Accelerating growth: the double-edged sword of self-reliance

There is opportunity up for grabs, with the world looking for alternatives to China as a supply source. With India moving towards self-reliance, with its Aatmanirbhar Bharat mission, is it flirting dangerously with protectionism or will it achieve exponential growth by nurturing local companies? There are two views emerging. Outlook Business’ Advantage India Chemical Summit saw an expert panel discuss the implications of replacing imports with local manufacturing. Will it create more enduring growth on the back of innovation or will it affect competitiveness in segments where India is a strong player? The panel included Sunil Punjabi, managing director and country speaker, Merck India and head of research solutions business for Merck Life Science; Varun Vijay Rao, chief procurement officer at Aceto US; Girish Dixit, president and executive director, Eisai Pharmaceuticals, India; and Dinesh Dua, chairman, Pharmaceutical Export Promotion Council of India (Pharmexcil). The discussion was moderated by Outlook Business Editor N Mahalakshmi and Hardik Joshipura, CEO of Innovassynth Technologies, also a partner for the summit.

Edited excerpts from the discussion:

Let’s just dive into this discussion. First of all, is self-reliance really a good ideal to pursue? If at all, where exactly should we be focusing, as a nation?

Punjabi: I think, the government has realised because of geopolitical issues, challenges that have come through this pandemic, or otherwise that there should be some minimum requirements met within the country. I do not think Aatmanirbhar means doing everything in-house. What it actually talks about is, in such (disruptive) events, are there capabilities or people available around those capabilities to ensure that we support it. It could be for food, medicine, or say, defense-related things. That’s what the government is trying to do. So, is it a good thing? I would say, yes. As a country, the minimum requirement, and if required, has to be scaled up.

Joshipura: On, as Punjabi mentioned, the geopolitical risk mitigation... when the government actually released some APIs in early 2020 to mitigate that risk, how did your company leverage this opportunity, in offering what we probably call localised raw materials to the big Indian pharma companies? Did you do something different to grab that opportunity?

Punjabi: Yes, I shall give a few examples, one for the national requirement and the other for the global requirement. As a company, we weren’t looking for government incentives but were looking at the challenge that needs to be addressed. Often, overcoming that challenge helps you fix problems and government incentives are icing on the cake. Prior to the pandemic, there were products coming to India from other parts of the globe, but (after the pandemic struck) these suppliers had their own challenges to address... some had with raw materials and some with diagnostic manufacturing products. What we did was to rise to that occasion as a company and looked at some processes we had overseas and developed them in-house. Some we did in-house, the others we talked to our partners in the market and asked if they could scale it for us because they have the capacity. There are a lot of capabilities in the country and you can go up to them, have an NDA (non-disclosure agreement) or CDA (confidential disclosure agreement) signed. Secondly, the global demand was also going up and not everybody was able to support it. We could produce the requirement in India and also support that demand for diagnostic manufacturing or raw materials. We also send that information to DBT (Department of Biotechnology) that we have this material now if anybody needs it, we could support them. 

Mahalakshmi: Varun, you source from various locations. When any industry is protected and there is a government push towards procuring from local players, it’s always tough for companies to make a commercial decision. Can you outline the landscape for us, in terms of India’s competitiveness in intermediates and APIs? At stake is a large formulation business where India has a larger play. Are there fears about localisation escalating costs and are they justified?

Rao: Let’s go back to the incentives for a second. I believe there are about 53-54 APIs in that incentive plan. It’s a production-linked incentive. We don’t have production in India but what we do have is a significant supply base. We source over $60 million from India, and it goes up year-over-year. Now the tariffs imposed on China and the recent ‘blue sky’ policy (an anti-pollution policy) that China has adopted present an opportunity for India. I’m seeing this as it unfolds because we source over $100 million from China. 

