SPECIAL ARTICLE
Manufacturing Trade Deficit and Industrial
Policy in India
Sudip Chaudhuri
The manufacturing trade balance in India did not
worsen after the economic reforms started in 1991. This
was because of the successful growth of industries such
as pharmaceuticals which the earlier planning strategy
helped to develop. The reforms nevertheless changed
the structure of demand in favour of capital goods such
as new types of telecom equipment. But they did not
help the domestic manufacturing of these goods.
Indeed, the underdevelopment of such industries is the
main reason why the manufacturing trade deficit has
worsened since the early 2000s.
Sudip Chaudhuri (sudip@iimcal.ac.in) teaches economics at the Indian
Institute of Management Calcutta. A research grant from the institute is
gratefully acknowledged.
Economic & Political Weekly
EPW
FEBRuary 23, 2013
vol xlviii no 8
T
rade deficit, particularly manufacturing trade deficit is
a typical problem which developing countries with
underdeveloped industry face. One of the specific
objectives of India’s earlier planning strategy was to substitute
imports by developing industries from the basic stages through
state intervention (Mahalanobis 1955). But the economic reforms since 1991 have led to a change in the strategy directed
towards import liberalisation, deregulation and market orientation (Bhagwati and Srinivasan 1993). The objective of this
paper is to analyse the trends in manufacturing trade deficit
both before and after the reforms and analyse the role and
significance of industrial policy.
Overall Trade Deficit, 1962-2010
In Figure 1 (p 42), we have tried to find out the long-term trends
in exports, imports and trade balance (i e, exports minus
imports) of manufactured goods as a percentage of gross domestic product (GDP) since 1962.1 It can be seen that till about
the mid-1970s, manufactured import ratio (as a percentage of
GDP) was quite under control. In fact, the import ratio fell from
3.2% in 1962 to 2% in 1976. Since then it increased moderately
to about 4.6% in 2001 and then sharply to 11.4% in 2008. So
far as manufactured exports are concerned, right up to the
mid-1980s, the export ratio remained steady at around 2%.
The export ratio accelerated from 2.4% in 1986 to 9.4% in
2008. Reflecting such import and export behaviour, between
the early 1960s and the mid-1970s, the manufacturing trade
balance improved. Again after some deterioration in the late
1970s and the early 1980s, the trade deficit improved from
-1.7% in 1986 to 2.1% in 2001. Since then it has started declining – the surplus turning into a deficit in 2006 and reaching a
level of -2.1% in 2008. With a sharper fall in imports than in
exports during 2009 and 2010, there has been some improvement in the trade balance since 2008.
What are the reasons for the improvement in manufacturing trade balance between the mid-1980s and the early
2000s? What are the reasons for the deterioration between
2001 and 2008?
According to one line of reasoning, the economic reforms
since 1991 had a significant positive impact on the economy
(see, for example, Ahluwalia 2006; Panagariya 2008). But the
problem with this view which has been widely recognised is
that the structural break in economic growth after India’s
Independence occurred about a decade earlier (see, for example, Nayyar 2006; Balakrishnan and Parameswaran 2007).
The counterargument is that economic reforms actually started
41
SPECIAL ARTICLE
Figure 1: Manufacturing Trade in India
12
Imports
8
As % of GDP
Exports
4
0
-4
Deficit
1962 1966 1970 1974 1978 1983 1987 1991 1995 1999 2003 2007 2009
Sources and notes: UNCOMTRADE database for trade data (http://comtrade.un.org/db/
default.aspx) and CMIE Business Beacon database for GDP at market prices. SITC-Rev-1
codes of5 (Chemicals) + 6 (Manufactured goods classified chiefly by material) - 68
(Non-ferrous metals) + 7 (Machinery and transport equipment) + 8 (Miscellaneous
manufactured articles) have been considered as manufactures. SITC-Rev-1 trade data are
not available before 1962.
in the 1980s. Some studies (for example, Kohli 2006; DeLong
2003 and Rodrik and Subramanian 2004) attribute the structural break in the 1980s to these reforms. They however consider the reforms of the 1980s to be qualitatively different from
that initiated in 1991. In this view, as articulated by Kohli
(2006), the state in the 1980s continued to play an active role
but with a “pro-business” strategy. Other studies (for example
Panagariya 2004) consider the reforms of the 1990s, which
emphasise reliance on market forces rather than on state intervention, as the fundamental factor explaining the economic
changes. They view the reforms of the 1980s as precursors to
that of the 1990s and argue that the growth momentum of the
1980s could not have been sustained without the reforms of
the 1990s.
In this paper, in the context of the manufacturing sector,
another explanation is explored. We argue that the improvement in manufacturing trade balance since the mid-1980s was
caused by the successful growth of industries under India’s
planning strategy. And the deterioration since the early 2000s
is largely explained by the failure of economic reforms to promote new industries.
Sectoral Trade Surplus, 1986-2001
In Table 1 (p 43) we have considered the contribution of different manufacturing groups to the overall surplus between 1986
and 2001 and the overall deficit between 2001 and 2008.
By 2001, half of the 45 manufacturing sectors listed in
Table 1 had a surplus trade balance. Among these industries,
the major ones which contributed to the overall manufacturing trade surplus between 1986 and 2001 are garments (“articles of apparel and clothing accessories”) (28.85% contribution), textiles (25.71%), iron & steel (11.01%), non-metallic
minerals (10.48%), specialised machinery (7.39%), pharmaceuticals (6.37%), metals (5.28%), chemicals other than
pharmaceuticals (4.00%), motor vehicles and parts (2.96%),
cycles and scooters (2.21%), etc. The sectoral percentage
contribution has been calculated as the change in the sectoral trade balance (exports minus imports) as a percentage of
the absolute value of the change in the total manufacturing
trade balance.
These industries with surplus trade balance were well established by the time economic liberalisation started in 1991. Textiles and garments have been in existence for a long time. The
42
other industries listed above are among those which were targeted for development under India’s planning strategy. The
strategy succeeded in widening the industrial base. When
reforms started, the important industries were not only the
traditional ones such as textiles but also several new industries
which were consciously developed. The share of the machinery
sector (comprising electrical and non-electrical machinery) in
manufacturing value added, for example, increased from just
1.2% in the early 1950s to about 12.7% in the early 1990s. The
other industries which have significantly gained in importance
are chemicals, transport equipment and non-metallic mineral
products (Chaudhuri 1998, Table 6.2).
