Market friendly, joint Centre-state approach key for new industrial policy

The growth boom in manufacturing that India experienced following the shift of focus from public sector to the private sector was driven more by market-friendly than business-friendly interventions

The global economy is in the midst of a proliferation of activist industrial policies whose beneficial effects, beyond enriching company owners, are doubtful. For instance, the current widespread subsidy-oriented government support for chip manufacturing, driven by geopolitical concerns, is likely to lead to global overcapacity, lower international prices, and reactive protectionist measures, ultimately resulting in higher costs for chip-using manufacturing activities in the states that are doing this. In fact, over the past few years, there has been a dramatic increase in distortive industrial policies globally, rising from a few hundreds in 2017 to more than 2,000 in 2023, with