Make In India - A Global Manufacturing Hub


By

Vijay Prakash Gupta
Assistant Professor
Deptt. of Management Studies
ABES Institute of Technology
NH-24, Ghaziabad, U.P.
 



© Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, India
Official 'Make in India' logo


ABSTRACTS

That day, Indian Prime Minister Narendra Modi addressed an audience of 500 domestic and international entrepreneurs in New Delhi, in an atmosphere charged with euphoria following the success of India's first mission to Mars the previous day. Modi inaugurated a campaign aimed at transforming India into a global manufacturing hub and at easing its business climate for both domestic and foreign investors. A logo, a portal and brochures detailing 25 priority sectors were introduced that day. The logo shows a striding lion made of cogs with the campaign name across its body.

The stock market boom at the clear mandate given to BJP in the 2014 Lok Sabha elections and the current stock market scenario was a clear indicator of investor confidence in the Narendra Modi Government. Further steps by Mr. Modi like the "Make in India" and "Digital India" campaigns, invitation to the leaders of all the SAARC countries, US and Japan visit and various business friendly reforms have significantly created a positive business environment in the country.

However there are certain bottlenecks in the economy which the Government needs to address towards making India a global manufacturing hub. This research paper aims to identify some of the key challenges in the path of development and recommend possible solutions to deal with the same. Through secondary research and data obtained from various authenticated sources

This paper has been able to identify the following major challenges in the path of making India a global manufacturing hub and accordingly make a few suggestions regarding possible solutions to deal with each of the issues:

  • Improving the ease of doing business in India
  • Improving the employability of general and engineering graduates
  • Infrastructure development of major roads and highways in the country
  • Capacity addition in the power sector to meet industrial energy demand

It is to be noted that the above list is not exhaustive and there are lot of other ample challenges towards making India a global manufacturing hub. However, focusing on these issues and taking adequate measures to deal with the same will go a long way towards turning the "Make in India" vision into a dream come true.

Introduction

The recent launch of the "Make in India" campaign by Prime Minister Mr. Narendra Modi where leading businessmen and CEOs of about 3000 companies from 30 countries were present is an impressive effort on the part of the new Government to boost investor confidence in the country.Moreover, Mr. Modi's recent US visit and meeting with CEOs of some of the top global firms like Goldman Sachs, Google, General Electric, Cargill, Boeing and many others definitely set the ground for investment in India. But at the ground level, there are a lot of challenges that the government has to overcome in order to turn the vision of achieving a sustainable 10% growth in the manufacturing sector into reality.

This research paper aims to analyse the key issues facingthe "Make in India" vision and recommend possible strategies to deal with the same.

Recent policy measures and projects to open up India's manufacturing sector:

  • 100 per cent FDI allowed in the telecom sector;
  • 100 per cent FDI in single-brand retail;
  • Validity of industrial license extended to three years;
  • For all non-risk, non-hazardous businesses, a system of self-certification to be introduced;
  • Process of obtaining environmental clearances made online.
  • The Government of India is developing the Delhi-Mumbai Industrial Corridor (DMIC) as a global manufacturing and an investment destination utilising the 1,483 km-long, high-capacity western Dedicated Railway Freight Corridor (DFC) as the backbone.

Additional reasons for the new initiative

Several pressing issues prompted the launch of this campaign. First and foremost, India needs to reboot its economy. After several years of gross national product (GNP) growth averaging 7.7%, between 2002 and 2011, this pace slowed down to around 5% in 2013 and 2014.

Second, India needs more jobs for its young people. Recently, on average, 5 million new jobs have been created each year, but around 12 million people join the workforce each year. This is the other side of the demographic dividend: India's labour force is expected to grow to 600 million by 2022. Job creation will fight poverty and help divert people from agriculture, which has a low capacity to sustain their livelihood.

Third, India's economic development model has been quite peculiar, offering privileges to skilled labour often employed by foreign companies. Conversely, other economies have achieved success by first providing incentives for job-creating manufacturing industries. That is why today manufacturing in China makes up 34% of gross domestic product. The Chinese have positioned themselves as the 'workshop' of the world, accounting for 22.4% of global manufacturing, while India accounts for only 2%. India's manufacturing sector is less productive compared to its competitors and accounts for only 15% of its GDP. The government has set a target of 25% of GDP by 2022.

Reactions to 'Make in India'

'Make in India' has received widespread support from industry leaders from both India and abroad as well as from the Confederation of Indian Industry (CII). Some companies, including foreign ones, have already announced plans related to the initiative.

Reserve Bank of India Governor Raghuram Rajanin dismissed the idea of introducing a policy targeting the manufacturing sector, just because it had worked for China, given how different the two countries are. He underlined the risks of an export-driven approach in a global economy still in crisis, and where many industrialised economies are strengthening their own manufacturing capabilities. 'The world as a whole is unlikely to be able to accommodate another export-led China', he said.

C K Ranganathan, the founding chairman of popular Indian household brand CavinKare, said that he would rather support a 'Made in India' approach in which India would be creating its own internationally renowned brands. Srikant Jena, a former government minister, stated that efforts to resolve caste and gender inequalities as well as regional imbalances were missing from the initiative.

Conclusion

Although the ease of doing business score went down to 142 from 134 last year, the World Bank has taken care to distance this downslide from the NDA government which took charge barely a week earlier and World Bank has used data till May 2014 whereas most measures to improve doing business were undertaken subsequent to that. The various measures undertaken by the NDA Government to address issues related to economic growth, delay in Government decisions and reforms in the Labour law, Land law and taxation have kick started the manufacturing sector and shot the GDP growth by 5.7 % in the last quarter.

The Modi Government has also signed a staggering USD 35 Billion investment deal with Japan for infrastructure development.

If governance continues in the current manner, we can definitely hope to see significant and sustainable growth in the manufacturing sector and progress towards India becoming a global manufacturing hub.

Bibliography:

1. http://en.wikipedia.org/wiki/Make_in_India

2. http://www.makeinindia.com/

3. http://www.crisil.com/crisilyoungthoughtleader/dissertations/How%20can%20the%20%20new%20governm ent%20mak%20India%20a%20global%20manufacturing%20hub%20%20Gunjan_Bhagowaty_MDI_Gurgaon.p df

4. http://epthinktank.eu/2015/01/22/make-in-india-for-more-made-in-india/
 


Vijay Prakash Gupta
Assistant Professor
Deptt. of Management Studies
ABES Institute of Technology
NH-24, Ghaziabad, U.P.
 

Source: E-mail May 28, 2015

          

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