Post-Covid India made remarkable turnaround in exports of both merchandise and services. We crossed the historical and psychological landmark of US$400bn in goods and US$300bn in services exports. For the last three consecutive years India not only achieved the US$400bn plus merchandise exports but created a momentum towards touching the magic figure of US$1trillion of exports each for goods and services.
Thanks to the visionary leadership of our Hon’ble Prime Minister and a very pro-active support extended by Department of Commerce under the astute leadership of Shri Piyush Goyaljee, Indian industry is fully committed to march along this ambitious journey of making India a global export powerhouse.
Early this month, the Confederation of Indian Industry organized an important event on branding Indian exports. This is an important initiative by CII to highlight its importance as brands and their popularity not only help in penetrating market but also contribute to fetching premium price in the national as well as international markets.
One of the very important elements for brand building is quality and standards. But before sharing my thoughts on it, I’d like to begin by sharing some pivotal moments that have shaped not only the Indian automotive industry but also the broader narrative of India’s brand on the global stage. These stories are not just about business decisions; they are about resilience, vision, and the relentless pursuit of excellence.
Some Early Stories of Brand India
In 1998, during the Auto Component Manufacturing Association (ACMA) AGM in Pune, Mr. Ratan Tata, who was our esteemed chief guest, faced a challenging moment. We had also invited Graham Maxwell from the Economic Intelligence Unit, who presented a study suggesting that India should perhaps focus on industries other than automobiles to drive economic growth. In fact, translating his presentation in a sentence “India had no future in manufacturing passenger cars for domestic market let alone exports”.
This couldn’t have been worse as Mr. Tata had just announced Tata Motors’ ambitious entry into the passenger car market, but he stood firm in his vision. He acknowledged that there would be challenges and lessons along the way but was resolute in his commitment to making Tata Motors a success in the passenger car segment. Today, Tata Motors’ acquisition of Jaguar Land Rover and its strong presence in the global automotive market is a testament to the power of perseverance and strategic vision.
Another story of Indian entrepreneurship comes from the journey of Hero Honda. Led by Mr. Raman Munjal, a bunch of young entrepreneurs from Ludhiana set out to establish Hero Honda in Dharuhera in Haryana, following a collaboration with Honda. At that time, India had implemented the Project Management Program (PMP), which allowed certain components to be imported temporarily before they had to be indigenized.
The Japanese partner initially underestimated the speed and quality with which these Indian entrepreneurs could set up ancillary units and indigenize components. Today of course it’s history as Hero Honda went on to become the largest two-wheeler manufacturer in the world. Even when Honda decided to go solo, Hero MotoCorp not only survived but thrived, continuing to be the largest two-wheeler manufacturer globally.
Today, the auto-component industry is growing at a rate of nearly 10% per annum and its size has grown up to US$75bn. The trade balance is positive with exports exceeding imports by US$300mn. The total export realized in FY24 was US$21.2bn. Majority of exports is going to developed market such as USA, Germany, UK etc.
These examples reflect the broader transformation of India’s global brand. I experienced this shift personally. When I first arrived in Boston in 1972 on an I-20 student visa to join MIT, I met with intense scrutiny at immigration, taking nearly 45 minutes to clear. Recently, when I returned, the contrast was striking. The immigration officer recognized from my profile that I was employing over 250 people in his country, and within five minutes, I was through. This change in perception is symbolic of how India’s brand has evolved, particularly in advanced geographies.
Taking Lessons from Japanese and Korean Success in Brand Building
When we compare this growth with other countries like Japan, Korea, Israel, and Singapore, we see both similarities and uniqueness. Japan rebuilt its brand post-World War II by focusing on quality and innovation to establish its dominance in electronics and automobiles. Korea, through its chaebol model and government-led industrialization, emerged as a leader in electronics and automotive. Israel, despite its small size, became a “Startup Nation,” leveraging its focus on R&D and technology. Singapore with its business-friendly environment, established itself as a global financial hub.
