Technical Change, International Competitiveness, and Role of the State:Indian and Taiwanese Machine Tool Industry's Experiences

Production of machine tools has long been associated with industrialisation besides it being a formidable factor of technical change and international competitiveness. This potent role of machine tool industry was amply recognised by several countries. Therefore, they framed policies to influence the technical change and competitiveness of the industry. The present paper is an enquiry into the role of the state in India to see whether the intervention led to generation of capabilities and an internationally competitive industry or not. The comparison with Taiwan shows that Indian industry is highly uncompetitive with respect to many parameters. The historical description shows that the multi-facet role of the state as a major user, producer, and restructurer resulted in conflicting policies at several instances. Despite a better head start, Indian industry fell into a vicious circle of Low production, less feedback and inferior quality machines. One of the ways to puncture this trap is to venture out for exports in a big way.