Pharmaceuticals is one of the industries which has contributed significantly to the manufacturing trade balance. We take
up the case of this industry below to demonstrate how active
state intervention before the 1980s led to the development of
the industry and enabled it to play an important role since the
1980s. Singh (2009) has pointed out that the institutions
which had been established in the post-Independence period,
particularly those in the field of science and technology, took
time to generate results. As the case of pharmaceuticals shows,
there are several other reasons why the transformation did not
happen earlier. Various internal and external shocks too
delayed the realisation of the full benefits of the planning
strategy (Chaudhuri 1998; Singh 2009; Balakrishnan 2010).
Sectoral Trade Deficit, 2001-08
If we now turn to the period between 2001 and 2008 when
manufactured trade experienced a deficit, we find from
Table 1 that the overall deficit was primarily due to the deficit
in sectors such as chemicals other than pharmaceuticals (sectoral percentage contribution, -45.42%), aircraft (-28.62%),
specialised industrial machinery (-15.05%), telecommunication equipment and parts (-14.88%), general industrial machinery
(-12.96%), computers (“automatic data processing machines”)
(-8.15%), metalworking machinery (-7.26%), electrical machinery (-5.35%), ships and boats (-5.15%), measuring instruments
(-5.10%), etc. If these sectors did not experience a deficit, if
trade were balanced in these sectors in 2008, then there would
have been an overall manufacturing trade surplus of $338,872
lakh in 2008 rather than the actual deficit of -$258,849 lakh.
Industries such as computers, telecom equipment and aircraft
experienced deficit trade in the earlier period too. But the deficit accelerated since the early 2000s (Table 1).
Domestic Production Ratios
We consider the domestic production ratios for different industries in Table 2 (p 44). Domestic production ratio is defined as
domestic production as a percentage of domestic production +
imports – exports. It tells us how much of the domestic use of
the product is due to domestic production. A decline in the ratio signifies a weakening of domestic production status. As
mentioned in the notes to Table 2, trade data refer to the entire
sector but due to data limitations, domestic production refers
only to the organised sector. Thus the absolute value of
the ratio does not correctly reflect the situation. Despite its
FEBRuary 23, 2013
vol xlviii no 8
EPW
Economic & Political Weekly
SPECIAL ARTICLE
impact of the 1991 reforms
on domestic production
compared to what it was
before 1991.
541
Pharmaceutical
-406
9,219
39,532
6.37
8.28
The industries where do5-541
Chemicals excluding pharmaceuticals
-16,404
-10,356
-1,76,567
4.00
-45.42
mestic production became
61
Leather
5,623
6,908
7,746
0.85
0.23
62
Rubber
175
2,169
6,137
1.32
1.08
stronger include chemicals
63
Wood
61
26
20 -0.02
0.00
including pharmaceuticals,
64
Paper
-1,651
-2,825
-12,403 -0.78
-2.62
iron & steel, metals, motor
65
Textiles
9,873
48,701
80,200 25.71
8.61
vehicles and motor vehicle
66
Non-metallic minerals
3,340
19,168
32,472 10.48
3.64
parts.3 The index in67
Iron and steel
-11,863
4,759
22,754 11.01
4.92
creased, for example, to 111
69
Metal products
-340
7,633
6,497
5.28
-0.31
for pharmaceuticals in
71
Power generating machinery and equipment
-2,130
-2,752
-12,072 -0.41
-2.55
2007, 107 for iron & steel
72
Machinery specialised for particular industries
-17,074
-5,912
-60,992
7.39
-15.05
and 105 for motor vehicles.
73
Metalworking machinery
-1,385
-1,236
-27,814
0.10
-7.26
The industries which be74
General industrial machinery and equipment
-8,875
-7,314
-54,726
1.03
-12.96
came weaker marginally or
752+7599
Automatic data processing machines and parts
-1,068
-9,498
-39,324 -5.58
-8.15
75-(752+7599) Office machines and parts other than
weaker to some extent inautomatic data processing equipment
-127
-292
-323
-0.11
-0.01
clude electrical machinery
761
Television receivers
-1
76
-3313
0.05
-0.93
(index 99 in 2007), railway
762
Radio-broadcast receivers
7
-64
-353 -0.05
-0.08
equipment (99), household
763
Gramophones, dictating machines and other
equipment (96), watches
sound recorders
8
-161
-1,671
-0.11
-0.41
and clocks (94), special
764
Telecommunication equipment and parts
-1,860
-6,612
-61,056
-3.15
-14.88
purpose machinery (90)
771+772+773
+776+778
Electrical machinery
-5,029
-6,160
-25,728 -0.75
-5.35
and general purpose ma774
Electro-medical and radiological equipment
-126
-624
-2,793 -0.33
-0.59
chinery (87). These indus775
Household type equipment
-58
-202
-707 -0.10
-0.14
tries contributed signi781+782+783 Motor vehicles
63
1,403
24,312
0.89
6.26
ficantly to the surplus man784
Motor vehicle parts and accessories
-1,534
1,590
-6,032
2.07
-2.08
ufacturing trade between
785
Cycles, scooters
-496
2,837
5,375
2.21
0.69
1986 and 2001 (Table 1).4
786
Trailers, and other vehicles, not motorised
55
38
-166 -0.01
-0.06
The contribution to manu791
Railway vehicles and associated equipment
-189
114
-1,692
0.20
-0.49
facturing trade turned neg792
Aircraft and associated equipment, and parts
-1,189
-2,039
-1,06,774 -0.56
-28.62
ative during 2001 to 2008,
793
Ships, boats and floating structures
-1,410
-3,046
-21,895
-1.08
-5.15
81
Sanitary, plumbing
14
79
-822
0.04
-0.25
particularly for chemicals
82
Furniture and parts
12
136
190
0.08
0.01
excluding pharmaceuticals
83
Travel goods, handbags
536
3,142
6,702
1.73
0.97
and machinery and in var84
Articles of apparel and clothing accessories
10,981
54,547
1,08,154 28.85
14.65
ying degrees for metal
85
Footwear
564
3,785
11,847
2.13
2.20
products, motor vehicle
871
Optical instruments and apparatus
-453
-216
-1,728
0.16
-0.41
parts, railway equipment,
872
Medical instruments and appliances
-14
-1,933
-5,333
-1.27
-0.93
watches and clocks. But do873
Meters and counters
-2,046
-94
-94
1.29
0.00
mestic production kept
874
Measuring, checking, analysis, controlling instruments
-95
-4,168
-22,844 -2.70
-5.10
pace with rising net im881
Photographic apparatus and equipment
-684
-380
-367
0.20
0.00
ports to prevent any sharp
882
Photographic and cinematographic supplies
21
-1809
-2,934
-1.21
-0.31
decline in the domestic pro883
Cinematograph film, exposed and developed
-58
183
211
0.16
0.01
884
Optical goods
-235
-1,616
-2,188 -0.91
-0.16
duction ratios.
