Level-Playing Field is a Double Edged Sword !

Economic Times ( 09 Feb 2017 ) carries a news report with following headline :

“ Sachin Bansal seeks level-playing field for local companies “

Details read as follows :

Highlighting the rise of "selective globalisation", Flipkart co-founder Sachin Bansal today said a  LEVEL-PLAYING FIELD  is needed to ensure that local companies can build solutions for the Indian market and don't get "prematurely killed" by foreign competition. 

"Another big thing that is happening across the world is the rise of anti-globalisation... it was all the time in China and US, selective globalisation rather. I meant there should be LEVEL PLAYING FIELD," Bansal said at the IAMAI India Digital Summit here. 

Bansal has, in the past too, voiced his opinion on supporting Indian companies against 'CAPITAL DUMPING'  by foreign companies. 

"What we need to figure out is how do we create a  LEVEL-PLAYING FIELD.  How do we ensure news app or restaurant apps doesn't get prematurely killed by a company coming from China and just pumping in dollars from there. It should be about technology and appreciation of the product," he said. 

Interestingly, Flipkart -- which is locked in an intense battle for leadership with US-based Amazon in the Indian e-commerce market -- has received over USD 3 billion funding from investors like Tiger Global Management, DST Global, Naspers and Steadview Capital. 

China's e-commerce giant Alibaba -- which has the stake in Indian digital payments and e-tailer Paytm -- is also aggressively looking at tapping into the Indian market.

 

Bansal said it would be a "mistake" if  INTERNET AND TECHNOLOGY  are not considered as a "STRATEGIC SECTOR". 

"...we are making a mistake by not thinking of INTERNET AND TECHNOLOGY a strategic sector and depending too much on China and the US to build that for us... We have the capability, we have the know-how to do this in India ourselves for our markets," he said. 

Voices similar to Bansal’s , are rising all over the World

Voices as powerful as that of Donald Trump who wants :

·         Buy American

·          

·         Hire American

·          

·         Cut legal immigrants by 50 %

·          

·         Double the minimum salary of H1B visa holders

·          

·         Build a wall along US / Mexico border

·          

·         Heavily tax US companies outsourcing work abroad

·          

·         Incentivize US companies ( with 15 % Corporate Tax ) to bring back jobs

·          

·         Heavily tax imports ( under guise of Anti-Dumping ? )…..

People who seek such protection from International Competition do not realize that a “ LEVEL PLAYING FIELD “ envisaged by them , is a DOUBLE-EDGED sword !

It is a game at which “ Two can play “ !

They would do well to read my following blog of 12 June 2016 :

Level Playing Field ?

It just does not exist - so forget about it and make the most of what you have !


For Corporate , it is absurd to demand and for a Government , it is futile to attempt to provide a Level Playing Field


There are no two countries where ALL the resources and the ENTIRE industrial Eco-system , is identical or even closely similar


Inputs for any industry are :


#    MANPOWER

    *  Ave age / Education Level / Skills / Work Ethics / Productivity / Working
        Hours / Holidays /  Salaries

    
#    RAW MATERIALS / COMPONENTS AVAILABILITY

    *  Local vs Imported / Supply Chain / Logistics / Duties & Taxes / Quality


#     FINANCE / BANK INTEREST RATES

     *  Equity / Loans / Interest Rates / Collateral / Duration / Terms 



#    LAND / LOCATION ( of manufacturing unit )

     *  Availability / Prices / Transport / Availability of Skilled Manpower 



#    INDUSTRIAL  POLICY ( Central and State Governments )

     *  Exemptions / Incentives / Restrictions / Inspections / Permissions /
         Compliance


#    MARKET

     *  Domestic / Overseas  
  

#    TECHNOLOGY

     *  IPR / Patents Regime / Copy-Rights / Home-Grown / Licensing / Royalty 


#    TAXATION

     *  High / Low Corporate Income Tax / Capital Gains Tax 


#    INFRASTRUCTURE

     *  Internal ( Road-Rail Network / Air-Sea connectivity ) / Warehouses


#   COMPETITION

     Monopoly / Oligopoly / Cartels / Fierce & Free competition of many

Now , Industrialists / Businessmen , all over the World , will continue to compare the INDUSTRIAL INPUTS existing in their own country with the following BENCHMARKS :


#   Most Business Friendly ................................... Ireland

#   Lowest Corporate Tax...................................... Kuwait ( 0 % )

#   Lowest Hourly Wages ( PPP basis ).................... Bangladesh ( $ 0.25/hr )

#   Highest Working Hours.................................... Mexico ( 42.5 / week )

#   Least Govt mandated paid holidays................... USA     ( Nil )

#   Highest Manpower Productivity......................... Switzerland

#   Lowest Bank Interest Rates.............................  Denmark ( 0.05 % )

#   Demographic Advantage of a Young Population....India 

#   Ease of Introducing unpopular reforms..............  China ( Dictatorship )

 


There is , quite likely , some parameter on which a Country can claim to have distinct advantage over all the other countries

It could have something to do with its Geographical situation / Historical evolution / Political System / Legal Frame-work / Societal Norms etc

It is not possible to replicate advantages of all of these benchmark countries , into any one single country

At the same time , it is very important to keep studying these Benchmarks and ask ourselves :

"  How have these countries managed to reach , where they are ?

   What REFORMS can we introduce in our own system to catch-up ?

   Are there any parameters in which we ourselves are a Benchmark to others ?

   What should we do so that we do not slip-up where we are ourselves , some

   kind of a Benchmark , to the rest of the World ? 

----------------------------------------------------------------------------------------

09  Feb  2017

www.hemenparekh.in / blogs