Portrayal of Women in Advertising: Baseline Survey in South Asia
A Baseline Study under the aegis of UNESCO and South Asian Women Network (SWAN) has been designed to cover nine countries including Afghanistan, Bangladesh, Bhutan, India, Pakistan, Myanmar, Maldives, Nepal and Sri Lanka with a view to build a gendered media in South Asia. The survey would cover news media, entertainment media and promotional media including advertising. ISID will be looking at the advertising part of the baseline survey. The Institute hosted a capacity building workshop in collaboration with the Institute of mass communication (IIMC) for delegates from various South Asian countries in May 2018 to share the conceptual framework of the survey and give hands-on skills on the research method and data analysis. The baseline survey on advertising aims to look at advertisements across various media to enquire in to various kinds of stereotyping and inappropriate portrayal of women and whether such portrayals reflect or negate the tradition and cultural ethos of the South Asian societies. The research will also focus on the process of making of ad campaigns to find how stereotypes and inappropriate portrayals seep in. It will also enquire whether there are gender sensitive policies within the organisations and the professional codes of ethics for reference of the creative teams and brand custodians to follow. The project also incorporates the making of a Gender Sensitivity Barometer (GSB) as an advocacy tool to map the gender sensitivity of content creators in news and entertainment media and advertising. The two-year long study is being carried out in collaboration with United Nations Educational, Scientific and Cultural Organisation (UNESCO), South Asia Women???s Network (SWAN) and the Indian Institute of Mass Communication (IIMC). Prof. Jaishri Jethwaney is the Principal Researcher and Prof. Seema Goyal is the Co-Researcher.
Financialisation in India: Nature and Implications with Special Focus on Corporate Sector
The project primarily aims to understand the nature of financialisation in India using the trope of corporate sector. The first part of the study would be dwelling on the major debates that inform us about the right questions and the appropriate indicators in assessing the extent of financialisation in India. This will be followed by an empirical assessment of the financialisation process in India???s corporate sector and finally comments on the identified trends. The study provides an assessment of the specificities of financial integration that seems to be different from the advanced countries scenario. To identify the macro trends it would use National Accounts Statistics (NAS) to analyse the long term trends of growth, investment, profitability and changing factor returns over the past decade. We would then narrow down to corporate sector at aggregate level as well as by industry divisions to identify the major trends. The RBI Bulletin provides performance indicators of Non-Government Non-Financial Public Limited Companies, Non-Government Non-Financial Private Limited Companies, Non-Government Non-Banking Financial and Investment Companies. Data on a representative sample of corporate sector shows sources and uses of funds, structure of assets and liabilities and financial ratios indicating leverage ratios, profitability indicators and changing composition of costs over the years. At the firm level, to understand the total assets and income composition along with the sources and uses of funds from Prowess database would be used to get a continuous series of a representative sample of the non-financial companies in sectors such as manufacturing, mining, electricity, construction and real estate and so on. Finally we would try to locate the identified trends within the larger literature of financialisation that has largely been focused towards the North. The project is sponsored by the ICSSR and Dr. Satyaki Roy is the Principal Researcher.
Portrayal of Women: An Empirical Study of Advertising Content ??? Issues and Concerns for Policy Intervention
The aim of the project is to examine the portrayal of women in the advertising space in various media including print, electronic and digital space. In specific, it seeks to find answers to the following questions.
- Are there are any typical brand categories that encourage stereotyping or indecent portrayal of women in advertisements?
- What is the thinking behind such portrayals within the creative teams and the brand owners???
- Whether the images thus portrayed are different or similar to the traditional and cultural ethos of the Indian society?
The steps involved and methods adopted would be: i) A systematic content analysis of advertisement campaigns from across brand categories like FMCG, Lifestyle, finance, automobiles, travel and hospitality sectors through a study of semiotics and discourse analysis; ii) Assess gender focus, gender issues in the existing curricula in the media schools/training institutes, and highlight gaps in knowledge and skills; and iii) Analyse existing policies and laws and professional codes of ethics to identify gaps, especially with the proliferation of the digital media. The programme is sponsored by ICSSR and Prof. Jaishri Jethwaney is the Project Director and Prof. Seema Goyal is Co-Project Director.