885
Watches and clocks
-1,156
258
-977
0.94
-0.34
But this is not so for the
89
Miscellaneous manufactured articles
2,704
9,642
42,689
4.59
9.03
other industries listed in
Total manufacturing
-43,915
1,07,103 -2,58,849 100.00
-100.00
Table 2. Net imports rose
(1) Trade balance = exports –imports. (2) Sectoral contribution (%) is defined as the change in sectoral trade balance as a percentage of the
absolute value of the change in the total manufacturing trade balance. (3) SITC-Rev-2 manufacturing groups (mostly at 3-digit level) considered sharply at the cost of doabove correspond mainly to 3 digit groups in the National Industrial Classification, 2004 used by the Annual Survey of Industries.
mestic production signifiSource: Calculated from UNCOMTRADE database (http://comtrade.un.org/db/default.aspx).
cantly weakening, in the
limitations, changes in the ratio over time may provide a process, the domestic production base, particularly for indusbroad indication of the changing status of domestic produc- tries. The production ratio for aircraft has fluctuated a great
tion.2 Accordingly we have considered in Table 2, the index of deal but the trend is distinctly downwards reaching an index
the domestic production ratio with the average of 1989 and of 20 in 2007. For “TV and radio transmitters and apparatus
1990 as the base year. Thus Table 2 gives an idea about the for line telephony and telegraphy” and office and computing
Table 1: Sectoral Manufacturing Trade Balance ,1986, 2001 and 2008
SITC Rev-2 Codes
Manufacturing Groups
Economic & Political Weekly
EPW
FEBRuary 23, 2013
Trade Balance Trade Balance Trade Balance Sectoral
Sectoral
1986
2001
2008
Contribution Contribution
$ Lakh
$ Lakh
$ Lakh 1986-2001 (%) 2001-08 (%)
vol xlviii no 8
43
SPECIAL ARTICLE
Figure 2: Aircraft Manufacturing Trade (1990-2010)
12,000
10,000
$ million
8.000
6,000
4,000
Imports
2,000
Exports
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
SITC Rev-2 code 792 for aircraft and associated equipment and parts.
Source: UNCOMTRADE database (http://comtrade.un.org/db/default.aspx).
2010
than three-fourths of the total manufacturing trade deficit in
2008 (Table 1). As indicated in Figures 2 to 4, imports of each
of these goods accelerated in the early 2000s. With exports
increasing modestly, rising imports resulted in huge trade deficits.
As is well known, GDP growth in India is spearheaded by the
services sector. During the last five years, for example, the
latter has grown at an average rate of 12% compared to 8% for
industry and 4% for agriculture. The services sector now accounts
for more than half of India’s GDP (CSO 2012). Within the services
sector, communication, software and air transportation have
Figure 4: Telecom Equipment Manufacturing Trade (1990-2010)
Figure 3: Computer Manufacturing Trade (1990-2010)
12,000
5,000
10,000
$ million
$ million
4,000
3,000
2,000
Imports
8,000
6,000
4,000
Exports
1,000
Imports
2,000
Exports
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
SITC Rev-2 codes (752 + 7599) for automatic data processing machines and parts.
Source: Same as in Figure 2.
1990 1992 1994 1996 1998 2000 2002 2004
SITC Rev-2 code 764 for telecommunication equipment and parts.
Source: Same as in Figure 2.
machinery, the index went down to 31 and 51 respectively
in 2007.5
Consider the important sectors of aircraft, computers and
telecommunication equipment which have been experiencing
a high trade deficit.6 The total trade deficit in these three
industries amounted to $207,154 lakh accounting for more
been experiencing a boom particularly since the early 2000s.
As Table 3 (p 45) shows, communication services (postal, courier and telecommunications) GDP at constant prices have
been growing at around 25% per annum since the early 2000s.
In telecommunications, the number of cellular subscribers has
seen an explosive growth from 3.4 lakh in 1996-97 to 6.68
0
2006
2008 2010
Table 2: Index of Domestic Production Ratio (Base year: average of 1989 and 1990)
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Chemicals Pharma- Iron and Metal
General
Special
Office and
TV and Radio
Excluding ceuticals Steel Products Purpose
Purpose Computing Transmitters and
PharmaMachinery Machinery Machinery Apparatus for
ceuticals
Line Telephony
and Telegraphy
100
97
101
100
98
103
104
102
103
109
109
109
108
108
104
104
101
103
98
100
100
100
102
104
102
104
106
109
110
111
111
110
110
111
103
104
106
104
104
105
105
105
107
110
109
111
113
112
110
108
107
103
111
106
104
102
102
102
102
106
109
114
109
116
111
109
104
98
104
102
102
95
92
93
92
91
92
95
99
100
96
95
93
88
87
104
96
89
87
85
90
90
100
105
104
104
97
98
97
92
86
90
107
104
101
105
101
108
90
50
50
55
64
57
59
48
48
46
51
105
102
98
97
100
100
94
91
85
72
69
50
30
26
27
24
31
Electrical Household Motor Motor
Machinery Equipment Vehicles Vehicle
Parts*
104
98
101
101
99
103
101
100
99
98
100
98
97
95
99
100
99
100
102
101
101
100
100
100
99
98
98
97
99
100
98
98
98
96
103
103
102
102
101
103
102
107
102
103
102
101
104
103
106
106
105
100
98
100
105
104
103
102
105
104
102
Railway Aircraft
Equipment
101
101
103
107
103
96
104
83
96
93
110
102
89
92
90
97
99
227
191
64
81
116
95
146
57
258
101
71
63
28
32
19
8
20
Ships
and
Boats
126
114
125
132
125
108
110
117
75
77
105
63
64
49
57
39
72
Optical
Watches
Instruments
and
and
Clocks
Photographic
Equipment
131
83
137
138
150
155
148
119
132
120
63
69
90
119
101
101
80
106
107
112
116
113
112
115
111
110
115
125
124
125
126
108
98
94
(1) Domestic production ratio is defined as domestic production as a percentage of (domestic production + imports – exports). Average of 1989 and 1990 = 100. (2) *Base year for
motor vehicles parts is 1998, the first year for which production data are available from ASI. (3) See Appendix for the table of concordance between NIC, 2004 classification used for ASI
production data and SITC-Rev 2 classification used for of UNCOMTRADE trade data. ASI production data corresponding to SITC Rev-2 group of automatic data processing machines and
parts (codes 752+7599) and of telecommunication equipment and parts (codes 764) are not available. Hence in this table we have considered the entire group of office machines and
automatic data processing machines (code 75) and electrical line telephonic and telegraphic apparatus and parts, television, radio-broadcasting; transmitters and telecommunications
equipment (codes 7641+7643+7648+76491) to correspond to ASI groups 300 and 322 respectively – see the Appendix.