If I go back to my 2020 data, I’ve already seen a meaningful shift. Now, does that mean India is competitive? Not necessarily, in my opinion. What it means is that we are just de-risking (by reducing dependence on) China. There are tariffs and we don’t know what’s going to happen with them with the geopolitical situation going forward. I’d be hard-pressed to say the new regime would come in and change everything that the prior regime has done. So, is (India’s) incentive plan enough? I don’t think we have an answer to that yet. They announced the incentive plan in November, but when it actually gets implemented, my interest would be to go to my suppliers and tell them that I’m ready for a cost down because you received an incentive from the government. So, that’s just a different perspective.

Joshipura: As a global procurement head, how do you see the needle shift towards India in order to really outsource some of the raw materials from the contract manufacturing? There are a lot of contract manufacturing companies within India. Do you have some kind of a strategy with this?

Rao: Obviously, I can’t share details but we constantly look at even acquisitions around the globe. India being a low-cost manufacturing destination is clearly on the preferred list. You have companies such as Merck, and my good friend Punjabi has set up and grown in India, and invested in technology here over the past few years. Why don’t we give a real example of Innovassynth? I see Aceto and Innovassynth, as examples among other players in India, being partners to service the globe. Say, you have strength in manufacturing a product, we don’t desire to have an immediate strength in manufacturing that and so I see a perfect marriage possible. About contract manufacturers, we are absolutely happy to work with them. That being said, I think Aceto also recognises that our future growth will really come from entering into manufacturing and not from pure-play distribution that we are in today. And that’s our strategy if you look at what we’ve done. We’ve made two small acquisitions. One is Iochem which is a New York-based company and they are experts in niche manufacturing. Another is Syntor in the UK that has good laboratory facilities. As we move forward, we will start looking at other regions too, including India, for potential opportunities for acquisition, joint venture, or a marketing and sales distribution agreement.

Joshipura: Dixit, what do you think about the localisation that Merck is doing right now, as Punjabi had mentioned? As you do the R&D and scaling-up, you will see pain points increasing, since getting the right quality of products with the right regulatory support and supply-chain transparency is always challenging. How do you see things shifting from traditional China to India?

Dixit: We have spent around 12 years in India, growing more than 15% every year, and the reason for the growth is the trust we have built with the Japanese companies (who are particular about quality). Many Japanese clients are asking us to utilise generic skills available in India and provide high-quality API and formulation at Chinese price. And that is possible because of the scientific skills available in India. We would like to move out from a traditional scientific workforce to a scientific understanding, investigation and root-cause analysis to develop high-quality key starting material (KSM) and API, and at the Chinese price. Our company is investing more in India to improve our capacity and our Japanese clients are directly linking with us, to ensure there is no procurement from China. It is interesting to see how the pharmaceutical or healthcare system is moving out from one big major player to India. It is our responsibility to ensure that we develop scientifically, whether it is to supply a common raw material or critical raw material or intermediate, so that we meet the quality requirement of Japan and other regulated markets around the world and also our domestic requirement as said by the government.

Mahalakshmi: Dixit, it’s a fantastic idea. If you think about it, Japanese quality at Chinese prices seems like a fantastic pursuit but can you explain how you do that? What are the levers that you really exploit to crack this equation? Can your method be replicated?

Dixit: In India, usually the raw material is sourced from China or any other country that provides it at low cost. It is easy for them to meet our quality standard but the price will increase. What we do here is integrate our suppliers based on the chemistry or scientific skill they possess, and collaborate with them with our technical expertise. For regular or common raw material, we design the processes and we help them improve their scientific capability. That is, in collaboration with very low-size or mid-sized contract manufacturing organisation (CMO), we design the technicalities ties in terms of raw materials or KSM or intermediates, which ultimately brings down the cost and improves the quality. It is not rocket science. This is a simple exercise that our team does to achieve the Chinese price.

Mahalakshmi: Why do we need the PLI scheme then? On that note, Dua, what are your thoughts on the scheme? Can you give us some sense of where we are headed and what is in the works for the second PLI? 