Urbanisation and Human Capital Development in Assam
Since urbanisation leads to structural transformations in the economy, the role played by human capital becomes considerably. Human capital and particularly ???specific human capital??? that is usually derived through education and training as a driving force of economic growth and social development is important. Thus, one of the emerging issues is to minimise the gap between skills supplied by training institutions and the skills in demand in the labour market. There is a need to reimaging the new urban centres with collaborative and integrated solutions that are required to promote successful urban growth where human capital is considered equally important as the physical capital as economic driver. The new perspectives on urban centres would be a strong knowledge economy integrated with physical infrastructure that connects people, resources/goods, and ideas/knowledge and skill.
Assam is one of the states characterised by the low levels of urbanisation, dominance of small and medium-sized towns and slow pace of urban growth. Despite such low levels of urbanisation, Assam has been one of the fastest growing states within the North Eastern region and has performed better than that of all India average. However, the employment trend has not been commensurate with the growth performance of the state. The state???s unemployment rate is higher than that of the national average. The youth, who constitute about 30% of the population, are unable to compete for jobs because of the poor state of Assam???s education and skills development programmes. The main objectives of the research project are to: bring out the spatial and size-wise distribution of urban centres; map the growth pattern of the urban centres by size-class categories; bring out Human Capital Endowment in the urban areas; and undertake a skill gap analysis on the basis of survey.??
The project is undertaken jointly by ISID and Shaheed Bhagat Singh College, University of Delhi under the ICSSR Research Programme on ??? Special Areas and Special Issues. The study is for duration of 18 months starting 16 April 2018. Prof. H. Ramachandran is the Project Coordinator and Dr. Poonam Sharma is Co-ordinator.
Industrial, Trade and Investment Policies: Pathways to India???s Industrialisation
One of the major drawbacks of high growth trajectory that Indian economy experienced in the past decades is the pre-mature services take-off together with low and stagnant share of manufacturing in GDP. Nearly three decades of liberalised regime has unleashed market forces as the guiding principle of organising economy and society. The underlying assumption was that deregulating industry, decontrolling capital flows and de-reserving erstwhile protected segments and liberalising imports and exports would provide enough stimulation to both domestic and foreign capital. This by itself was expected to reverse the trend of dwindling manufacturing growth; however, the reality was not as expected.??
In this backdrop, India???s strategies to achieve high growth in manufacturing should address the following questions: (a) how to increase India???s share in world manufacturing given the fact of slow global growth; (b) how to expand domestic demand; (c) how to mobilise internal and external sources of finance and investment to build capacities physical as well as human; and (d) what could be the role of various categories of firms – by ownership and scale of operation.
The proposed research programme has the objectives of: (i) identifying continuities and departures in production pattern, investment trends, degree of engagement through trade and technology assimilation, and status of infrastructure; (ii) comprehending an industrialisation strategy given the constraints and emerging opportunities. In this programme, it is proposed to undertake in-depth studies in five key areas of manufacturing:
- structure and growth performance,??
- trade, technology and FDI,??
- industrial investment and finance,??
- regional dimension: agglomerations, SEZ and state level policies, and??
- participation of India in global production network.
In the area of structure and growth performance, there will be a few studies analysing the structure and growth dynamics of Indian manufacturing sector; large Indian corporate sector and market competition; and the impact of new technologies (AI, robotics, big data, etc.) on Indian manufacturing sector. The trade, technology and FDI component of the programme will analyse the impact of trade liberalisation on manufacturing sector growth and productivity; and the nature and impact of liberalisation under Free Trade Agreements (FTAs). This component will also look into the issues of technology associated with FDI such as impact of technology collaborations on absorption of technology and impact of outward FDI on innovation capability. The section on industrial investment and finance will examine the impact of financial liberalisation on industrial development in India. It will also look into the relevance of Term Lending Institutions like the Development Finance Institutions (DFIs) for industrial development in the liberalised regime in India. In the area of regional dimension: agglomerations, SEZ and state level policies, a few studies will look into the relationship of survival of firms and employment to the characteristics of regions and pattern of distribution of SEZs across states. This component will also review the response of private sector players to SEZs. The section on India???s participation in global production networks will examine the nature and extent of participation of India in global production network; their share in the global value added; and the distribution of domestic and foreign components in value added share. It will also identify the industries in India, which are more globally integrated and examine how such integration affects the productivity and employment in these sectors. The two-year programme is sponsored by ICSSR and it is undertaken by a team of Institute???s faculty with Prof. M.R. Murthy as the Programme Director and Prof. T.P. Bhat as Co-Director.
