MAKE IN INDIA; POINTS THAT MATTER
Department of Commerce
Maharshi Dayanand University, Rohtak
Contact no. 91-9729770093
MAKE IN INDIA; POINTS THAT MATTER
Make in India campaign of Government of India has stimulated a lot of
professional and academic interest since its declaration locally as well as
globally. Focusing upon industrial and commercial activity, the stakeholders are
looking towards it with promise and challenge altogether. The present article is
an attempt to describe various pros and cons of the initiative by looking into
its precedents, both political and economical, thereby the emergence of its need
and untiring efforts being put into its take off with full vigor. There seems a
blending of the campaign side and the initiative side of the scheme, which
happens to be certainly long term but yielding immediate gains too. The role,
the manufacturing sector plays into the GDP of any economy is cardinal and
bringing it to the core of national economy is perhaps the appropriate step the
country was looking for. Its fruit are likely to be availed by different
sections of the society but ultimately by all. In the paper, seeming challenges
in its happening have been identified and listed. Relevant efforts and steps
being taken and has been taken by relevant government departments to meet these
challenges have been dealt upon. It is however realized that there are many grey
areas which may demotivate the investors and entrepreneurs along with lessons
learned from other world economies. It shall not be unrealistic optimism to say
the scene shall ride over resilient Indian economy and vast local and global
Keywords: Make in India, Manufacturing sector, GDP, Indian economy
The world economies are recovering from extended slowdown including different
groups like US, Euro Zone, BRICS and are expected to stage higher growth rates.
India experienced emphatic election verdict last year by choosing Narendra Modi
for his growth agenda. The sentiments of investors are positive and industrial
leaders are expecting more improved environment for doing business. Although,
manufacturing sector is witnessing stagnancy for the last many years and UPA’s
policy paralysis has been one of the prime cause for this catastrophic
condition. But newly elected government is working hard to revive the
manufacturing sector. There is huge mismatch between sectoral contribution in
GDP and dependence of population upon the sectors. To reduce this gap and to
boost the manufacturing sector a new initiative Make In India has been launched
which aims India to become export-based manufacturing leader. Thus the campaign
is attracting investments across the world. China, manufacturing leader is
losing its cost advantage slowly and therefore eager to invest in India because
of cheaper work force. Other leading developed economies like USA, Japan are
also investing here due to India’s youthful human resource.
Modi’s vision of making India manufacturing leader is laudable but not easy to
achieve. To achieve target of annual growth of 10 % in manufacturing sector (in
regard to Make In India ) is having a lot of hurdles – political, practical or
legal in its path. The paper focuses on identifying such challenges in making
this campaign a reality and recommends
such measures to adopt which can help in overcoming various difficulties. The
objective of this paper is to know the need and possible contribution of make in
India campaign in growth of India’s economy and to analyse steps being taken by
the government, and what further course of action govt. may take to help in
making this ambitious campaign feasible and successful.
Manufacturing Sector the Ground Reality
The manufacturing sector is backbone for any economy which boosts growth,
productivity and services, and supports both sectors- agriculture as well as
tertiary, generates employment and contributes significantly in GDP of the
nation. The Manufacturing Industry in India has experienced various phases of
development over the period of time. Since independence, the Indian
manufacturing sector started from the initial phase of building the industrial
foundation in 1950’s and early 1960’s, to the license–permit or Inspector Raj in
the period of 1965–1980, to a phase of liberalization, globalization and
privatization in 1990’s. However it has grown at a robust rate over the past ten
years and has been one of the best performing manufacturing economy but
investments and low growth in this sector has been a very challenging task.
Advanced estimates released by the Central Statistics Office peg India’s overall
GDP growth in 2013-14 at 4.9 per cent, marginally above 4.5 per cent in
2012-2013. But manufacturing output was seen declining 0.2 per cent in 2013-14
compared with 1.1 per cent growth the previous year, dragging down the overall
economy. It was one of the worst years for manufacturing since 1999-2000. The
sector has grown with excellent pace over the years, with growth of around 10
per cent CAGR between 2005 and 2011. Manufacturing sector contributes about 15%
of India’s GDP and 50% to the country’s exports. The Manufacturing sector
employed 58 million people (about 12% of the workforce) in 2008. By 2012, it was
estimated to generate further 12–13 million jobs. In India, employment
generation is one of the key policy issues, thus making this sector a critical
sector to achieve inclusiveness in growth.
1Source Economic Survey 2013-14
The figure portrays the growth rate in
manufacturing sector as compared to percentage growth in GDP from 2009 to 2014.
