India has over protected its companies from global competition in the past and if it continues to do so, it will end up creating third class firms, NITI Aayog CEO Amitabh Kant said today.
"India has over protected its companies, including auto companies for too long. Every time you open up India, it does extremely well. All these companies (that have faced global companies) have grown because we opened up to the rest of the world. If you keep protecting you will create third class companies, this is my view," Kant said today.
Kant was speaking at the launch of a the new programme in manufacturing and operations by the ISB here today.
He said companies like the Tatas, Mahindras, Heros competed and they came as world champions because India let its economy to open up.
"Don't protect, open them up to the rest of the world, they (companies) will go and capture the world," he said.
The ex-bureaucrat said this is not like the 19th century where one could deny to compete and become uncompetitive, and say that "I will be not competing with the rest of the world and I will say that I will protect my industry, that is not feasible any more".
Indian manufacturing has to be cost competitive, as well as the best in the world and also to have the size and scale, Kant said, adding that if companies are not cost competitive in the globalised world it is not possible to compete.
To thrust growth and to create job, India must focus on its manufacturing sector, and there is also a need to review the notion that the country can surpass manufacturing process and become a service driven economy, Kant said.
"We must understand that manufacturing is important but also innovation and design. India must become an innovative nation. Manufacturing gives returns but it doesn't give you full returns if you don't invest, innovate and design.
"And therefore India must become an innovative nation and the spirit of innovation must propel growth", he added.
India has a challenge to grow at the rate of 9-10 per cent for at least three decades to uplift a large section of the society from the poverty line, he said, adding that no country in the world has been able to do it without manufacturing.
"And there is no way India can grow at those rates by creating jobs without manufacturing sector. So if India's ambition is to grow at 9 per cent then the manufacturing sector actually needs to grow at 13-14 per cent per annum for a long period."
Unless India doesn't grow at those rates, it will be very difficult to create jobs, it will be very difficult to do exports, and it will be very difficult for India to penetrate global markets, Kant said.