Changing Business Group Strategies in India: An Inquiry from the Lens of Mergers and Acquisitions in India
This study aims to unravel the likelihood of concentration of economic power in the hands of top business groups in India in the context of the new competition regime implemented in India (i.e. Competition Act, 2002), replacing the three-decade old Monopolies and Restrictive Trade Practices Act, 1969 (MRTP). One of the major objective of MRTP Act was to limit the ???concentration of economic power in the hands of a few???. This objective has been dispensed with in the Competition Act and there is a clear deviation from ???economic concentration??? or ???controlling monopolies??? to ???promoting competition???. The current regulation follows rule of reason approach, i.e., the pros and cons of each and every merger and acquisition (M&A) is assessed to find out the likely impact on competition in the ???relevant product market??? and ???relevant geographic market???. Assessment of the impact of M&As on ???relevant product market???, without considering the ???ownership??? of the firms involved, may lead to the concentration of economic assets in the hands of big business groups due to the diversified nature of groups and the large number of affiliated firms. This is likely to affect future competition too.??
In a developing country context, the multiple number of M&As undertaken by big business groups have both positive and negative implications. While ???bigness??? is considered to be crucial from the point of creating globally competitive firms and deriving economies of scale, major concerns arise due to the likelihood of creating monopolistic elements in the market along with the evils associated with the concentration of economic power in the economy. M&As is one of the relatively unregulated routes of business restructuring at the group level. More specifically, the study addresses the following: the significance of big business groups in the Indian corporate sector in terms of various indicators; extent, nature and structure of M&As undertaken by top business groups; product market competition through business group M&As; and concentration of economic power through business group consolidation. A case study of a consolidation intensive business group will enrich the macro-level findings. The study will attempt to evaluate and will help understand the contribution of new policy regime adopted in India. The study is sponsored by the ICSSR and Dr. Beena Saraswathy is the Project Director.
FDI in R&D and Development of National Innovation Capabilities: A Case Study of India
This study was proposed in the context of India emerging as a leading destination for global offshore R&D. FDI in R&D (FDIRD) constitutes one of the forms in which offshore R&D is conducted. It has the potential of upgrading the innovation capabilities of a country through transfer of technologies by various means and establishing linkages between various elements of national innovation system. However, the strategies adopted by the host governments to attract FDI and effect transfer of technologies are important. The FDI policy of India aims to improve the technological base of the country through FDI.??
The study defines national innovation capability (NIC) as the ???ability of a country as a political, cultural and economic entity to contribute to the stock of knowledge and add economic value to the knowledge???. It conceptualises the likely influence of FDIRD on NIC through its linkages with the industry and academia. An important question addressed in this study is what impact would FDIRD have on NIC when such investments are part of global innovation networks (GIN)? In GINs, the R&D conducted in one country will focus on certain tasks/phases of the entire innovation process and the people involved in the R&D are not exposed to the entire innovation process. The study develops a methodology for identifying FDI inflows which are in R&D by looking into each inflow and the core business activity of the investment receiving firm.??
Data on R&D expenditure, patents granted, and papers published will be used for the analysis. Information will also be collected through field survey. The study will bring out nuances of FDIRD-NIC relationship through case studies. Studies already conducted on the same topic shows that FDIRD in India is in R&D services (to take advantage services of scientists and technicians at much lower costs) and it does not establish any linkage with either industry or academia. But our preliminary findings suggest that in certain sectors such as biotechnology, FDIRD has contributed to building up NIC. Biotechnology is a sector where a large number of entrepreneurs are ???professionals turned entrepreneurs???. The study would examine the background of entrepreneurs and ability of firms to gain from FDIRD. Biotechnology is also a sector a where lot of NRIs have invested. The study will, therefore, also look into the role of diaspora in contributing to NIC. The study is sponsored by the ICSSR. Dr. Reji K. Joseph, ISID and Prof. Biswajit Dhar, CESP, JNU are the Principal Researchers.
Global Value Chain Engagement and Industrial Restructuring: A Study of the Indian Electronics Industry
The electronics industry???the hardware core of the information and communication technology (ICT) sector???is strategic for any country because of its economy-wide productivity-enhancing impact. Expansion in the adoption of digital technologies across sectors increases the imperative for domestic hardware manufacturing capabilities. Several policy reforms are being carried out by the government to promote global value chain (GVC) engagement by Indian electronics firms and to increase their exports. While there have been earlier studies looking at the contribution of foreign-invested firms to exports, imports, productivity, foreign exchange earnings, etc. in particular industries, there has been no systematic attempt in the literature to examine the extent and nature of engagement of either foreign-invested or domestically-owned firms in industry value chains. Against this backdrop, the present study seeks to analyse the extent and nature of Indian electronics firms??? engagement in electronics industry value chains and their implications for the domestic industry???s development.