Sources: (1) Value of production data (in rupees) of the Annual Survey of Industries obtained from CMIE’s Business Beacon database have been converted to $ values by using the foreign
exchange rates available from the website of RBI (www.rbi.org.in). ASI changed the industrial classification 2008-09 onwards. Hence we consider the period till 2007-08. The source of
trade data (in $) is UNCOMTRADE (http://comtrade.un.org/db/default.aspx). (2) ASI production data are for the organised sector. UNCOMTRADE trade data refers to country’s aggregate
comprising both organised and unorganised sectors. Some industry groups with significant unorganised sector presence, for example leather, garments, textiles have not been included
in the table. (3) ASI production data refers to financial years; UNCOMTRADE refers to calendar years. ASI production data for 1991-92 corresponds to UNCOMTRADE data for 1991 and so on
for other years.
44
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SPECIAL ARTICLE
million in 2001-02, 101.87 million in 2005-06 and 811.60 million
in 2010-11. The number of landline telephone connections too saw
a rapid growth. But lately it has started declining – the share of
landline telephones has gone down from over 85% in 2001-02
to less than 5% in 2010-11. The number of passengers travelling within the country has grown from around 13 million in
the early 2000s to 54 million in 2010-11. The export-oriented
software industry is another high growth sector. Though lately
software exports have experienced some deceleration in growth
(7.4% and 11.6% in 2009-10 and 2010-11 respectively), it has
been growing earlier at more than 30% per annum (Table 3).
Table 3: Growth of Services in India
Year
Communication
Services (GDP
at Constant Prices)
(Annual Growth
Rate) (%)
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
6.6
7.4
12.7
13.3
15.4
16.4
10.7
20.1
19.5
22.1
25.0
19.4
23.2
25.8
21.0
23.5
24.3
24.1
25.1
31.7
27.2
Telephone
Connections
(Landline)
(Million Nos)
5.07
5.81
6.80
8.03
9.80
11.98
14.54
17.80
21.61
26.65
32.71
38.29
41.33
40.92
41.42
40.23
40.77
39.41
37.97
36.96
34.73
Cellular
Export of
Subscribers Software Services
(Million Nos)
in $
(Annual Growth
Rate) (%)
NA
NA
NA
NA
NA
NA
0.34
0.88
1.20
1.88
3.58
6.68
13.30
35.61
56.95
101.87
165.09
261.08
391.76
584.32
811.60
NA
NA
NA
NA
NA
NA
NA
NA
49.2
52.9
57.9
19.2
27.1
33.3
38.3
33.3
32.6
28.8
14.9
7.4
11.6
Passengers
Flown in
Domestic
Scheduled
Operations
(Million Nos)
7.91
8.92
7.89
7.51
7.27
7.43
7.91
11.55
12.02
12.71
13.72
12.84
13.94
15.68
19.45
25.18
35.79
44.36
38.82
45.20
54.05
Sources: (1) Col 2: CSO 2012. (2) Cols 3 and 4: Department of Telecommunications, Annual
Report (various issues) for 1996-97 onwards; CMIE, Business Beacon database for the
period before 1996-97. (3) Cols 5 and 6: CMIE, Business Beacon database.
The growth of these services has resulted in huge demand
for manufactured goods – computer hardware, telecommunication equipment, aircrafts and components. As we will elaborate below with respect to telecommunications, economic liberalisation has contributed to the rapid growth of the services
part. But industrial reforms implemented since the early 1990s
had quite an opposite effect on the manufacturing part. We
will argue that due to the lack of an industrial policy the country has failed to adequately utilise the opportunity to develop
the domestic manufacturing capacity and capability in telecommunications equipment and has become increasingly
dependent on imports. As our discussion above suggests, this
seems to be the case in computer hardware and aircraft manufacturing too. The growth of manufacturing has failed to keep
pace with the growth of software services and air traffic.7
Industrial Policy and the Pharmaceutical Industry
By the time India became independent in 1947, the international pharmaceutical industry was transformed into a vast
Economic & Political Weekly
EPW
FEBRuary 23, 2013
vol xlviii no 8
Research and Development (R&D) intensive industry dominated by multinational corporations (MNCs). To develop the
industry the government not only encouraged but invited the
MNCs to start manufacturing operations in the country. But despite
the favourable attitude and persuasion of the government, the
response of the MNCs was poor. They preferred imports to local
production. Even when they started some manufacturing, they
were keen to formulate imported bulk drugs rather than to
produce them and develop the production base in the country.
It was primarily because of the reluctance of the MNCs to start
production from basic stages that the government decided not
only to undertake such production in the public sector but
also to initiate several other steps with the specific objective of
supporting the indigenous sector and developing the industry.8
The most significant intervention was the enactment of the
Patents Act, 1970 and the abolition of product patent protection in pharmaceuticals. This eliminated the monopoly status
which the MNCs enjoyed till then. Thus the indigenous firms
could immediately manufacture the new drugs if they could
develop processes for manufacturing these. While developing
manufacturing technologies, the indigenous sector benefited
from the externalities associated with public investments in
manufacturing and R&D. The government not only set up public
enterprises, it also put in place research laboratories under the
Council of Scientific and Industrial Research (CSIR). In many
cases the CSIR laboratories and the industry collaborated with
each other to develop process technologies.
Another important step was the introduction of the New
Drug Policy, 1978. Under the NDP, the Indian companies were
favoured vis-á-vis the MNCs. Restrictions were imposed on the
MNCs which were not applicable to the indigenous sector.9 One
of the most important policies was that the MNCs were not allowed to market formulations unless they themselves produced the bulk drugs in specified ratios. While some relaxations, for example, broad banding,10 were provided, the stricter
licensing requirements for the MNCs continued in the Drug
Policy of 1986.