The growth rate has fallen substantially from 11.3% in 2009 to 7.4% 2011-12 and
fell even to negative in 2013-14. Thus in 2014 finance minister P.Chidambaram
mentioned in budget speech “Manufacturing is the Achilles heel of the
Indian economy. The deceleration in investment is particularly worrying.
Consequently, there is no uptick yet in manufacturing."
Make in India: Concept
‘A major new national program designed to
facilitate investment ,foster innovation, enhance skill development, protect
intellectual property and build best class manufacturing infrastructure there’s never been a better time to
Make In India.’
Make in India is an
initiative program of Government of India which was launched in September 2014.
The main objective behind
this initiative is to encourage businesses to manufacture their goods in India
so as to boost up employment generation and to focus on skill development.
It is one of the prime initiatives of Modi government
which aims to make India a manufacturing hub. “From electrical to electronics
to, come ‘Make in India’. From chemicals
to pharma, come make in India, from auto to value-addition, come make in India.
Paper or plastic, come make in India. Satellites or submarines, come make in
India,” Prime Minister invited investors.
'Come, Make in India'! PM Modi's aggressive push to revive an ailing
manufacturing sector, has found resonance with Indian companies. Minimal
procedures cutting out of any red-tapism & single-window clearances - PM Modi
sees Make in India as vital impetus for his growth agenda, rise in GDP and
improved quality life. For this purpose twenty five sectors were selected among
which some of these sectors are: automobiles, pharmaceuticals, chemicals, IT,
textiles, aviation, leather, ports, railways, tourism and hospitality, wellness,
auto components, mining, design manufacturing, bio-technology, renewable energy
Manufacturing currently contributes just over 15% to the national GDP. The aim
of this campaign is to grow this to a 25% as seen in other developing nations of
Asia. In this process, the government expects to generate jobs, attract much
foreign direct investment, and transform India into a manufacturing hub
preferred around the globe. The logo for the Make in India campaign is an
elegant lion, inspired by the Ashoka Chakra and designed to represent India's
success in all spheres.
Challenges Ahead ‘Make in India’ Success
is the foremost necessity for making India a
manufacturing hub and ‘Make in India’ a success. Any firm requires good
infrastructure for manufacturing and performing its operations. But at present
it is very robust and is not sufficient for making such an ambitious program a
reality. Government needs to make efforts in improving such a poor situation.
Unease of doing business-India ranks 142 out of 189 countries in ease of doing
business index of World Bank group. There are numerous of factors which
contribute such a poor ranking despite of being one of the biggest economies of
the world. The Inspector Raj corruption license system, time consuming processes
because of lethargy of officials and government, and political dissension on key
tax structure and ineffective single window complicated tax structure
is one of the major obstacle in doing business with ease. Multiple tax system
and issue of retrospective taxes are major issues which are needed to be sought
out for attracting foreign investments. Single window system is not that
efficient. Multiple permissions for
a single project have to be taken from various departments which delays the time
and increases the cost.
– due to political dissension Modi government is not able
to actualize the expectations of industry in bringing major economic reforms
like GST and Land acquisition bill.GST Bill is a revolutionary bill which
simplifies the whole complicated indirect tax system. Land acquisition bill is
one of the foremost requirement for manufacturing as it can simplify the whole
process of availing land to industry. Although government is not able to
overcome all the roadblocks but it has yet not been able to succeed in making
consensus on the bill.
Human resource manpower-
Manpower is a
major challenge before any business to be successful. Despite manpower being
abundant lack of skills and mismatch of demand and supply of human resource is
the major challenge.
Make in India: Government in Action
The make in India- an innovative and growth booster, includes major new
initiatives which are designed to foster innovation, facilitate investments,
protect intellectual property and to build world class manufacturing
infrastructure. To achieve its aim, government is taking several measures like
new de-licensing and deregulation measures, steps for increasing speed and
transparency. Government has simplified various processes to simplify the
business such as
making application of industrial licensing online through
eBiz portal on 24*7 basis, extending validity to three years for industrial
states are asked to introduce self certification and
third party certification under Boilers Act,
major components of defence have been excluded from
industrial licensing, deregulation of dual use items having both military and
making process of environmental clearences online, filing
of returns online through one unified form
businesses must manage an electronic register in place of
various registers to keep record of all transactions
Government is initiating various schemes so as to
emphasize on infrastructure and to boost up innovation and is integrating those
with that of Make in India to foster GDP growth. Manufacturing infrastructure is
poised for phenomenal growth. To infuse vigor for accelerated growth in
infrastructure, government has started smart city project in which 98 cities or
towns have been shortlisted for modernization and technology to simplify living.
