India's Domestic Revival: Exploring National Attitudes and Strategies

In a bid to boost economic nationalism, the Indian government has announced next-generation GST reforms, aiming to simplify compliance and lower costs for small enterprises. The reforms involve reducing the number of slabs to two (5% and 18%) and eliminating cess on most goods, with pre-filled returns and streamlined registration processes to reduce friction for small traders and manufacturers.

However, the approach to economic nationalism in India remains fragmented, with schemes often favoring large firms over Micro, Small, and Medium Enterprises (MSMEs). To address this, the government is proposing measures to enhance international partnerships, facilitate technology transfer, provide financial support, and promote market access to strengthen MSMEs through global collaboration.

The success of these GST reforms depends on their execution, particularly in reaching semi-formal and rural enterprises. Compliance must be radically simplified for small businesses operating in these environments, with policies designed for inclusion, not just efficiency. Policies should provide multilingual support, offline access, and proactive outreach to small businesses.

Vietnam, for instance, supports SMEs by streamlining compliance, offering subsidies, and investing in export readiness as part of their economic nationalism strategy. The country aims to raise the localisation rate in the textile sector to 51-55% in 2025.

India, too, needs to invest in domestic capacity across critical sectors such as electronics and pharmaceuticals, where a large percentage of components are currently imported. Government procurement in India should prioritise local producers through transparent tendering, timely payments, and simplified eligibility criteria.

The automotive sector serves as a case study for Swadeshi as a strategy, with collaborations like Maruti-Suzuki redefining "Buy Indian" as a choice rooted in quality, affordability, and innovation. These collaborations in the automotive sector enabled thousands of MSMEs in auto hubs like Pune, Chennai, and Gurgaon to absorb global best practices and integrate into international supply chains.

However, not all sectors are thriving. Shrimp exporters from Andhra Pradesh and coastal states are facing challenges during crises, with small players and workers particularly affected. The government, in collaboration with related state government departments, is working to address these issues and support these sectors.

P.V. Ramesh, former IAS officer and Andhra Pradesh's commissioner of industries, cautions that the current approach to economic nationalism risks being more rhetorical than strategic. Manufacturers must produce for all Indians, especially the bottom 50%, for mass consumption, which entails revitalization of MSMEs, addressing last-mile challenges for workers and small-scale operators, access to credit, technology, skilled workforce, and ease of access to domestic and global markets.

Genuine and sustainable economic nationalism entails absorbing global best practices, promoting domestic innovation, and strengthening institutions that nurture entrepreneurs producing for India and the world. Swadeshi must evolve to meet the demands of a world defined by crises, requiring resilience and proactive preparedness in supply chains, decentralisation of production, and investment in adaptive capacity across sectors.

There is a need for a proper mechanism for collaboration between Indian MSMEs and international partners, according to Vinod Kumar, president of the India SME Forum. South Korea's rise as a manufacturing powerhouse was due to a coordinated industrial policy that nurtured local champions, built skills, and ensured global market access. These are lessons India can learn from as it navigates its path towards economic nationalism.