Spearheaded by the Indian companies, large-scale production of pharmaceuticals started particularly since the 1980s
and the country experienced a surplus in pharmaceuticals
trade for the first time. The surplus improved since the late
1980s. The growth since the 1980s does not reflect the success
of the reforms of the 1980s or that of the 1990s. Rather it is the
result of the state-led development strategy that was pursued
earlier. The fact that the transformation did not happen earlier
goes to show the difficulties of developing industries in developing countries. Some of the efforts, for example, initially persuading the MNCs to set up the industry, did not succeed. The
task of revising the patent law was initiated immediately after
India’s independence. But due to intense lobbying by the MNCs
it took more than two decades to do so. What the earlier liberal
policies and persuasion could not do in the 1950s and 1960s,
direct interventions by the government in the 1970s and 1980s
not only provided the indigenous sector the space and the
opportunity to develop but also compelled the MNCs to undertake manufacturing investments from basic stages.
45
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By the time the reforms were started in the 1990s, Indian
companies had emerged as a dominant force. Indian companies became a major player in the global pharmaceutical industry receiving worldwide recognition as a low-cost producer
of high quality drugs exporting not only to other developing
countries but increasingly also to developed countries particularly the United States (Chaudhuri 2010). Unlike in aircraft,
computers and telecom equipment (Figures 2 to 4), the pharmaceutical industry experienced a trade surplus all through
the 1990s and 2000s (Figure 5). In fact, while the contribution
of the former to the trade balance deteriorated sharply during
the 2000s that of the pharmaceutical industry improved
(Table 1).
Figure 5: Pharmaceutical Manufacturing Trade (1990-2010)
80,000
$ million
60,000
40,000
Exports
Imports
20,000
0
1990 1992 1994 1996 1998 2000 2002 2004
SITC Rev-2 code 541 for medicinal and pharmaceuticals products.
Source: Same as in Figure 2.
2006 2008
2010
The market share of larger firms has been increasing in the
domestic market (Chaudhuri 2010). Abolition of industrial
licensing may have helped the larger firms. Import liberalisation too may have helped some Indian companies. China has
been offering some bulk drugs and drug intermediates at prices
lower than what Indian competitors could do. Indian exporters
have benefited from cheaper bulk drugs and drug intermediates imported from China.11 Indian companies could exploit the
opportunities arising out of reforms because by then they had
acquired the competence to do so. As we will see below, in the
case of telecom equipment, manufacturing opportunities remained underutilised after reforms because indigenous technology
was not developed and the MNCs who have the technologies
neither used nor transferred technologies in the country.
For the drug MNCs, the situation is similar to that during
the 1950s and 1960s. Interestingly enough their current behaviour too is reminiscent of the earlier period. With the
withdrawal of restrictions in the 1990s, the MNCs have
started disinvesting in manufacturing operations. They have
sold a number of plants which they had set up earlier under
government pressure. The days of product monopolies and
high prices are back in India. The MNCs have started marketing
new patented drugs at exorbitant prices particularly for lifethreatening diseases such as cancer. Imports of high-priced
finished formulations are expanding rapidly with manufacturing investments lagging far behind. With the taking over of
some Indian companies, for example, Ranbaxy, the MNC share
in the domestic formulations market has risen dramatically in
recent years (Chaudhuri 2012). A few more Ranbaxy-type takeovers can shatter the confidence of the Indian generic industry
and “neutralise the sting out of India’s generics revolution”
(Ministry of Commerce and Industry 2008, pp 42-44). The need
46
for government regulation is being advocated in the pharmaceutical industry also which is more mature than the telecommunications equipment manufacturing industry discussed below. Some provisional changes have been made in the pharmaceuticals foreign direct investment (FDI) policy in India in 2011.
To acquire domestic units, MNCs now require prior permission
from the government. Pharmaceutical FDI policy has become a
very controversial issue. The final policy is yet to evolve.12
Telecom Equipment Manufacturing
The telecommunications sector can broadly be classified into
telecom services (mainly landline and cellular telephone services) and telecom equipment manufacturing. Before 1984,
both telecom services and telecom equipment manufacturing
were government monopolies. The Department of Telecommunications (DoT) of the central government was the sole
service provider and manufacturing of the entire range of telecom equipment (switching, transmission and terminal equipment) was exclusively reserved for the public sector. The
Indian Telephone Industries (ITI) was the main public sector
undertaking operating in this sector (DOT 2004, p 1).
Reforms in the telecom sector started in 1984. The entry of
the private sector in telecom equipment manufacturing was
initiated in that year with the government permitting private
firms to manufacture terminal equipment, mainly telephone
instruments. So far as switching equipment is concerned, the
government set up in the same year the public sector research
organisation, Centre for Development of Telematics (C-DoT) to
indigenously design, develop and commercialise digital electronic switching systems. In 1991 the entire telecom equipment
manufacturing was delicensed and entry of Indian private
firms and foreign firms permitted. In telecom services, the private sector was permitted in 1992 to provide cellular mobile
services and other value added services such as radio paging
and video conferencing. In 1994 the private sector was permitted to enter basic telephone services as well (DOT 2001, p 5).
Liberalisation of telecom services ushered in a new era in
India. Before the 1990s, telecom access was hardly a priority in
the state-owned telecom sector. Access to telephone was essentially considered a “luxury” meant for the elite and public
investment in the sector was low (Srinivasan 2010). The result
was that access to telephone and other telecom services was in
a very poor state. One had to wait years before getting a phone
connection. The priorities of the government altered radically
in the 1990s. The National Telecom Policy, 1994 (NTP 1994)13
stated that “the focus of the Telecom Policy shall be telecommunication for all and telecommunication within the reach of
all. This means ensuring the availability of telephone on demand as early as possible”. Acknowledging that the government will not be able to generate the resources to achieve the
target of universal access, NTP 1994 stressed the need for
private investment “in a big way to bridge the resource gap”.
What one witnessed thereafter is active state intervention to
realise these objectives. Under the NTP 1994, the private firms
were given licences through competitive bidding on the basis
of the fixed fee quoted by the firms.
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When the entry of the private sector and the expansion of
the telecom network were found to be less than what was projected, the government took the proactive step to revise the
telecom policy in 1999. The government agreed with the view
of the private sector that the fixed fee system was not remunerative enough for private investment and in the New Telecom Policy, 1999 (NTP, 1999), rather than insisting that the
private players fulfil their commitments, permitted them to
migrate from the fixed licence fee regime to revenue sharing
regime. This has been one of the most important landmarks on
telecom reforms (NTP 1999 and DOT 2001, p 6). It is significant
that the specific targets of the NTP 1999 have been more than
achieved. As against NTP 1999s target of overall tele-density
of 15 and rural tele-density of four by 2010, what was achieved
was 76.86 overall and 37.52 for rural by 2011. The target of
achieving telecom coverage in all villages too has been almost
met. By 2011, 5.76 lakh villages, i e, 97.11% of the villages have
village public telephone (VPT). With almost a billion telephone
connections, India has the second largest network in the world
after China (DOT 2012, pp 1, 5).