The differential involvement of foreign-affiliated firms and domestically-owned firms in value chains, their equity and non-equity forms of value chain engagement, their contributions to and impact on production restructuring, trade balances and technological capabilities, etc. need to be examined at the firm-level, through an analysis of related party transactions and inter-firm transactions of both foreign-invested and domestically-owned enterprises. Thus the objective of the study is to examine and assess value chain participation of domestically-owned and foreign-owned firms using firm-level sources of primary and secondary data. In contrast to existing approaches based on analysis of trade in value added (TiVA) or intra-industry trade (IIT) with their weaknesses, this study proposes a new framework that combines macro policy aspects of trade and investment liberalisation with firm-level business strategies for achieving competitiveness, to unravel the dynamics of GVC engagement by domestic firms. The research project is sponsored by the ICSSR and is being carried by Dr. Smitha Francis, Consultant, ISID, jointly with Prof. Murali Kallummal, Centre for WTO Studies, New Delhi.
Understanding FDI-Linked Trade through Related Party Transactions: A Study of Manufacturing Foreign Subsidiaries in India
The preferred tendency towards intra-firm trade by MNC-associated firms has been typically linked to transfer pricing practices by a host of studies globally and many recent studies find evidence of profit shifting through the manipulation of transfer prices by these firms. The susceptibility of these transactions to mispricing practices is undoubtedly high, especially in the case of developing countries. Given the complexities involved in identification, analysis and comparisons of related party foreign transactions owing largely to the data shortcomings especially for the vast number of unlisted foreign affiliated firms, the issue remains largely unexplored in the Indian context. No direct estimates of degree or pattern of intra-firm trade in foreign exchange transactions (covering various transaction heads) of foreign affiliates operating in India are available for the post-reform period.
The study is seeking to address this data gap and aims to analyse the extent of intra-firm transactions in foreign exchange transactions of foreign affiliates operating in the manufacturing sector of India, as far as traceable. Apart from the trade-related transfers, a closer examination of financial, technology and service payments related transfers will be undertaken, given the high potential of mispricing in transactions involving absolute intangible asset transfers and the special challenges faced by revenue authorities in auditing them globally.
The study shall cover about 500 listed and unlisted foreign manufacturing affiliates and will focus on two recent years, namely 2014???15 and 2015???16. The information on intra-firm foreign transactions for firms shall be obtained from the related party transaction disclosures in their financial statements, which is mandatory for all material transactions under the Indian Accounting Standard 18 for accounting periods ending on or after 01.04.2004. The data on the annual financial statements of firms will be procured from the Ministry of Corporate Affairs (MCA) website and from the Prowess Database of CMIE. The related party ???foreign??? transactions of the foreign affiliated firms are being identified individually for different earnings and expenses heads. Also, a review of various tax disputes around transfer pricing of different foreign transactions of the selected firms will be done by inspecting the extracts of legal cases from a few legal websites to understand the issue from a contemporary legal perspective. The project is of 24 months duration commenced in May 2017 and will be completed by April, 2019. The study is sponsored by ICSSR and Dr. Swati Verma is the Project Co-ordinator.
Penetration and Effectiveness of Health Insurance Schemes in India
The Indian healthcare sector has been a testing laboratory for launching centre and state governments-funded pro-poor health insurance schemes to achieve universal health coverage in the country. The financing nature of these pro-poor insurance schemes, however, is highly different from the social health insurance (SHI) schemes of the some emerging economies like China, Brazil, Chile, Thailand and Malaysia have recently tried to for accessing services of accredited private and public health facilities. The SHI largely pools resources from public sources as well as contribution from employers and employees/beneficiaries parse. Indian insurance schemes promise to cover all BPL families and informal community members with minimal contribution from beneficiaries. The contribution from employers in India would be almost negligible because of informal nature of the economy (around 93% of the workforce is employed in the informal sector which leave no/little room to receive employers??? contribution). Thus, financing health care through insurance-based model in India is almost entirely from public sources. This is an important shift in the fundamental nature of healthcare financing. Until recently, the public investment on healthcare was almost entirely tax-based for financing public health system for services provisioning. Currently promoted insurance-based system will also get finance in the same way as the public health sector. The difference is that the provisioning would now be shifted almost entirely to the private sector. Whether the changing nature of financing strategy and the insurance-based financing mechanism can ensure equitable access to healthcare and provide financial risk protection against high costs are the main questions the study would address. The study is largely based on secondary (different health rounds of NSSO and India Human Development Survey-IHDS) data sources. These survey data capture expenditure and utilisation status (inpatient and outpatient) and information about whether households are covered under any financial protection scheme or not. The IHDS-2012 and NSS-2014 unit level data are used to assess the impact on beneficiaries (covered) and non-beneficiaries (non-covered) under health protection scheme. However, in order to substantiate the argument, a field survey is planned. The case control, DID with matching and Heckman selection models are employed for impact evaluation. The study was sponsored by ICSSR and work on the project was commenced in May 2017. Dr. Shailender Hooda is the Project Director.