Dua: Let me give you a perspective of the Indian pharmaceutical industry. I’ve been associated with pharmaceuticals since 1979. In the ‘70s and the ‘80s, India was doing amazingly well, post the Uruguay round of talks. By ‘89 or ‘90, we weren’t even on the world map for KSMs, both fermentation-based and small-fermentation-based, and then the APIs and intermediates. I distinctly recall an instance where a Chinese supplier had come to an agent in Mumbai and supplied us an overstated intermediate and, within two days, we knocked him out of our factory because the quality was atrocious. Lo and behold, two years later, the supplier came back and said they will incur the damages if our batches fail or if anything goes wrong in terms of the impurity profiling. We instantly shifted at 50% of our variable cost.

So, it tells you that the government of China was wholeheartedly supporting the Chinese pharmaceutical industry through an economic model which was differentiated. They would create pharma parks of the size of an astounding 10,000 hectares, give them electricity for free, moratorium for five years, give them all the utility for free, and five years moratorium on the EMIs to be paid back. They created such massive demand that the supply was matching up with whatever was available in these pharma parks and plenty of them around in about ten years’ time. Even today, they are sufficiently endowed with the global capacities of Penicillin G. Nobody else in the world manufactures Penicillin G, (raw material for) 7-ACA of which my company Nectar Lifesciences is the largest buyer in the world. Novartis used to manufacture but they shut shop in Frankfurt and went to China. DSM, the largest manufacturer of Penicillin G, went out to China and created a joint venture with Sinochem, and that’s how this was taken over by a PE fund. So, look at this paradigm shift of being in a numero uno leadership position and then, in the ‘90s, letting it go to China. To give us a level playing field, the government gives a 12% incentive on any exports and they do it in such a smart manner that a pharmaceutical company gets an incentive in a remotely associated government company. So we don’t capture it. So, we’ve been saying to the earlier disposition of UPA and now NDA to do something about it.

The figures speak for themselves. The Indian pharma industry is valued currently at about $42 billion, vertically divided 50:50 into domestic ($21 billion) and exports ($21 billion) at a growth of about 10% exports and about 9 to 11% in domestic. Ninety-five per cent of the domestic industry formulation is vulnerably dependent on the Chinese API and a whole host of other inputs, and ingredients. Every challenge provides an opportunity and I look at COVID-19 as a great opportunity for the Government of India to have realised because of the geopolitical tensions, and suddenly the NITI Aayog became receptive, the PMO became receptive. As the chairman of Pharmexcil, I was invited to a number of meetings to deliberate over what needs to be done. A study was conducted by our Ministry of Commerce and Pharmexcil, which laid open the fact that if China pulls the plug on you, the domestic pharmaceutical industry will go haywire, completely smashed.

What China as a behemoth has built in the last two decades, cannot be built overnight. That’s how the PLI scheme was devised. Technologies are there, we were ahead of the curve against China but the Chinese evolved big time, particularly through the American Chinese who came back to China with stolen technologies and otherwise. With technologies available in India, we could become self-sufficient in a gradual manner.

So, we asked for a 20% incentive for KSMs, Penicillin G, Clavulanic acid, erythromycin, 7-ACA, which would make us about 50% self-sufficient in five years’ time and I’m very confident about it. India can bounce back and make sure that in about seven years’ time, it will be 100% self-sufficient. In about 10 years’ time, you would gun for China.

As Dr Dixit said so eloquently, what we bring to the table for Otsuka and Astellas (Japanese companies), nobody does. They hate the word China. And so is the case with other geographies of the world. Europe doesn’t like China at all. With the US, I don’t see any change in the China policy. (The sentiment) might not be as bad as it was under Trump but it comes close even under Biden. India is in an imminent position to become self-sufficient in about seven to 10 years’ time, depending on the molecule, and it can be a great supplier of wonderful pharmaceutical APIs and KSMs for the whole world.