The declared objectives of telecom reforms, however, have
been not only to enhance access to services but also to
strengthen manufacturing. NTP 1994 attempted “to ensure
that India emerges as a major manufacturing base and major
exporter of telecom equipment”. Similarly the NTP 1999 not
only states that “access to telecommunication is of utmost importance”, but that its objective is also to “strengthen research
and development efforts in the country and provide an impetus to build world class manufacturing capabilities”. But in
stark contrast to what happened in telecom services, the impact on telecom equipment manufacturing has been adverse.
In the pre-reforms period, domestic manufacturing of telecom equipment was essentially sustained through public procurement and import substitution policies (Mani 2008). With
both the service provider (DoT) and the manufacturer (ITI)
owned by the government, the latter was assured a guaranteed market. Even after telecom equipment manufacturing
and technology imports were liberalised in the early 1990s,
DoT, the sole service provider at that time continued with the
policy of procuring equipment only from local sources. Thus
MNCs such as Siemens, Ericsson and AT&T were forced to set up
manufacturing bases in the country either directly or through
local partners to get a share of DoT’s procurement. This regulated the imports of finished equipment and ensured that at
least a part of the value addition takes place in the country. But
as a part of the reforms as DoT ceased to be the sole service
provider and as private players entered the scene from the
mid-1990s onwards, government did not insist on mandatory
purchase from local sources.
With no compulsion on the part of the private sector operators to buy from local sources, they started importing from
abroad, often facilitated by the availability of cheap credit
arranged by overseas suppliers. The procurement policy of the
public sector too was changed. The clause in the tenders that
the suppliers will have to be “Indian manufacturers” was amended to “Indian manufacturers/suppliers”. Thus public sector
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service providers BSNL and MTNL started buying from Indian
suppliers who were not manufacturing but merely importing
and supplying to them. The existing manufacturers – ITI and the
MNCs – too started trading activity, importing and supplying
equipment to service providers (DOT 2004, pp 2-5).
Import Liberalisation
Several other factors intensified this tendency. In line with India’s commitment to the World Trade Organisation, both tariff
and non-tariff barriers have been progressively lowered. The
import duty on finished telecom equipment was 65% in the
mid-1990s. It came down to 35% by the late 1990s and 15% by
the early 2000s. By the mid-2000s import duty on telecom
equipment was abolished together. This was not mandated by
the General Agreement on Tariffs and Trade (GATT). Unlike
GATT which is mandatory for all WTO member countries, the
Information Technology Agreement (ITA) being a plurilateral
WTO agreement, India had the option not to join it. But India
was among the first developing countries to do so and committed herself to a zero import duty structure.14
Another factor which had a profound effect on the structure
of manufacturing and imports has been the rise and growth of
cellular services. It led to demand for entirely different types
of telecom equipment. But indigenous capability and capacity
did not develop to tap the potential. As Figure 4 shows, the
trade deficit in telecommunication equipment was broadly under control till the late 1990s. But with the boom in the cellular
mobile services since the early 2000s (Table 3), the trade deficit worsened tremendously. The trade deficit increased at a
compound annual rate of growth of 35% from –$661 million
in 2001 to –$10012 million in 2010. This failure needs to be
looked into in historical perspective.
While ITI satisfied the equipment requirements of the service provider, DoT, it failed to develop as an innovative organisation. ITI remained dependent on foreign technology suppliers since its inception in 1949. As Mani (1989) shows, it failed
to properly absorb, assimilate and further develop the technology imported. As a result, as technology and hence the requirements of equipment changed, ITI had to resort to fresh imports
of foreign technology. What is worse, the choice of foreign
technology was not always appropriate and the cost of technology imports quite high (see also Saha 2004).
This was sought to be reformed by setting up C-DoT. The target was very ambitious – it was to develop within a short time
and with a small budget, import substituting telecom equipment technologies which are cheaper and more suited to Indian
conditions. C-DoT responded remarkably well. Its first major
success was in developing small (256 line) rural automatic
exchanges (RAX). Gradually it also developed larger capacity
switches ultimately of up to 40,000 lines. It achieved most of
its initial targets and revolutionised the telecom equipment
manufacturing industry in India. It was able to do in a few
years what ITI dependent as it was on foreign technologies
could not do in several decades (Saha 2004; Mani 2005a).
What C-DoT demonstrates is the importance of a supportive
industrial policy in developing indigenous technology and
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industry. The government intervened in three crucial ways: in
funding C-DoT, in giving it a free hand to pursue clearly stated
objectives and supporting it against unequal competition from
the MNCs. Despite the doubts about the capability of C-DoT
technologists and the opposition from the MNC lobby, it could
deliver because of the direct support from the then prime minister, Rajiv Gandhi and his immediate successor, V P Singh
(Chandra 1994).
With the liberalisation in the 1990s and the changing priority of the government, the role of C-DoT weakened. It lost the
earlier focus and dynamism. It failed to adapt to the new environment. The result has been that though about two-thirds of
India’s landlines are based on C-DoT technologies (TRAI 2011,
p 118), a strategy to indigenously develop equipment for cellular mobile services was conspicuous by its absence leading to
massive imports as mentioned above. In the early 1990s, particularly after C-DoT’s initial success, India was ahead of
China in telecom manufacturing technology. But whereas
China quickly moved from that level to develop a world class
industry, India failed to do so.15
One of the objectives of economic reforms since 1991 has
been to facilitate industrial growth. This was sought to be done
by making the business environment more attractive to private players including foreign firms. Hence government monopoly and industrial licensing was abolished and entry of MNCs
not only permitted but encouraged. Initially the limit of FDI
was 49% of the total equity capital. Later it was relaxed and
now any firm can set up a manufacturing unit without any
prior permission with 100% foreign equity. But these measures
did not promote domestic production. The MNCs who had the
technology to manufacture telecom equipment were neither
using the technology nor transferring the technology, to manufacture locally except in a limited way as mentioned below.