Along with it, Digital India campaign has been initiated to
boost electronics sector and to provide platform for innovation and technology
advancements. National Industrial Corridor Development Authority- a new authority is being created to coordinate, integrate,
supervise and monitor the development of all industrial corridors. Another key
program- Skill India is also a major booster for Make in India as it helps in
developing skills which are useful for competing with world in manufacturing,
services, textiles and leather products and exports oriented sectors.
Achievements so far
Some of the major sectors have been judged in this article. Although number of
sectors and its achievements is quite long, thus to make study simple and
feasible, following major sectors have been shortlisted in which major
investments have come under this campaign.
The Defence Acquisition Council which is chaired by Mr. Arun Jaitely cleared
defence projects worth Rs. 80,000 crores. A big leap and probably for the first
time that six submarines are to be built indigenously in India at the cost of Rs
50,000 crore. A committee will now be formed by the Defence Ministry to study
both public and private shipyards for the purpose of building submarines in
India and will ensure that a port has the capacity and manpower, apart from
meeting other parameters.
Hyundai Heavy Industries (HHI) of South Korea will collaborate with Hindustan Shipyard
Limited, Vishakhapatnam to build warships in India so as to reduce the time-gap
for delivery to 2.5 years from 6 years. Another Korean company
Kang Nam Corporation will construct 12
minesweepers for the Indian Navy in Goa Shipyard at a cost of $1 billion. The
Electronics giants Samsung will associate with Cochin Shipyard to build LNG
Sun Group of Gurgaon and
Reliance Infrastructure are in talks with Russia to manufacture 2– Kamov
Ka-226 light helicopters in Punjab and nuclear submarines and stealth warships
in India respectively.
Foxconn, the contract manufacturers of Apple iPhones will start
10-12 production facilities in India the first contract of which will be signed
by the end of 2015. Lava, India's
fourth largest cell phone maker is shifting its base from China to India and is
planning to spend Rs 500 crore in local operations over three years. After which
it will shift most or all of its production for which. The central government is
giving 25% subsidy and offers of VAT-free operations from various states.
Oppo, Chinese Electronics manufacturer is reported to be
starting a facility in India and Chinese telecommunication major
ZTE Corporation is setting up its
manufacturing facility. Smartphone Company
Phicomm is investing $100 million in 3-years to market its products in India
and also plans to set-up a production facility here.
Mercedes Benz’s two-fold association with “Make In India” will see
manufacturing its components in India, and will increase the localization of its
C220 CDI model to 60%. Also, the trials of its luxury buses for Africa and
South-East Asian markets are on-going and it will be manufactured in India
aiming at an early 2016 full-fledged export.
BMW will raise its localization to 50% in India and for the purpose it has already signed
deals with 20 companies to supply components.
Volvo too is seeking to manufacture
its buses in India for other suitable markets.
Renault’s small-car Kwid- a new one, is 98% Indian and the company
used “frugal engineering” an innovative method to achieve such a level of
localization. Ford is also believed to
invest Rs.4000 to 5000 crore for Research
and Development purpose in its Chennai division. Fiat Chrysler Automobiles has
started working on plans to manufacture a premium SUV under the Jeep brand as
part of Rs 1,500-2,500 crore investment in India and to export it to markets
like UK, Australia and South Africa in next two years.
Railways and Aviation Sectors
Indian Railway has invited international suppliers for procurement and
manufacture of 15 train sets in a bid. A total of 40 coaches will be imported
and rest of 275 coaches will be manufactured in India which is estimated to be
worth around Rs. 2500 crore.
India signed the major military aviation deal which is of French fighter jet
Rafale of which 50% will be invested
in India (appoz. $4 billion).
a United Technologies Group, will start a training facility in Hyderabad, in the
second half of 2015 to meet global training demand for its Geared Turbofan (GTF)
Airbus and Mahindra have already reached an agreement to manufacture various
metallic components for Premium AEROTEC of Germany, an Airbus Group Company and
Mahindra Aerospace, a Mahindra Groip subsidiary.
Energy and Power Sector
China’s Trina Solar, the fourth
largest manufacturer of photovoltaic modules, plans to set up a facility over
the next few years and to export these modules to other parts of the world.
Alstom T&D India will manufacture 2
substations, and its components, entirely here for the first time. One will be
in Betul (Madhya Pradesh) and other in Navsari in Gujarat.
Azure Power India has announced its largest (100 MW) solar photovoltaic
(PV) plant in Jodhpur, Rajasthan under the National Solar Mission of India.
Essel Group and
JA Solar of China will setup a solar
cell and module company in India. Bajaj
Group commissioned 660 MW thermal power plant at Lalitpur in Uttar Pradesh.