That sounds phenomenal music to everyone’s ears but, China devised an economic model with which costs have been 50% of what India offers. This model has been around for a while, so the plants and machinery have gone through the cycle where capital cost could be recovered. Today, if the US imposes a 24% tariff, from what Varun told me, they will still be able to compete in the US markets. It’s not that their share has gone down. They have laid that foundation with an economic model that makes them competitive.

Dua: That’s a wrong perception. If you say that about chemicals, I would agree. Our imports from China of KSM/ API intermediates are worth $2.68 billion and our exports of APIs predominantly to the regulated markets is $4 billion. They don’t stand a chance. They don’t have a regulatory landscape and cannot face audits except the top 10 companies. So, what you’re saying does not apply to API formulations, they are ages behind. What you are saying does not apply to regulated markets at all. 

Rao: I agree, in terms of a regulated market. Now, I’m looking at a broader perspective, beyond just the pharmaceutical market because we also source specialty chemicals, nutraceuticals and base products of cosmetics. In those areas, there are certain pockets in which India shines. But for the most part, sentiment aside, we have to make a financial decision. Let me put it simply, I get a quotation from India and China, and a lot of times, the difference is still drastic. So, I think if this PLI is enough and we were talking about a total of Rs 70 billion or a billion dollars in that neighbourhood. I don’t know how that gets distributed among the companies who get favoured and why all of those politics kick in. But at the end of the day, I wonder what will my supplier base get out of it and what would I get out of it, if anything at all. If it is not much, then you tend to gravitate back towards China to make a financial decision, not a sentimental one.

Dua: I’d just like to put another dimension to this. The PLI scheme for pharmaceuticals is at 20% and 10% — 20% for KSM fermentation and 10% for the rest of it, 41 molecules in all. It was solely intended for the domestic industry. There is a study by KPMG with CII. The differential in pharma, not in chemicals, is to the extent of about 24%. This kind of incentive will first cater to domestic market and then lead to export. Give it another two to four years, and you will see India becoming competitive.

Rao: I have it on my KRS to move sourcing from China to India.

Mahalakshmi: Rao, what is the sense that you get from customers or the Indian formulation producers? Are they just equally price-sensitive? I would think that India would be a hard negotiator in pricing.

Rao: Yes, we Indians love to bargain. Hence, selling to Indian customers is even tougher. We don’t really have a large customer base in India. Sun Pharma is one of our customers. We sell Carbidopa, among other things, but there is really no value proposition. Sun Pharma, in this particular case, doesn’t want the hassle of going through the regulatory process. We do that for them. So, we’re taking that off their plate. At the same time, they’re also a cost-sensitive customer. I need to get my costs under control to be able to have a meaningful customer relationship while making a good enough margin at our end as well. Dua, what you said is music to my ears, I can’t wait for that to happen. 

If it were left to me, in three years, I’d like to flip what we have and have $120 million from India. Globally, our spend is over $300 million.

Dua: The Indian industry is the biggest in the world in generic formulations, controlling 30% of the market. We let the lead go to the Chinese because they were dumping away to glory. Piyush Goyal, the minister for commerce and industry, has stated that if China keeps dumping after the PLI kicks in, all interim duties will be immediately imposed in one month’s time. Customs which is not under the purview of WTO to the extent of 40% can be imposed. So, the industry remains absolutely protected. We have the largest number of FDA-approved plants outside the US, and the highest number of ADAs and drug master files. What else do you want?

Mahalakshmi: This is what gets us really worried. The answer to everything can’t be that we have this ammunition to raise tariffs and protect our industry, because that’s what has got us here.

Dua: These are the possibilities when China dumps away to glory at 50% of my cost. Nobody raised a finger. Today, when there are geopolitical tensions, the formulation industry, about 12,000 of them, went to the government to take some action regarding it. This is just a possibility. This is not going to be done unless it is necessitated.

