Increasing protectionist sentiments in the global level have reflected in Indian start-up sectors too. What are the impacts, if India allows such demands in to operation? (200 words)
Refer – Live mint
Enrich the answer from other sources, if the question demands.
IAS Parliament 6 years
KEY POINTS
· There are increasingly loud voices calling to shield India’s internet start-ups from foreign competition.
· Indian start-ups are of the view that, they are not able to match the resources of multinational companies and therefore need protection.
Impacts
· Promoting protectionist measures would hamper best products and services available (through promoting competition) to reach Indian consumers.
· India’s businesses and growing middle class want more choices, and cutting-edge tech companies are at the forefront of meeting these demands in a tailored way.
· For example, in 2016, Samsung launched a strategy entitled “Make for India”, creating products specifically based on insights from the Indian experience.
· In the presence of arbitrary barriers to market entry, it is difficult for companies to innovate in a unique fashion to cater to the Indian market.
· This will ultimately result in decreasing choices before Indian consumers and companies.
· Thus, preventing them a wider array of products and services to meet their demands and make India more uncompetitive.
· A tilt towards protectionism will likely result in a slide down in the World Bank’s Ease of Doing Business rankings, where India has recently made impressive gains.
· Additionally, limiting competition would disadvantage our acclaimed Digital India campaign and the Start-up India campaign as well, as Indian start-ups would lose access to international platforms and information.
· Doubling down and creating barriers might help some businesses in the short term, but in the long term, start-ups, entrepreneurs, and consumers would lose and India’s competitiveness would suffer.
· Additionally, the negative signal would leave both foreign and domestic companies wary of investing in India, and those that remain would have lost any incentive to innovate.
· Instead of allowing protectionist urges to isolate India from the thriving global technology sector, the government should invest in the future by encouraging start-ups to be more competitive.