They were more interested in importing the equipment and
policies such as import liberalisation directly favoured such activities. The duty structure is such that domestic manufacturers
rather than getting support actually face disadvantages compared to imports. Whereas importers of finished equipment pay
no import duty, domestic manufacturers are required to pay import duties on components imported. In addition they pay state
value added tax (VAT) and central sales taxes which are not applicable for imports (TRAI 2011, pp 7, 84). This is in sharp contrast
to what happened in China. The government there played a
significant and positive role in developing the telecom equipment
manufacturing industry. The government used foreign capital
and technology but regulated it to partner with local enterprises
and supported the latter to take up lead roles in building the
industry (Saha 2004; Mani 2005b; Harwit 2008, Chapter 5).
If one were to learn lessons from the experience in the last
two decades, the conclusion is inescapable that the telecom
equipment sector is in dire need of significant reforms – not in
the form of deregulation as in the 1990s, but reforms to design
and implement a strategy for technological and industrial
development in the country as in the late 1980s. In other
words, what is required is active state intervention to promote
domestic manufacturing of telecom equipment. There is no
48
indication to suggest that a rethinking of the strategy has
taken place at the country’s highest decision-making level. But
at the micro level, an attitudinal change is discernible among
those who are more directly aware of and involved with the
industry. Recognising the crucial importance of an industrial
policy, the Telecom Equipment Manufacturers Association of
India (TEMA) has been asking for quite some time for a stateled strategy involving all the stakeholders (Aggarwal 2012).16
Again, the reports of government working groups comprising
of government officials from relevant administrative departments and industry representatives have been acknowledging
the difficulties of domestic manufacturing and have been suggesting corrective measures (see, for example, DOT 2006).
TRAI Recommendations
Perhaps the most significant is the attempt by the Telecom
Regulatory Authority of India (TRAI) to develop a “telecom
equipment manufacturing policy” (TRAI 2011). It has recommended a series of steps to promote domestic manufacturing.
These recommendations emerged through a consultative process involving the stakeholders. Telecom equipment is broadly
classified between telecom network equipment and end-user
equipment (such as mobile handsets, dongles, and modems).
The former is further classified between active equipment
(such as fixed and mobile switches, routers, base stations,
transmission equipment) and passive equipment (such as cables
and towers). Passive equipment is largely sourced locally (TRAI
2011, p 18). In recent years a number of MNCs (such as Nokia,
Samsung, LG, and Huawai) and some local players (for example, Micromax, Spice Mobile) have started manufacturing mobile handsets. As a result production has improved and exports
have also started (TRAI 2011, pp 37, 44). This has generated an
expectation that India may develop as a manufacturing hub
(Mani 2008; KPMG and FICCI 2010). Even before handset manufacturing began, some companies such as VMC and Tejas Networks took the initiative to invest in manufacturing some active
equipment.17 These individual initiatives are noteworthy but as
India’s import dependence suggests, the overall impact has
been limited. Total value of production of telecom equipment
has been rising but due to high import content, value addition
in the country is limited. Focusing on the value addition that
takes place in the country, TRAI (2011, pp 41-42) has estimated
that only about 12% of the demand for telecom equipment is
met from domestic production. These are approximate figures
but they give us an idea about the magnitude of the problem.
The most significant recommendation of TRAI is that preferential market access should be provided to domestic manufacturers of equipment by both public and private service providers when procuring equipment. To discourage local production
with high import content, mandatory procurement has been
linked to the extent of value addition in the country. Among
the other recommendations are loans at subsidised rates of interest, providing venture capital, reducing and rationalising
the structure of indirect taxes so that local production is not
disadvantaged, income tax holiday, providing infrastructure
facilities through telecom clusters, establishing proper testing
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and certification facilities. Recognising that R&D is vital in this
technology-intensive industry where rapid changes take place,
TRAI has recommended the setting up of a Telecom Research
and Development Corporation for managing a research fund
and setting up a telecom research park.
Some of these recommendations have been accepted in the
National Telecom Policy 2012 (NTP 2012) announced by the
government.18 Like the earlier telecom policies, NTP 2012 has
stressed the importance of domestic production. In fact it has
stated that one of the missions is “to make India a global hub
for telecom equipment manufacturing”. A lot however will depend on how these policy pronouncements are implemented.
So far as mandatory domestic purchase is concerned, NTP 2012
has diluted the recommendation of TRAI. A rider has been
added that indigenous products must be “comparable in price
and performance to imported products”. This seems to be the
result of the strong objections from the Cellular Operators
Association of India and MNC equipment manufacturers.19
Questioning the capability of indigenous enterprise to develop
technology is a typical way to suppress the potential and continue with the domination of the MNCs. It may be recalled that
C-DoT faced quite a hostile environment. It required direct
intervention from the top political leadership to support the indigenous initiative and enable C-DoT to do what it did. Mandatory purchase requirement at that time did not make C-DoT less
efficient. In fact C-DoT showed that it is possible not only to develop technologies as per international standards. The products
can be cheaper and more suited to Indian conditions. If the
telecom equipment industry is to develop properly, piece meal
half-hearted steps will not do. What is required is a mission with
full political support as in late 1980s when C-Dot was set up.
Conclusions
The manufacturing trade balance in India did not worsen after
the economic reforms started in 1991. In fact it improved till the
early 2000s. But this as such does not reflect the success of the
Notes
1 UNCOMTRADE data using SITC Rev-1 classification are not available before 1962 (see Notes
to Figure 1).
2 This is particularly true for industries such as
specialised machinery, aircraft, computers
where the role of the unorganised sector may
not be very important. We have not considered
in Table 2, industries such as textiles, garments,
leather rubber, wood where the presence of the
unorganised sector is significant.
3 For metal products, the index went down to 98
in 2007. But it has been well above 100 in recent years.
4 The sectoral contribution was negative but
only marginally so for household equipment
(-0.23%) and electrical machinery (-1.79%)
during 1986-2001.
5 As explained in notes to Table 2, we have considered TV and radio transmitters and apparatus for line telephony and telegraphy in Table 2
rather than telecommunication equipment as
in Table 1 and the broader group of office machines and automatic data processing equipment in Table 2 rather than just automatic data
processing machines as in Table 1 because of
lack of corresponding data from ASI.
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reforms of the 1990s or for that matter the reforms of the 1980s.
It is rather the result of the successful growth of industries such
as pharmaceuticals which the earlier planning strategy helped
to develop. If results were not always visible earlier it was because it takes time to develop new industries in developing country settings. In pharmaceuticals the actions in the 1950s and the
1960s turned out to be inadequate. The growth since the 1980s
followed some radical government interventions in the 1970s.