Liberalisation, Technology Import and Industrial Development: A Study of Organised Manufacturing Sector in India
The study attempts to examine the impact of technology import on industrial growth in India since economic liberalisation. In particular, the main objectives are to provide empirical evidences on the impact of technology import, both embodied as well as disembodied technology purchases from abroad, on the productivity and export performance of the Indian manufacturing sector.??
The rationale of the study is based on the theoretical and empirical evidences on the role of technology, especially the international technological diffusion in enhancing industrial production in economies. In an open trade regime, access to superior technology inputs such as the purchase of capital goods and payments towards technical fees, royalties etc. provides opportunities for catch-up economies to have dynamic benefits over time. As India adopted the policy of liberalisation to integrate with the rest of the world, the degree of openness has increased considerably. This increased trade orientation is expected to have considerable impact on the productivity and export performance of the domestic manufacturing industries. The present study is an attempt to understand these dynamics through the econometric analysis of the firm level data.??
In the final part of the study, which is currently in progress, the aim is to study the impact of technology purchases on export performance. The analysis is carried out at the aggregate level using the standard demand and supply side framework. This is also supplemented by the disaggregate level analysis using firm specific determinants. The study sponsored by ICSSR was initiated during July 2017 and is expected to be completed by September 2018. Dr. R. Rijesh is the Principal Researcher.??
India???s Inward FDI Experience in the Post-Liberalisation Period with Emphasis on the Manufacturing Sector
The study was taken up in the context of absence of detailed information on India???s foreign direct investment (FDI) inflows, despite the fact that in the post-liberalisation period FDI is being seen as a key factor in the country???s economic development. The project aims to analyse India???s FDI experience through (i) identifying India???s relative place in global FDI flows; (ii) a disaggregate analysis of India???s FDI inflows; and, (iii) analysis of specific aspects of functioning of a relatively large number of representative set of companies having FDI. It is also proposed to take up specific sectors depending upon their immediate relevance for FDI policy. The project proposes to use of a variety of data from national and international sources some of which are not known to have been deployed to understand India???s FDI experience and thus seeks to offer deeper insights. This ICSSR-sponsored two-year project was commenced on May 01, 2013.
- FDI in India???s Manufacturing Sector and M&As: Some initial results of the study were presented at the IGIDR Silver Jubilee Conference on Trade and Industry organised in Mumbai during October 22???24, 2013. Subsequently a paper titled ???FDI Inflows into India???s Manufacturing Sector and M&As: An Exploratory Study??? was presented at the National Conference on India???s Industrialisation: How to Overcome Stagnation? organised by ISID in Delhi during December 19???21, 2013. The study noted that while as per the official estimates, M&As account for less than 30 per cent of the inflows, in reality they accounted for a far greater share of 47 per cent. If only the inflows that could be termed as genuine FDI, the share would be even higher at 54 per cent. Not only the acquisition-related inflows accounted for a significant part of the total inflows into the manufacturing sector, they also seem to have influenced the year-to-year changes suggesting that it was not a one-off phenomenon. The relation was stronger in case of the inflows categorised as genuine FDI. Overall, there would not have been capital formation commensurate with the quantum of reported inflows, especially in what are termed as high and medium technology industries except the automobile sector. Acquisition-based inflows, unaccompanied by substantial capacity expansion, may not help India achieve the objective of increasing the share of manufacturing in GDP. The revised conference paper has been brought out as a Working Paper of the Institute titled ???FDI into India???s Manufacturing Sector via M&As: Trends and Composition.???
- FDI Definition: While the concept of FDI is well understood, its identification has been a major problem. In this background and in the context of India???s ongoing efforts to distinguish foreign direct and portfolio investments, an elaborate Discussion Note was prepared. The note suggested that mere labelling of an investment as FDI based on the 10 per cent thumb rule will not serve the purpose either in the medium or long term. Just because an investment is defined as direct or portfolio, the basic characteristics will not change. The pressing need is, in fact, to distinguish among the FDI investors themselves.