Joshipura: Let’s talk about something on the KSM, intermediate space. One of the challenges is getting the right material. Rao, in the Indian pharma or Indian manufacturing space, would you be getting the right supplier who is actually talking about not the price but the quality and regulatory support, and at a price point which is acceptable to the end customer? Dr Dixit, could you also weigh in? Do you think you would be able to get the right quality and preferred supplier within India? Also, in India, there are challenges to get a supplier or manufacturer who would be able to compete with the expertise Chinese manufacturers have developed. Considering these two things, can we really become Aatmanirbhar Bharat or a self-reliant country?

Rao: I agree with Dua. When it comes to FDA, GMP, any kind of certification and regulatory-bound products, we tend to look at India very favourably over China because of the adherence and compliance to those norms. You audit APIs every two years. What happens between those two years is a cause for concern always. Whereas in India, it’s less of a cause for concern. In China, I know suppliers who got caught in an audit issue and we had to shut off supply and try and move immediately somewhere else. Now in an API, you can’t do that overnight. The regulatory audits take several months, if not longer. For that reason, we would always look at a de-risking strategy where we have an alternate supply base and we spread the risk geographically. So, if our primary supply is in China today, then we look for a supply in India and if this primary supply is in India, then we actually look for a second supply in India.

Joshipura: Punjabi, you have the largest portfolio of research chemicals. How do you see the shift when the CMO or the R&D or the pharma-process development guys really scale-up? How do you see this as an opportunity as you move forward and go deeper into it, right from drug discovery and phase one to phase two and commercialisation?

Punjabi: I would put a couple of points here. I am a strong believer that China is not going to go anywhere. But do we have today another supplier or another country to challenge this? To make an entry, China gave a price that no one could refuse and, at that time, the Government of India didn’t give any benefits or incentive schemes. Today, the Government of India is giving those advantages. Capability and other things will take time to build. People will look at what are those 20% products which will give 80% coverage. 

Coming to your second question, about the company offering these raw materials or the chemicals. We go with the same approach of the 80:20 principle. What is my 20% of the portfolio which can generate 80% of business and can I de-risk it by having one more supplier? I would fall back on what Rao said, at the end, it’s business. And business doesn’t mean cheap price, it means business continuity and that is what we are trying to do here by ensuring that I have multiple suppliers and security of supplies. I have the right quality product but, if your customer doesn’t look at the quality, then you may look at the cost also. On the other side, you have government support too. Our governments have become more cautious and have realised that supply security is critical. They will support you and so it won’t be that duty will be increased at random, but it will be done for protection of self-interest.

Rao: Punjabi, you’re right. It’s not just cost, but it’s about value. I look at what value does a supplier bring me. The regulatory challenge is a big part of the value, so it’s not always the lowest cost that wins. 

Mahalakshmi: All of you are in agreement on what is important. But, when you have put large capacities at a low cost and you are sitting on all kinds of depreciated assets, pricing can be a game. Now, who can say how long this can go on? Yes, you can increase tariffs. But is there a way to create something that is valuable, competitive and durable in the long run from a global perspective? Since the future lies in other areas such as maybe biosimilars, should our incentive system be geared a little more towards such things? How do we win the next round, rather than go back and snatch away a slice of what’s created?

Punjabi: So incentives can be given to companies upfront, such as exempting them from electricity tariff or from compliance to quality systems related to Environment, Health and Safety (EHS) practices, or allowing them to increase their production and sell cheaper. But, with the PLIS, the incentive is not being given upfront. The government is asking companies to invest and produce, and then avail of these manufacturing-linked incentives. Also, the products identified under the scheme are required for the country first, and they have not been picked to meet global demand. People are anyway benefitting from the global exports opportunity. I don’t think we need to worry about government placing tariff barriers (at random). Whatever it does, it also has to show that it is in relation to a particular country — it could be China or country XYZ. There are other countries which want to dump their food products sometimes, so we need to be mindful of that. It’s not that the government can unilaterally go and place these barriers too. They have to make a case before the WTO. So, it’s a balanced approach, I would say.