The economic reforms of the 1990s led to the growth of
services such as air travel and telecom services. The structure
of demand changed in favour of capital goods such as aircraft
and new types of telecom equipment. But the manufacturing
base did not respond appropriately. Reforms did not help the
domestic manufacturing of these goods. Opportunities arising
out of reforms could not be exploited by domestic manufacturers. Underdevelopment of these industries is the main reason
why the manufacturing trade deficit has worsened since the
early 2000s.
Economic reforms – withdrawal of government regulation
and freedom to the private sector – are at best an opportunity
for the firms which have already acquired the capabilities and
capacities to develop further. It does not automatically lead to
the creation of such competencies in firms which lack these in
the first place. In developing countries in underdeveloped industries, reforms basically favour the MNCs from the developed
countries which dominate these industries. This does not guarantee the development of the industry in developing countries.
The government by regulating the MNCs and supporting indigenous efforts can help the development of these industries.
Regulating the MNCs not only provides space for the growth of
the indigenous sector. It also compels the MNCs to contribute
more to the economy.
The rising manufacturing trade deficit if not checked can lead
to a major economic crisis. It calls for a proper industrial policy
to develop in India industries such as computers and telecom
equipment which are currently dependent on imports.
6 As mentioned in the earlier footnote, trade
data (but not ASI production data) are available for the finer groups of computers and telecommunication equipment.
7 In air traffic too abolition of the monopoly of
the government-owned carrier and the entry of
private players had a major impact in the
growth of the passenger traffic. The impact of
reforms on the software industry is more controversial. Balakrishnan (2006), for example,
attributes a major role to active state intervention for the growth of the software industry.
8 This account of the rise and growth of the pharmaceutical industry before the 1990s is based
on Chaudhuri (2005), Chapters 2 and 4. All the
sources are mentioned there.
9 Under the Foreign Exchange Regulation Act,
1973 (FERA), a distinction was made between
firms with foreign equity of more than 40%
(FERA companies) and those with foreign
equity at 40% or below. The later were effectively treated as the Indian sector and the
former as the foreign sector.
10 They were allowed to expand and diversify without specific licences if the items of production were
within the broad product groups announced.
11 But in the midst of India’s export success what is
often overlooked are the costs of such imports.
vol xlviii no 8
12
13
14
15
Plants unable to compete against cheaper imports have closed down (Reji 2012). India sources
about 70% of requirements of drug intermediates
from China (Ministry of Commerce and Industry
2008, p 49). Dependence on a single source
(China) for vital materials is hazardous.
“PM meet to finalise FDI in pharma”, in The
Hindu, 19 September 2012 (accessed from
www.thehindu.com).
The text of NTP 1994 and NTP 1999 accessed
from www.trai.gov.in
See “Brief note on status regarding information
technology agreement”, accessed from the
website of the Ministry of Commerce and Industry, http://commerce.nic.in; DOT 2001,
p 41. Several government reports have highlighted the plight of indigenous manufacturers
(DOT 2001, 2004). See also Mani (2008).
It is worth quoting what B D Pradhan, the Executive Director, C-DOT from 1990-95 wrote in
a paper: “The early successes of the RAX in the
country prompted us to explore the markets
abroad. One of the first countries we explored
was China... While the Chinese showed a great
deal of interest, we realized that they would
resist its import from India. While there, we
also visited the local telecom factories. The factories we saw were primitive compared to our
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16
17
18
19
ITI. In some factories, workers were idle and
waiting for components to arrive from Europe
for completing the assembly of their equipment. That the Chinese have been able to develop their Telecom Industry and Infrastructure from that level of primitiveness to world
class levels today, is to be admired. It is difficult
to avoid a sense of disappointment that, despite
our much advanced state of development at
that time, we were unable to move quickly
ahead during the last 15 years and leapfrog in
the development, manufacturing and deployment of telecom” (Telecom Sector Innovation
Council 2011, p 7).
The author is the Director General of the Telecom Manufacturers Association of India
(TEMA).
See “Indian Telecom Equipment Manufacturing:
Current State and Potential Future Opportunities”
(accessed from http://knowledgefaber.com).
The text can be accessed from www.dot.gov.in
See the Press Release, “COAI response to TRAI
Recommendations on “Telecom Equipment
Manufacturing Policy” issued by the Cellular
Operators Association of India (accessed from
its website, www.coai.in); “Telecom gear makers’ body split over manufacturing policy”, The
Hindu Business Line, 20 February 2012.
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Appendix Table: Concordance between NIC, 2004 and SITC Rev-2 Classifications
NIC 2004 Code
NIC 2004 Description
SITC Rev 2 Code
24-242.3 Chemicals and chemical products except
pharmaceuticals, medicinal chemicals and
botanical products
242.3
Pharmaceuticals, medicinal chemicals and botanical products
271+273 Iron and steel
28
Fabricated metal products, except machinery and equipment
291
General purpose machinery
292
300
322
Special purpose machinery
Office, accounting and computing machinery
Television and radio transmitters and apparatus for line
telephony and line telegraphy
31+321
293
341
343
352
353
351
332
333
Electrical machinery and apparatus
Domestic appliances
Motor vehicles
Parts and accessories for motor vehicles and engines
Railway and tramway locomotives and rolling stock
Aircraft and spacecraft
Building and repair of ships and boats
Optical instruments and photographic equipment
Watches and clocks
SITC Rev 2 Description
5-541 Chemicals and related products except medicinal and
pharmaceuticals products
541
67
69
71+73+74
72
75
7641+7643+7648+76491
771+772+773+776+778
775
781+782+783
784
791
792
793
871+881+884
885
Medicinal and pharmaceutical products
Iron and steel
Manufactures of metals
General industrial machinery and equipment, power generating
machinery and equipment and metalworking machinery
Machinery specialised for particular industries
Office machines and automatic data processing equipment
Electrical line telephonic and telegraphic apparatus
and parts, television, radio-broadcasting; transmitters and
telecommunications equipment nes
Electrical machinery
Household type, electrical and non-electrical equipment.
Motor vehicles
Parts and accessories of motor vehicles
Railway vehicles and associated equipment
Aircraft and associated equipment, and parts
Ships, boats and floating structures
Optical instruments and goods, and photographic apparatus
Watches and clocks
Source: Author’s compilation on the basis of the detailed codes and description of National Industrial Classification 2004 (NIC, 2004) and Standard International Trade Classification, Revision 2 (SITC Rev-2).
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FEBRuary 23, 2013
vol xlviii no 8
EPW
Economic & Political Weekly