Dr. Kakali Majumdar
Make in India is an ambitious initiative launched by the Government of India to encourage companies to set up manufacturing their products in India. It was launched by Prime Minister Narendra Modi on 25th September 2014. The basic objective of Make in India is to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build manufacturing infrastructure. The importance and potential of Make in India as a discipline is enormous in the globalised era. Awareness regarding the same, at a greater level is always beneficial for the successful implementation of any developmental plan, so is it for this government scheme. There is a need to deliberate on the various issues related to economics of Make in India in order to harness the opportunities available as also face the challenges and prepare with the proactive approach to combat issues of varying
complexities.
At an elementary level, Make in India is an effort to alter the production structure of the economy. The major objective behind the initiative is to focus on 25 sectors of the economy for job creation and skill enhancement. Some of these sectors are automobiles, chemicals, IT, pharmaceuticals, textiles, ports, aviations, leather, tourism and hospitality, wellness, railways, auto components, design manufacturing, energy, mining, bio-technology and electronics. It is expected that this developmental initiative will give a required thrust to the GDP growth and increase tax revenue of the country. The initiative also aims at quality standardisation and at the same time, minimise degradation of the environment.
Make in India campaign is a welcome move aimed at making India an attractive investment destination. Relaxation plans have been initiated in FDI norms for many sectors including multi-brand retail, telecom and defence. 100 per cent FDI is allowed in all the sectors except Space (74 per cent), Defence (49 per cent) and News Media (26 per cent). FDI restriction in tea plantation has been removed, while the FDI limit in defence sector has been raised from the earlier 26 per cent to present 49 per cent. India’s emergence as the world’s top foreign direct investment destination in the first half of 2015 has been the outcome of the Make in India Initiative. India has pulled ahead of China and US to emerge as the world’s number one destination for foreign direct investment (FDI). It received $31 billion in foreign capital inflows during the first half of 2015; China was second with $28 billion and US third with $27 billion. However, if analysed from Socio-economic perspective, there remain some negatives of FDI policy formulations. FDI coming to India has been concentrated to e-commerce, automobiles and cash and carry businesses, which, though these seem to be romantic Economic ideas especially with the growth of internet as a Business module world over, are not fully aligned to the spirit of the Make in India campaign. Again these investments are aimed at tapping domestic consumption rather than boosting export, which is the thrust area of ‘Make in India’.
India is having a large and young workforce, an enabling economic environment and competitive wages which are essential elements of ushering a successful ‘Make in India’ scene. Skill development programs are needed to be launched especially for people from rural and poor backgrounds from overcrowded urban areas. As already mentioned 25 key sectors have been short listed such as telecommunications, power, automobile, tourism, pharmaceuticals and others for Make in India thrust area. Individuals aged 15-35 years would get high quality training in these key areas such as welding, masonry, painting, nursing and other areas where skilled jobs are in high demand. Skill certifications at various expertise levels would be given to make training process, a standard. Currently manufacturing in India suffers due to low productivity, rigid laws and poor infrastructure resulting in the markets being flooded with low quality products, that do not have, owing to their sub standard quality, oversees buyers. To offset this handicap, over a thousand training centers are to be opened across India in the next two years.
Empirical evidence shows positive linkage between patents, innovation, productivity and investment. Make in India will be successful when ‘Innovate in India’ will also merge with it. A strong research environment will encourage trade and investment in India, while fostering other benefits like high-paying skilled jobs, transfer of technology, medical knowledge so on and so forth. It can be made possible with the prioritization of Research and Development in high technology fields. At present India counts for only 2.7 per cent of global R and D spend, while China is 17.5 per cent.
Besides innovation, some fresh initiatives are undertaken in the Make in India regime to improve business environment of India. Now all income tax returns can be filed online. Validity of industrial licence is extended to three years. Paper registers are replaced by electronic registers. The process of applying for industrial licenses is to be made through an online portal. In the era of Make in India the government has decided to improve and protect the intellectual property rights of innovators and creators by upgrading
infrastructure, and using state-of-the-art technology.
Manufacturing sector is the backbone of any economy as it stimulates growth, productivity, employment and strengthens other sectors of the economy. The ultimate objective of Make in India initiative is to make India a manufacturing hub that will generate millions of employment opportunities and push India on a high and sustainable growth route in the upcoming times. Presently, the situation of manufacturing sector in India is a cause for concern especially when seen in comparison to the massive transformation registered in this sector by other Asian economies, particularly in the era of complete globalization. According to ‘2013 Global Manufacturing Competitiveness Index (GMCI)’, by Deloitte and the U.S. Council on Competitiveness, India has slid to 4th from 2nd rank from year 2009-10 to 2012-13. However, the forecast results during 2017-18, predict that India is expected to register an index of 8.49 and jump to 2nd rank behind only China.
India has the potential like an attractive domestic market, comparative advantage in shipping and labour costs, an inexpensive currency relative to the US dollar, low political risk factors, etc. to become a manufacturing hub and achieve the desired growth trajectory. The initiative resultants will accrue through employment to the middle class and lower middle class, to the rural-urban migrants for whom income from agricultural activity is not sustainable enough for a decent life-quality. This initiation is also targeted at building the effective physical infrastructure as well as improving the market of digital network in the country to make it a global hub for business. Digital India, another of the ambitious projects of present ruling dispensation, is a right step towards fostering Make in India achieve its desired goals, as is Start-up India and Stand up India.
Make in India initiative has received support and appreciation from different foreign counties and multinational companies as well as from internationally acclaimed rating houses like Moody’s and McKinseys. Russia is the first country to have agreed to partner under Make in India umbrella in two key strategic sectors, nuclear and defense. Japanese Foreign Minister Fumio Kishida said, “Japan will contribute to Prime Minister Narendra Modi’s ‘Make in India’ initiative to support India in becoming a base of economic growth for the Indo-Pacific region and the world”. French defence firms have expressed their willingness to “adapt” to PM Modi’s Make in India push. Inspired by ‘Make in India’, UK has launched ‘Great Collaborations’ which will seek greater cooperation between the companies based in India and the UK on a range of sectors such as energy, healthcare, advanced manufacturing, financial services and infrastructure.
The importance of this highly ambitious and determined initiative can be gauged through these words, “We have skill, talent and discipline and a will to perform. We want to give a collective opportunity to the world. ….Come, make in India, we have the strength, come to our country, I invite you”. [Narendra Modi, Prime Minister of India, August 15, 2014].
(Faculty member, Department of Economics, Shri Mata Vaishno Devi University).