Odisha Government will set up a 3 GW renewable energy capacity to contribute
government’s aim to produce 175 GW power by 2022 Maharshtra will increase the
current capacity of 6.7 GW to 14.4 GW of renewable energy.
Karnataka Iron Ore Corporation Limited
(KIOCL) will associate with
overseas companies to allow the use of its pellet plant and blast furnace units
as a tolling plant. It will convert imported ore or concentrate into pellets for
these overseas suppliers. National
Aluminium Company (NALCO) will setup 1-million tonne refinery at Koraput,
Damanjodi, Odisha and thus proposes
investment of Rs. 5540 crore.
make the vision into reality, government has to address all the concerns of
various stakeholders and to take appropriate measures to fix the issues. Very
first government must identify the various hinderances while doing business,
which may include red tapism, inspector raj, government clearance delays
corruption, environmental clearance and many more. India stands quiet behind in
ease of doing business index, thus indicating urgent actions to be taken to
facilitate good business environment and to revive the investment sentiments.
For this purpose various actions are being taken such as eBiz portal, simplified
tax returns, format ion of committee to redress grivences of investors,
simplification of business processes and industrial licensing. Government has
tried to start single window but it needs to be more efficient, reliable and
time saving which could facilitate investors. More simplified tax structure,
putting check on lethargic administration, addressing grievances immediately,
removal of overlapping provisions or laws, abolishing inspector raj, check on
corruption by using maximum technology and internet, and many such measures must
be taken to provide investor friendly environment and ease in doing business..
Good infrastructure is the basic necessity for making India a manufacturing hub.
At present it is one of the major concern for the government, this is focusing
on building world class infrastructure. However govt. is trying to push it by
smart city project but it is not showing much favourable outcomes because of it
being in initial phase only. Projects of infrastructure need to be speeded up
and must comply with requirements of various projects. Good infrastructure is
must to attract foreign investors. Along with it, govt. has to speed up its key
reforms such as land acquisition bill and GST bill. Government has to work more
hard to make consensus among different stakeholders in regard to land bill which
is facing too much fire because of its some controversial provisions. Govt.
needs to find a midway to satisfy both farmers and industry guarding their
interests. GST bill could be presented in parliament but not passed because of
political wrangles. However after washout of monsoon session govt. is thinking
to call special session for the purpose but it also seems to be in vain since
major opposition party is opposing the bill due to its political interests. It
is important to make consensus as soon as possible so as to meet its deadline of
2016. For providing land for manufacturing and simplified indirect tax
structure, these reforms must be passed soon. There is lack of skilled labour to
meet requirements in such a large scale project. Although Skill India has been
pushed for the purpose but it will take a long time in its application. Human
resource is in plenty in India but govt. must take appropriate steps to remove
this mismatch and to reduce the deviations among skilled labour.
Make in India campaign is the calling card for investors to come, invest,
manufacture in India and exporting to the world. Although this campaign is not
just an influx of capital being targeted or attracted but the impetus is further
the manufacturing capabilities of India. Since the manufacturing sector has
faced a creeping rut over last few years, it was very important to infuse some
positive energy in such a crucial sector and thus was done in the form of ‘Make
in India’. Aiming the export oriented manufacturing; it has several roadblocks
or challenges ahead to achieve 10% additional growth in manufacturing. Govt. is
trying hard to change the mindsets of bureaucrats, of states, of employees, of
the people (to become entrepreneurs) and of investors. Positive response can be
seen as portrayed by number of MoUs being signed between different foreign
companies with governments or local investors in different sectors. More time
must be given to see the fruits of such a hopeful idea. The idea of ‘make in
India’ is no doubt suitably fit the growth story of India but it is a long term
prospective. The ‘make in India’
initiative conceived as a comprehensive and holistic production centered scheme
has already started taking shape with lot many promises ultimately enhancing the
living standards of the masses, directly or/and indirectly. However, relevant
agencies have to be constantly vigilant to not astray the concentrated effort
towards the objectives of the scheme that is to make India a manufacturing giant
with the maximum harnessing of indigenous potential.
Abbas,A.(2014): Narendra Modi’s
‘Make in India’ vision can empower youth,
Niti Central, 25 September 2014,
Ganessan,A.V.: Come, Make in
India, The Hindu, 31 august 2014,
Talwar,S.(2014-15): How can the
new government make India a global manufacturing hub?, CRISIL Young Thought
Das, S.: “Make in India”-Boost
to Manufacturing sector,
Modi's 'Make in India' campaign
so far mostly hype: Wall Street Journal,
26 May 2015, IANS
Bhattacharya, A., Bruce,A., and Mukharjee, A.(2014): Make
in India: Turning vision into reality.
CII 13 Manufacturing Summit
2014, CII and BCG, November 2014.