Made in India Vs. Make in India
Prof. Lalit Gupta,
Dean, Faculty of Commerce and management.
J. N. Vyas University,
(m) 098295 25191
Professor and Management
in India call of NaMo Govt. has to be differentiated from Made in India. We have
to attract FDI in manufacturing sector to fill the gap in investment by unwilling
Indian Business and helpless public sector. It is a timely strategic call given
by NaMo Govt. in view of global economic crisis. We have to improve GDP Growth Rate
from 5% to 7% by increasing share of manufacturing sector from Just 18% to 30%.
Several obstacles are there. We need political wisdom, consensus, foresight rather
than confrontation based on outdated controversies to succeed in this mission of
inclusive balanced growth. It will not be export led but domestic market led this
Terms: Make in India, Made in India, inclusive balanced growth, bop, politicking
free market economy (Thatcher Model/Regan Model), Hobson’s choice.
Made in India Vs. Make in India
NaMo Govt. at centre has given a new slogan ‘Make in India’. This slogan has following
major justifications and connotations in contemporary setting :–
It is a sort of invitational tune to foreign direct investors (FDI) in India’s industrial
sector – come and invest in our manufacturing sector. Make India your production
The contribution of manufacturing sector in India’s GDP is just 18% as against 30%
in China. 50% of India’s labour is dependent on agriculture which contributes handly
16-17% to India’s GDP.
We have to spur GDP growth rate from just about 5% p.a. to 7% plus in near future
by improving performance of industrial sector.
Comparatively cheap land and labour (as compared to China, Japan, Australia) must
attract manufacturers from these countries to make India their manufacturing base.
Surplus land and labour may be gainfully used for manufacturing.
Import to meet domestic need in defence sector involves forex outgo and also hidden
cost in the form of bribes. Import of goods to meet civilian craze for foreign goods
involves forex outgo. Thus, balance of trade and bop pressure can be eased by dual
positive inflow of FDI and negative outflow of forex due to reduced defence and
civilian import of goods.
The country will get benefit of foreign technology which foreign entrepreneurs will
bring in addition to investment. Thus, briefly we may say that ‘Make in India” is
a red carpet Welcome invitation to, technology, entrepreneurship and managerial
skills to make India their manufacturing base either for domestic market, or for
export market or both.
How does it differ from ‘Made in India’?
in India involves swadeshi land, labour, capital, entrepreneurship and technology
or intellectual property. Made in India refers to India’s own Brand Equity in Indian
and/or foreign markets. Like ‘Amul’ Butter- -Taste of India. As against this, Make-in-India
is not a Brand. It is an invitation to foreign capital, technology or Intellectual
property (innovations) to employ Indian manpower and land to manufacture goods in
India for domestic market and/or export market. Since private sector has bleak demand
prospects due to economic crisis in developed world and Governments have no money
to invest, foreign investors are focusing their attention to emerging economies
like China and India where huge demand potential, cheap land and labour exist. Now
China’s cheap land and labour advantage is waning away due to rising cost curve
of these inputs. Even Chinese Industries and MNC’s based in China are in search
of more competitive locations like India to relocate their manufacturing units.
The same is true about Japan also. Therefore, the clarion call given by Namo Govt.
at Centre is very well-timed - Welcome! Make in India.
significant point to be considered is this that the Indian Business lost confidence
in UPA-2 Govt. due to rampant corruption, red-tape, long delay in big project clearance
under the pretext of environment clearance and land acquisition legal hassles. They
are so dejected that they consider doing business in India a crime or sin. The Indian
private capital is not willing to invest in India’s manufacturing sector due to
their bitter experience with UPA-2 Govt. Now, new (NaMo) Govt. at Centre is trying
very hard to restore Business Confidence in Govt. but opposition is also leaving
no stone unturned to project NaMo Govt. Pro-Business-anti farmer, labour and the
poor. Development must be our national agenda with political consensus based on
shared wisdom and foresight rather than segmented confrontational myopic politicking.
People have given a clear mandate to NaMo for ‘Sabka Saath Sabka Vikas.’