- FDI in Healthcare Sector: Since the main objective of the project was to understand the characteristics of the investments into manufacturing sector at a disaggregated level, a pilot exercise was taken up to study the inflows, greenfield investments and M&As in the drugs and pharmaceutical industry, which according to official data on equity inflows received the maximum investment among the manufacturing sectors. The initial results were presented at the National Conference on Pharmaceutical Policies in India: Balancing Industrial and Public Health Interests organised jointly by ISID, PHFI and TWN during March 06???07, 2014 at ISID. These were also discussed at a training-cum-workshop which preceded the conference and attended by a large number of scholars and practitioners from different parts of the country. Further work on the topic ???FDI in India???s Healthcare Sector??? is underway.
- FDI Policy in Defence Industries: While most of the manufacturing sector is open to 100 per cent foreign investment, due to its importance for national security India did not open the defence sector to FDI until 2001. Along with opening the sector to private participation in May 2001, India also allowed FDI up to 26 per cent in these industries. Since then and until August 2013 when the cap of 26 per cent was virtually removed, the reported FDI inflows into the sector at $4.94 mn were almost negligible. No additions took place since then either. This is probably one of the reasons why opening up the defence sector to 100 per cent FDI participation is being discussed once again. It is understandable that a country with large dependence upon imports would like to promote domestic production not only to ensure supplies in critical times, but also to reduce the import burden, besides providing fillip to the local manufacturing sector which has been languishing. The argument for relaxing the limit on FDI in defence industries is based on certain assumptions like diversification of global defence production and higher shares of foreign equity encouraging foreign companies to invest in India and to transfer state-of-the-art technology. The study seeks to examine these assumptions empirically and a draft paper is expected to be ready by September 2014.
The next step is to analyse global greenfield and M&A data. Downloading and collection of data from company annual reports is in progress. It is proposed to hold a workshop during March 2015 in order to discuss the outcomes and to benefit from the deliberations in finalising the overall project report.
Constructing an Urban India
It is argued in the ongoing work that whatever the nature of urbanization??????top heavy,??? tertiarised and sans industrialisation???India needs to promote urbanisation since we can demonstrate that poverty is better fought through urbanisation than by focussing on the population living in 6,00,000 small and scattered villages and hamlets which are unlikely to attract substantial investment in infrastructure. In addition, there is a need to shift the policy focus to promoting urban growth. For this we need to revisit the policy of land acquisition by government vis-a-vis land as a commodity traded in the market.
It is further argued that tertiary sector-led urban growth as experienced in India is not as unsustainable as a segment of research literature makes it out to be, despite increasing regional and interpersonal income disparities, since accelerated reduction of poverty is positively related to level of urbanisation and without much cost to the public exchequer. Recent decades have recorded increased absorption of labour force released from rural economy in the urban informal sector in the developing world including India where the informal sector accounts for over 90 per cent of employment. This has been viewed as a solution to the growing problem of unemployment.
Given the above argument, finding land for urban growth is important. At present, less than around 3 per cent of the country???s land is under urban use. It is possible to locate suitable land for urban-industrial development without hurting agriculture. The role of the government is to facilitate such land use change through land policies. The study is being undertaken by Prof. H. Ramachandran under the ICSSR National Fellowship Programme.
Understanding India???s Industrial Development Puzzle through the Interactions between Industrial Policy and Trade Policy: A case study of the electronics industry
Against the backdrop of the discourse on the causes of India???s manufacturing sector growth decline and revival strategies, this study examines the interplay between trade and investment liberalisation and domestic manufacturing sector growth dynamics by focussing on the electronics industry, with a view to drawing implications for industrial policy. There are several parallel processes of trade and investment liberalisation that have had an impact on the Indian electronics industry. Apart from unilateral trade and investment liberalisation, a second channel of liberalisation was under the Information Technology Agreement (ITA-1) signed in 1996, which is a plurilateral agreement of the WTO designed to achieve lowering/elimination of all entry barriers on trade in information technology products. Thirdly, the WTO-plus trade and investment liberalisation carried out by India under its comprehensive Free Trade Agreements (FTAs) with East and Southeast economies such as Singapore, ASEAN, Japan, South Korea and Malaysia has also significantly changed the competitive scenario facing Indian producers in the electronics industry. Through an analysis of the pattern of trade and FDI flows in the electronics industry, the study seeks to unravel the implications of trade and investment liberalisation for the domestic electronics industry???s development trajectory and what this means for industrial policy formulation. The study is being undertaken by Dr Smitha Francis.