India, with its vast and diverse economy, has the potential to continue this upward trajectory. The key to become a global brand lies in quality, standards and innovation. No matter how much we try to promote our exports through branding, if we do not adhere to quality standards, the effort is unlikely to yield long-term fruitful results. Here, the case of Chinese toy imports into India is a perfect example. For the past several years, Indian toy market was flooded by cheap Chinese toys, but the moment India’s notified the Quality Control Order, the import has decreased significantly. Today, India is a net toy exporter.
Quality and Standards: Key to Brand Building
In India, the quality revolution has started but it is a long journey. No doubt over the last one decade several targeted policy initiatives have been taken to improve the quality ecosystem in India. Firstly, the Bureau of Indian Standard (BIS) Act was amended, and a new BIS Act 2016 was enforced in 2017. Standardization Cells have been constituted in 36 Ministries and 103 Industry Associations. Currently mandatory certification through Quality Control Orders is in enforce for 725 products and more in the offing.
Besides the BIS’ new measures to improve standards compliance, the Quality Council of India too launched few innovative programmes to promote quality infrastructure – such as state-of-the-art laboratories, hospitals and educational institutions. The most notable one is QCI Surajya Recognition & Ranking Framework, an initiative that recognizes and applauds the efforts of states in excelling in the field of quality across key sectors. The scheme also incentivizes states to adopt best practices and strengthens cooperative federalism, setting a new benchmark for excellence across the nation.
Export Focus is Missing
The entire thrust of quality standards agenda is on meeting two objectives – uplifting quality ecosystem in domestic market and curbing sub-standard imports. This is absolutely fine but somehow export focus is missing. To facilitate exports and develop brands, India needs to get into more MRAs on products. Through MRAs, products that are tested and certified before export can enter the importing country directly without having to undergo similar conformity assessment procedures in the importing country.
India has a poor record in signing MRAs though provisions are there in FTAs. However, very recently India and Taiwan signed MRA for organic products. The implementation of the MRA between India and Taiwan is a landmark achievement as it is the first bilateral agreement for organic products, in which India is strong.
ZED: To Make MSMEs Competitive through Quality Compliance
Since we are talking about quality as an important instrument of branding exports, in this context the ZED (Zero Effect Zero Defect), a brainchild of Hon’ble Prime Minister is an important initiative. This was aimed to ensure competitiveness of India’s MSME so that they can integrate themselves into the MNCs led global production network. MSME Sustainable (ZED) Certification is an extensive drive to create awareness amongst MSMEs about Zero Defect Zero Effect (ZED) practices and motivate & incentivise them for ZED Certification while also encouraging them to become MSME Champions.
Currently, over 200 thousand SMEs are ZED certified. Through the journey of ZED Certification, MSMEs can reduce wastage substantially, increase productivity, enhance environmental consciousness, save energy, optimally use natural resources, adopt best practices in work culture, standardization of products, processes, systems etc. to enhance their global competitiveness and sustainability.
In view of the growing demand to make supply chain sustainable, the ZED was a visionary scheme conceived by our top leadership to prepare Indian MSMEs for future challenges. The ZED certified MSMEs would be successfully complying with the new EU upcoming regulations like Corporate Sustainability Due Diligence Directive, Deforestation Free Products, which make it mandatory for producers to ensure sustainable business process across their entire supply chain.
Leveraging GI to Build Global Brand
Another important lever to harp on quality is Geographical Indications (GI) to develop brand. GI refers to goods having property referring to a country or place of origin of that product. Typically, such a name conveys an assurance of quality and distinctiveness which is essentially attributable to the fact of its origin in that defined geographical locality, region or country. The European nations have successfully exploited the GI tag of many of their agriculture and diary products in building global brands. We all know about the Champagne, Scotch whisky and cheese.
In India, as of July 2024, there are more than 600 products, which have been granted GI, but we haven’t been able to commercially exploit this special tag except in case of very few products such as Darjeeling tea, and some variants of mango. Agriculture produces like Shahi Litchi of Bihar, Orange of Nagpur, and spices of Kerala have potential to command premium price in global market.
The quality revolution has begun in India as efforts are being made to check sub-standards imports coming into the country, but we need to add export thrust in this endeavour. The focus should be on harmonization of standards with our key export markets, signing of more MRAs by using FTAs, helping Indian MSMEs in complying with private standards.