Our democracy should lead to deliberated timely decisions rather-than intense
political confrontations of Industry Vs. Agriculture, Swadeshi Vs. Videshi which
are outdated and outlived. Anna Hazare leftists, socialists, congress and other
must avoid confrontations which, if prolonged, may freighten away Indian and foreign
investors both from investing in manufacturing sector of India – a key to fulfillment
of NaMo electoral promise of ‘Ache din ayenge’ – more jobs, less inflation,
less corruption, higher and inclusive growth. Let us all respect a clear mandate
given to NaMo and allow him to fulfil his electoral promises.
few salient differences based on implications need be noted carefully. Made in India
will involve capital outflows in the form of dividend, interest and royalty, capital,
etc. in the log-run. Unless it is covered by exports, it may amount to postponement
of present bop pressures to future. As against this, Made in India may not be able
to provide solution to present bop imbalance unless it leads to growth of exports,
import substitution. But, it will not involve any forex outflow in future. A careful
Social-Cost-Benefit Analysis of Make-in-India Vs. Made-in-India must be carried
out by independent policy research group experts to help decision-makes arrive at
a well informed decision on this issue. It should not be presented as option’s choice(compulsion)
before the nation.
A few warning signals
attract FDI for Make in India, India has to speed-up Infra project clearances and
implementation, eliminate administrative and political decision delays, corruption,
etc. Improve policy implementation of land and labour law reforms at ground level.
Now, apart from known bitter open opponents, NaMo may invite opposition from RSS
Swadeshi Movement, BMS (Labour Wing of BJP). Govindacharya joining hands with Anna
Hazare & Co. in mas public agitation against Land and Labour Law reforms is
a pointer in that direction. When we focus on development, the other socio-cultural
issues have to be put on hold for the time-being. We must remember that development
has its own cost and sacrifice. Social benefits must exceed social cost. It should
be the only basis of an enlightened political choice in a democratic system. If
we want development at no social cost, we are living in a fool’s paradise.
we invite ‘Make-in-India’ in defence production, the technology transfer is not
forthcoming as the past experience shows. It involves national security risk also.
We have to think more about ‘Made-in-India’ to happen as early as possible. ( Ref:)
Ajay Shukla, B.S., Ahmedabad, Jan 6, 2015 p.9 – Made in India Vs. Make in India).
Governor Raghu Ram Rajan and OECD Chief Economist Catherine L. Mann have argued
in favour of ‘Make-in-India’ for domestic market rather than export. We subsidize
exports with cheap inputs as well as undervalued Exchange rate. It is unlikely to
be effective right now due to global economic crisis led lack of demand in overseas
markets. Concentrate on domestic market and reduce transaction costs by achieving
economy of scale. It must be clearly understood that make in India will not be for
export unlike in the past. It will be focused on domestic market. It is advisable
that it should not lead to avoidable conflict with swadeshi manufacturers just to
satisfy craze for foreign brands in elite class in substitution of deshi manufacture
instead of import substitution. (Ref. B.S. Ahmadabad February 20, 2015 P.4 Make
in India for India makes more sense.)
Is it a new slogan ?
in India has been presented as a new slogan by Namo Govt. However, it has its origins
in India of 1901 when Dadabhai Nauroji had written against economic policy of British
India favoring Make in India against export of raw material from India to stop economic
exploitation of India. L Kirlosker and J. N. Tata responded to his all by starting
manufacturing in India. Then it was akin to modern Made in India or swadeshi industry.
(Ref. Prof. Satish Deodhar’s research, Times of India Ahmadabad, 24 Feb, 2015 P.4)
should realize their duty to their own motherland. Bring black money back from tax
havens, invest it in India’s development- infra projects, Manufacturing, Real Estate
and Rural Development. Indian diaspora must come forward to invest in Indian industries.
Reform electoral and administrative process to make it inclusive development-oriented.
The question of balanced regional growth :
in India call if positively responded by foreign direct investors, will lead to
widening gap between developed states (Maharashtra, Gujarat, Tamil Nadu, Karnataka)
and under-developed states (Bihar, U.P, Orissa, Rajasthan, M.P. etc). FDI destinations
will be only those states who have carried out economic and legal reforms, have
developed good infrastructure and have created investor friendly environment and
procedures and have secure and peaceful law and order. (Ref. Tamil Nadu fights to
retain edge in `Make in India` race : B.S. Ahmadabad, Jan 9, 2015 P.6)
in India (swadeshi) be encouraged to reduce this gap by special state and central
incentives to compensate them adequately for diseconomies of location .
in India and Made in India both will get a boost if Indian Common Market is developed
by introducing GST and later on SAARC and ASEAN Common Markets are developed with
A Few more barriers – Do’s and Don’ts called for
we invite FDI through Make in India Call it will create domestic resistance in country
of origin. If they shift existing manufacturing base from own country/other countries,
it will lead to unemployment and decline of exports/increase of imports. Swadeshi
lobbies in those countries will oppose such moves. Therefore, it is better to present
Make in India as an opportunity to expand overseas business for FDI.