Foreign Acquisitions and FDI Inflows into India???s Drugs and Pharmaceutical Sector
Pharmaceutical industry in India has been nurtured over a period and it has acquired global recognition as a significant producer of generic drugs. Over the years many Indian companies emerged to reach the top rung of the industry in India displacing some long established foreign manufacturers. Following the liberalisation of FDI policy and change in the Patent Act, however, the situation started changing gradually as major Indian manufacturers are getting acquired by foreign companies thus raising concerns regarding accessibility, availability and affordability of medicines, exports, R&D for diseases in the country???s profile, etc. Concomitantly, other aspects of healthcare like medical equipment, diagnostics, hospitals, etc. too, came under focus. From the point of FDI inflows into India, the pharmaceutical sector emerged as the topmost recipient of FDI among the manufacturing industries. Thus, the developments in sector turned out to be important both from FDI inflows and public health points of view. In this context, the study would focus on the quantum of FDI inflows, nature of foreign investors, the mode of entry and operational aspects of FDI companies in the sector.
An Analysis of India???s Merchandise Export Performance during 1999-2013: Existing Competencies and Emerging Policy Challenges
The Department of Commerce, Ministry of Commerce and Industry, Government of India sanctioned a short term study of Macro Analysis for Working out Elasticity of Demand for Top 10 Commodities of India???s Exports. The objective of the study is to work out elasticity of demand for top ten commodities of exports using dataset for the years 1999???00 to 2008???09 and more recent years of 2009???10, 2010???11 and 2011???12 to identify factors typically relevant in the context of exports and build simulations and draw policy implications for export promotion. A draft report was submitted to the Department in October 2013. The Ministry requested to take the Institute to do a sectoral level disaggregated analysis to enhance the relevance of the study and a new proposal was submitted to the Dept. The study examines India???s existing export competencies and weaknesses through an analysis of India???s export dynamics in its major export sectors in order to identify the emerging policy challenges. The study will analyse India???s merchandise export performance at the global level for the last 15 years covering 1999-2013 with a view to suggesting sector-specific export promotion policies. The study is undertaken by Dr Smitha Francis. It is expected to be completed by November-December 2014.
Participation of Indian Firms in Global Production Network: Nature and Implications
The current phase of globalisation is distinct from the earlier phases of internationalisation precisely because the latter being referred to as an expansion of capabilities and dominance of a nation or region beyond its boundaries but the former indicates a far more complex network of interdependence between nations. The nature of interdependence although asymmetric entails a new international division of labour which offers greater scope of participation for developing countries in the production process. This is primarily driven by a change in the production structure of global manufacturing that involves a network like structure with large amount of intermediate goods and services sourced from across the world. Regional specialisation of final products is being gradually replaced by specialisation on the basis of tasks. In this milieu it is assumed that such integration not only increases capabilities of participating firms but also has positive spillover effects on other producers in the backward linkage those may not be directly linked to foreign producers. Firstly the study aims to assess the nature and extent of interdependence between domestic and foreign firms. Secondly, participation in the global production network does not automatically give rise to attaining technological capabilities and moving up the value chain ladder. The question therefore is how far the framework of global production network helps us analysing the asymmetry in the distribution of value added and explain the boundaries of value chain while involving domestic producers in the backward linkage. The study is being undertaken by Dr Satyaki Roy.
Linkage between Growth and Manufacturing Sector as Reflected by ASI and Growth in Exports
The objective of the study is to identify the linkage between growth of manufacturing sector as reflected in Annual Survey of Industries (ASI) and growth of exports in ITC HS classification, and prepare concordance tables between ASI and ITC classification of commodities of exports at two-digit level. The study was commissioned by the Department of Commerce, Ministry of Commerce and Industry, Government of India. A draft report was submitted to the Department of Commerce in October 2013 and the final report with enhanced scope of study will be completed by February 2015.
India: Trade in Health Services
The objective of the study is to assess the advantages of healthcare trade to India in the expanding global trade and to find out ways and means how best it can benefit from health trade. The paper deals with various facets of healthcare services in cross-border trade under the General Agreement on Trade in Services. There are 120 countries participating in the agreement to liberalize trade in healthcare services in which India is a participant. The commitments to the agreement made by the countries are partial and limited to certain segments of healthcare services. However, for India, there is still scope for enhancing trade in this sector.
