More than chipping in

On the recent fab policy, a BL edit rightly asks

The policy does not address a basic question: Why it is necessary to subsidise their local manufacture merely because there is a growing appetite for these consumer goods? A country's choice of what it would produce and what it would source from outside depends on the evaluation of comparative advantages in making versus buying. If chip fabrication does not make economic sense, then providing fiscal sops to tilt the scales would set a dangerous precedent where drawing a line on denial of such benefits elsewhere can become virtually impossible.

Looked at from another perspective, India does not also produce all the gold and diamond (indeed practically nothing) that it needs as raw material for the gem and jewellery industry. But that has not prevented the country from virtually cornering the global market for cut and polished precious stones or making serious inroads into jewellery making. Indeed no economy can boast of such an insular existence that it sources everything that it needs from within its shores. No doubt we live in a world where nations compete with one another to attract investments. The chip fabrication industry is merely a manifestation of this trend. But if India must enter this race, then the Government has to make out a valid case for extending these fiscal benefits.