Mahalakshmi: Dua, could you expand on what the next round is going to look like? Will it be more of the same or will it be on a completely different track?

Dua: I sincerely hope that all of us have read the text of PLI-3. It’s already been announced, it’s a work in progress. I’m deeply involved in that, and whatever you said and beyond are being covered. It covers innovation, cell therapy, stem cell, biologics, biosimilars, excipients. You name it, and the quantum is double of what’s being offered to the generic farmer. So that’s about Rs 150 billion or Rs 160 billion, and the government is preparing another PLI-3 to gradually take India to the path of innovation. Outside of the top 100 companies, we are not even scratching the surface of the depth of innovation that sits in Indian academia which is unbelievable.

Ninety per cent of the innovation in the West has come from academia but, in our country, unfortunately, nothing is coming out (into the market). Academia is very happy sitting, quietly getting their patents, publishing in journals, making dissertations and getting promotions. I, along with some friends from the industry, have gone ahead and told the PMO to cut 50% of the subsidisation of financing to the universities and tell them to adopt the American, European and Japanese model to earn-and-burn. If that happens, you will see a revolution in this country in the next two decades.

Mahalakshmi: What does all this mean, like the PLI-1, 2 and now 3 that Dua is talking about. We have no clue about them, even PLI 2 is hazy. From a company perspective, what can you do more out of India? How does it change manufacturing, outsourcing, research? How does it change things for a company?

Dixit: I wanted to talk about innovation. Most of the time, when I participate in a conference at a multinational organisation, the discussion is around India’s reliability as a supply partner for the rest of the world. So, we would like to win the trust of other countries and we’ll have to ensure that, while we are vocal for local, we are also there to serve the world. We, as an innovation organisation, are diverting our attention from innovation in India. There are many hurdles during our clinical trial, creating material for a clinical trial, and supplying them to a global community for clinical activities. We develop the process, manufacture clinical trial material but when it comes to filing an NDA in the US, (since the US is the largest country and everyone files NDAs there) we face hurdles due to the Trade Agreement Act or Veteran Affairs. And most multinational companies don’t have any other option but to take this technology from India, identify the base in Europe, the US or Japan, and start filing an NDA from that country. 

We come back to our original situation, in which we are considered the third, fourth or fifth source. I think that there will be a strong demand in the future. We should come out of a generic mindset and try to figure out what exactly we would like to be in 10 to 20 years, in terms of innovation. Our target should not be short-term, such as providing an incentive to the 53 APIs to be manufactured in India, but it should go beyond that. We should create more reverse innovation in India. Companies such as Eisai are willing to innovate in India. They want to launch their new products in India based on the feedback or the patient reality. We would like to relaunch these products in the US and Europe or the developed world but we need support to do that kind of innovation in India. So as Dua has said, this is the right time to involve academia and subject matter experts in the industry. Let us try to stay a step ahead of China because China is watching us closely. 

Mahalakshmi: Quickly, Dixit, your company strategy?

Dixit: Our company is very clear — it wants trust from India. It keeps investing in product development, drug discovery, regulatory filing and does huge capital investment. But with a positive mindset, the government can take an extra initiative to support innovation in India. The strategy is clear. Innovation for regulatory filing without compromising on anything.

Mahalakshmi: Punjabi, what is your company strategy, in terms of what do more out of India and what do less out of here?

Punjabi: I think the government today has little patience. But, we need to be patient because innovation does not happen overnight, and it does not take decades too. Any adversity like COVID-19 makes you wake up to the situation and rise up to the occasion. That’s what I see.