The paper brings out the various dimensions of India???s trade in the healthcare sector with specific reference to its growth, advantages and disadvantages. The findings indicate that India has a distinct advantage in health tourism (mode 2) and movements of health personnel (mode 4) including physicians, nurses, paramedics, midwives, technicians, and health management personnel. In cross-border delivery (mode 1) which includes shipment of laboratory samples, diagnosis and clinical consultations via e-health services, India has made some progress but is yet to establish its supremacy. In mode 3 the commercial presence of foreign establishments in India is in the initial stages. The flow of foreign investment is slow and halting in spite of high degree of healthcare trade liberalization.
The growing trade in health sector could generate large number of jobs for the skilled and semi-skilled health personnel, besides foreign exchange earnings for the country. There are barriers to healthcare trade, particularly in health tourism and migration of physicians and nurses in many trading partner countries. India is able to cope-up with these obstacles to a considerable extent. The need of the hour is for the government to support the programme. Better institutional support is also required. The government has taken some measures, but they are inadequate. The healthcare trade could also be promoted through regional and sub-regional agreements. Currently, speciality health services are attracting large number of foreign patients to India for treatment. The study is being undertaken by Dr T.P. Bhat.
Pharmaceutical Sector: Investment and Innovation
The project addresses how India???s pharmaceutical industry could successfully build its own capacity for innovation during the pre-reform period and why the industry needs to now upgrade its capacity for innovation in pharmaceuticals. Investigations have been undertaken to find out how the drivers or motives, gatekeepers and financial support for innovation have changed in the case of domestic pharmaceutical firms over the years. Considerable progress was made during the year 2013???14.
The study describes the patterns of changes observed in the form of four distinct innovation regimes in order to bring out how the consequences of these regimes have been very different for the development of capabilities for making innovation happen. A detailed assessment of the current innovation regime (2002???2013) is available. The aim was to highlight the achievements and limitations of the current innovation regime with a view to pinpoint the main challenges facing the country in the sphere of industrial policy in respect of fulfilling the goals of industrial upgrading and public health. Also, a preliminary assessment of the emerging barriers to responsible innovation was completed.
During the year 2013???14, some preliminary assessments have been made on: the kind of strategies to be devised for meeting the challenges of access to quality drugs relevant to the burden of diseases and of building a responsive ecosystem, given the dynamic situation in global and national markets both with respect to supply and demand; tracking the emerging impact of acquisitions, takeovers, divestitures and mergers on the industrial performance; impact of strategic alliances, collaborations and PPPs and harmonization of regulation and procurement and other related changes on the upgrading of capabilities for innovation in the pharmaceutical industry; and, the changes in FDI policy to find out what has been the impact on the progress in respect of learning and innovation making in pharmaceuticals for the foreign and domestic firms operating from India to cater to both domestic as well as foreign markets.
Further work is in progress on the tracking of the evolving impacts of the changes in policies and programmes on: i) Pharmaceutical production and market structure, (ii) Private and Public investment in Pharmaceutical Sector, (iii) Medicine Pricing; iv) Compulsory Licensing; v) Bulk drug R&D in public and private sectors, (vi) Status of R&D and Innovation making in TB, Diabetes and Cancer, (vii) Status of patenting on processes, products, formulation and drug delivery systems, (viii) Collaborations, linkages and institution building for innovation making???Response of Indian industry and Research Institutions, ix) Evaluation of impact of India???s WHO Collaborative R&D Centres Programme, and, (x) WHO Global Strategy and Plan of Action for Public Health, Intellectual Property and Innovation. The study is jointly undertaken by Prof. Dinesh Abrol, Ms Nidhi Singh and Ms Bilqeesa Bhat.
Growth and Structure of Clinical Trial Industry in India
A study on why India has emerged as the most popular destination of global clinical trials (CTs) is currently underway. The processes of implementation of CTs by the drug companies have raised some critical issues with regard to the prospect of clinical research involving human subjects in a productive and ethical manner. This project aims to examine the prospects and processes of clinical research. Work on the assessment of such aspects of CTs was started by reviewing existing literature as well as various sources of data. Preliminary findings are that while India is the most potential destination for CTs, but recently the industry has faced a serious challenge due to massive government intervention to control the operation. There was a major collapse in the investment in CTs in 2013. Due to uncertainties in regulation, many companies have postponed trials, while many stopped operations permanently and moved to other destinations. In the case of CTs, the main challenge is over the nature of regulation to be undertaken by the government. It is clear that the government needs to create an appropriate regulatory environment without violation of humanitarian ethics and other social norms. The study is jointly undertaken by Dr Swadhin Mondal and Prof. Dinesh Abrol.