Make in India call is intended to attract big MNC’s to invest in India, we must
be aware of their economic power. Several such corporates have budgets larger than
even major countries. They may meddle into domestic politics, may control major
Govt. Policy decisions through lobbying and bribes, may exploit input suppliers,
labour, channel partners, investors, may pollute environment and may create security
risk. They may insist on legal action/ arbitration in their country of origin for
dispute resolution. The Govt. of India must observe safeguards to protect interest
of all stakeholders and the nation against such risks. History of East India Company
be not allowed to get repeated.
Labour and tax law reforms, judicial reforms, corruption free politics and administration,
development of infrastructure, restoration of Business confidence must be top agenda
to make Make in India call successful. Market reforms in land will shift labour
from agriculture to manufacturing. This will call for massive skill development
effort. FDI investors (MNC’s) will go for automation in manufacturing rather than
using labour intensive manufacturing technology. This may lead to a massive growth
in unemployment which may intensify Maoist and Naxalite movements posing threat
to law and order and democratic system itself. Nation can ill afford gigantic burden
of freebies like national food security. Therefore, strong tax incentives be given
to manufacturing sector for skill development, rural development, SME development,
use of labour intensive manufacturing.
retrospective changes in tax laws to increase tax burden be avoided, all necessary
safeguards be taken to deter MNC’s from tax evasion via transfer pricing route.
will be no doubt that what NaMo could do to attract FDI in Gujarat successfully,
be will be able to do it national level. But safeguards (do’nts) call for more careful
can’t afford to adopt Thatcher or Ronald Regaon’s pure rightist agenda for development
of manufacturing sector. We may move from left to centre position to centre but
can’t move to extreme right or free market model. We must not allow India to become
a colony for MNC exploitation. Make in India and Made in India both have to provide
solutions to India’s balanced inclusive development need. Let us to be pragmatic.
(Ref : Ishan Bakshi : “News Maker : Arivind Pangariya “ : B. S. Ahmedabad, Feb.
A Few Positive Policy Decisions
few positive decisions taken by Namo Govt. recently kindle hope for success of manufacturing
sector. These are listed below :-
Land acquisition made easy. Labour reforms, GST implementation, single allocation
and price guidelines for domestic gas for works, lifting of restrictions on domestic
airlines from flying abroad, simplification of Toll collection and implementation
of Indian IFRS from 1.4.15 in India already annonced / or on the anvil.
Auction of coal Blocks and 2G,3G spectrum being done in a transparent manner. About
Rs. 3 lakh crores revenue already generated. FDI in Insurance raised from 26% to
49%. FDI limit in defence manufacturing raised. Defence procurement process made
easy. Real estate investment trust units (REIT) with tax exemption announced. Foreign
investment allowed in real estate and railway projects. Investment commitments sealed
in Japan, China and USA.
Planning commission replaced with NITI Ayog. Disinvestment plan announced. Experts
groups constituted for advice on reforms. Diesel price deregulated, direct benefit
transfer to bank A/C on massive scale to reduce corruption and bogus subsidy burden.
Public sector Banks have been assured of no political / Govt. interference.
above-stated examples are enough to restore Business Confidence in a single party
Govt. with comfortable majority working under an action – oriented Leader at an
The Union Budget 2015-16 : The first full budget of Namo Govt. contains
several proposals to give a fiscal policy support to make in India and Made in India
both in order to banish poverty by 2022. A few salient proposals are listed hereunder.
Five large power projects to ensure 24 hour power supply.
Mission innovation to promote innovations
Linking Make in India with Skill India program, specially in rural areas to ensure
adequate supply of skilled manpower. This may become an alternative to MNREGA where
only sand digging (unskilled work) is being done making supply of labour to agriculture
and MSME sectors scarce and costly.
Corporate tax rate to be reduced by 5% and wealth tax abolished to attract FDI and
IDI both to manufacturing sector.
SETU yojana to promote entrepreneurship.
MUDRA – A new financial institution to provide finance to MSME sector units. Rs
20,000 crore corpus announced.
NaMo Govt’s first budget 2015-16 makes a confident move towards make in India and
Made in India both. Recent steps and new Budget proposal taken together point towards
a imminent bright future of ‘Ache din aa rahe hain’