Honestly, I don’t think our company like Merck looks at one country or the other... they look at the business case, purely. They look at what customers in that country look for, are they looking for research or are they looking for commercialisation, and how I can make things happen closer to the customer. Nobody is interested in going all the way to Europe or other countries, if there is a business case closer. If it is closer, you can keep the supply security intact. You can keep innovation intake closer. So that is the first strategy of Merck. But what if something we have developed here now is required for some other part of the world? We do not go and invest in the other part of the world unless it is optimum there. So naturally, that becomes our second reflection of what I have produced here. I will be trying to export that which is a normal reflection but clearly driven by the country’s requirements, its needs, political and geopolitical requirements, and that’s what Merck is trying to do.

Joshipura: Dua did mention the opportunities which emerged after COVID-19. Rao, about specialty chemicals’ outsourcing in a non-pharma space after COVID-19, how did it affect your overall outsourcing spend? Has it gone up because, in the fragrances and flavours segment, there might have been a deeper impact compared to the pharma outsourcing space?

Rao: It’s actually about the product mix overall. We had a fairly good balance year-over-year, the spend didn’t really go down. While automobiles may have gone down, I think food consumption has gone up during the pandemic. And with local sabzi mandi closed, people rely on BigBaskets and Amazons for supply. Therefore, they are consuming products with additives in them. If you look at changes in consumption during and perhaps even in the post-COVID era, habits may have been permanently altered. Going forward, I think the specialty chemicals industry still has a lot of opportunities. When I look at what I intend to spend on specialty chemicals in 2021, it’s actually more than what I did in 2020. So, it’s year-over-year growth as well. Despite a hope that COVID-19 cases will reduce this year, with all the vaccinations out in the market, I don’t think that will reverse changes in habits. As consumption patterns change, a list of fragrances and food additives will remain as they were during the COVID-19 times.

Joshipura: When you talk about India as a country, what value proposition or competitive advantage does it bring to the table, over the next three to five years? How would we emerge as a country of choice for the rest of the world?

Dua: There’s going to be a paradigm shift in this current political dispensation. They’ve taken long-term perspectives, policy decisions and they’re staying. The stability of the government, I think, is very critical for our country and we are in that zone. Irrespective of whatever may happen to China, or how the US, Europe and Japan will behave, India will still continue to march progressively towards being self-sufficient, from a domestic consumption point of view. I am proud to inform you that we will move from $20.56 billion worth of exports to $25 billion. That’s a 25% increase since last year, with the disruption in the last week of March. Let the APIs kick in and we can start exporting more, beyond $4 billion and cut back on our imports from $2.6 billion.

Rao: What India has going for it, is the appetite for investment in innovation. There’s certainly an appetite and, if the government supports that with some schemes, that’s a great thing. But a largely ignored fact is the age demographic of India. Forty-seven percent of our population is 20 years or younger, which means for the next 20 years, we will have a skilled workforce coming in. On the other hand, China has an aging demographic. That’s why they removed their one-child policy because they realised that they made a mistake several decades ago, a consequence of which was a drastic increase in labour rates in China. I think that also presents an opportunity for India. Tariffs, government schemes and other factors will remain the same, but the reality is that the labour rate in China today is 5x or 6x that of India. So, there’s an opportunity for you and for the investment in innovation in India which will help the country grow.

Punjabi: I think as an economy or as people in this country, we are moving away from the traders to the manufacturing process, we realised that there is a value chain and that has to continue. Second, people have always been resilient and the country’s political leadership says that it is important, (so) we need to align that resilience with technology. If we do that right, I think with the manufacturing process and the people behind it, we should be able to drive the change much faster.

Dixit: The government has taken a great initiative for an Aatmanirbhar Bharat and we will achieve those objectives. But we should not forget the rest of the world. While China is being detested by many countries, it’s the right time and opportunity for India to remain global, always play globally, and take care of its strengths and expectations from the rest of the world. I was reading a statement that India will have to RUN, as in Re-skill, Up-skill, and get New skills.