Decolonize Mindset for Industrial India: Rekindling the Entrepreneurial Spirit to Strengthen Manufacturing in India

All policymakers, from Nehru to Indira to P.V. Narasimha Rao to Modi, have attempted to industrialize India. Their aim has always been to make India the factory of the world, yet they have all failed. Despite implementing numerous enabling policies, our industrial sector lags behind. For those who may disagree, the data speaks for itself. According to the government’s official data, the total number of people employed in the industrial sector was 12.5% in 2011-12, which decreased to 11% in 2020-21. In contrast, the service sector has seen its share of employment rise from 28.6% to 30.9% during the same period. The services sector in India has been performing exponentially well since the 1980s according to official metrics, while the growth of the industrial sector remains slow. Using the rabbit and tortoise analogy, the services sector is sprinting at the rabbit’s speed, whereas the industrial sector is crawling like a tortoise.

This brings us to the question: why, despite the efforts of successive governments, does the manufacturing sector show very meager growth? The answer lies in historical sociology.

During the Harappan civilization, India, or the Indian subcontinent, was the workshop of the world. This is agreed upon by many historians due to various reasons. First, Indian lapis lazuli and carnelian products have been discovered in Mesopotamian remains. Second, excavations in other parts of the world from that era reveal a focus on large monuments, whereas in Harappan excavations, no large monuments were found. Instead, we found numerous houses of similar sizes, well-planned cities with roads and drainage systems, and even a dockyard in Lothal. Additionally, there are no king’s seals or mentions from that period, but we have found Harappan seals of commercial use in Mesopotamia. This evidence suggests that we were the factory of the world and had a flourishing, rich society.

However, today, we are highly dependent on imports and are an overall trade-deficit nation. The answer lies in colonialism. When the English consolidated their power in India in the 19th century, they turned India into a source of raw materials. These materials were sent to Britain, processed into finished products, and imported back to India to be sold in Indian markets. This destroyed many traditional Indian industries, as evidenced by Dadabhai Naoroji’s Drain Theory, which details how British policies drained India’s wealth to Britain.

To create customers for their Western products, the British introduced Western education in India. This created an educated middle-class society. After being educated, these individuals obviously did not engage in agriculture. They had two options: manufacturing or services. Most chose the services sector, which is why there were many lawyers, doctors, and teachers in the 1900s. Even the major national freedom fighters and independent India’s Constituent Assembly were dominated by lawyers.

Why not the manufacturing sector? British free trade policies imposed heavy duties on Indian products exported from India to the UK while allowing British products almost free access to Indian markets. This made Indian manufacturers uncompetitive. Additionally, there was a lack of technology and no ease of doing business. The policies were deliberately designed to stifle Indian industries, as demonstrated by scholars like Naoroji and R.C. Dutt.

As a result, the educated class had no option but to seek safe government employment or join the services sector. This historical shift has now become a societal norm. Even today, children are often asked, “What will you become? A doctor or an engineer?”, but rarely encouraged to pursue entrepreneurship. In our society, safe government employment is seen as the pinnacle of success, while starting a business is considered mediocre, even if both paths yield equal earnings. This “single safe profession throughout life” mindset is the main reason we lack entrepreneurs, yet have 10 lakh students competing for 1,000 government job seats.

The root of this issue lies in colonialism. Back then, government jobs were indeed safer than running a business. However, the seeds sown during that time have now grown into a rigid societal mindset. Despite numerous policies offering tax concessions, loans, and subsidies to businesses, we are still not succeeding. A country cannot become the factory of the world without a strong MSME sector, which requires a vibrant entrepreneurial spirit in society.

Thus, the government should shift its focus from merely enabling business policies to fostering social acceptance of entrepreneurship. Social changes take time. Policies need to follow the tortoise approach—slowly and steadily working towards cultivating a business-oriented mindset within the population. Instead of playing it safe, policies should aim to ignite the entrepreneurial “animal spirit” in society.