MAKE IN INDIA – THE WAY AHEAD

“This is a step of a lion; nobody can question the talent of our people after
Mangalyaan”

Introduction

The Make in India initiative was launched by Prime Minister Narendra Modi on
September 25, 2014 as part of a wider set of nation-building initiatives. Devised to
transform India into a global design and manufacturing hub, Make in India was a
timely response to a critical situation. By 2013, the much-hyped emerging markets
bubble had burst, and India’s growth rate had fallen to its lowest level in a decade.
The promise of the BRICS Nations (Brazil, Russia, India, China and South Africa) had
faded, and India was tagged as one of the so-called ‘Fragile Five’. Global investors
debated whether the world’s largest democracy was a risk or an opportunity. India’s
1.2 billion citizens questioned whether India was too big to succeed or too big to fail.
India was on the brink of severe economic failure, desperately in need of a big push.

Make in India logo

Make-in-India is a lion step, said Prime Minister, after launching the logo of his
ambitious campaign to attract companies to India. The logo is the silhouette of a
lion on the prowl, made entirely on cogs. symbolizing manufacturing, strength, and
national pride. The national emblem, Ashok Chakra, also has four lions In Indian
folklore, the lion denotes the attainment of enlightenment, besides representing
power, courage, pride. confidence.

The logo adorns the brand-new website makeinindia.com-for the campaign and all
its brochures

Process of Make in India

Make in India was launched by Prime Minister against the backdrop of this
crisis and quickly became a rallying cry for India’s innumerable stakeholders and
partners. It was a powerful, galvanising call to action to India’s citizens and business
leaders, and an invitation to potential partners and investors around the world. But
Make in India is much more than an inspiring slogan. It represents a comprehensive
and unprecedented overhaul of outdated processes and policies. Most importantly, it
represents a complete change of the government’s mindset – a shift from issuing
authority to business partner, in keeping with Prime Minister's tenet of ‘Minimum
Government, Maximum Governance’.

Objectives of Make in India

 To increase the manufacturing sector's growth rate to 12-14% per annum

 To create 100 million additional manufacturing jobs in the economy by 2022
 to ensure that the manufacturing sector's contribution to GDP is increased to
25% by 2022 (later revised to 2025).

 Creating required skill sets among the urban poor and the rural migrants to
foster inclusive growth.
 A rise in the domestic value addition and technological depth in the
manufacturing sector.
 Having an environmentally-sustainable growth.
 Augmenting the global competitiveness of the Indian manufacturing sector.

Make in Inida - Plan

To start a movement, you need a strategy that inspires, empowers and

enables in equal measure. Make in India needed a different kind of campaign:
instead of the typical statistics-laden newspaper advertisements, this exercise
required messaging that was informative, well-packaged and most
importantly, credible. It had to (a) inspire confidence in India’s capabilities
amongst potential partners abroad, the Indian business community and
citizens at large; (b) provide a framework for a vast amount of technical
information on 25 industry sectors; and (c) reach out to a vast local and global
audience via social media and constantly keep them updated about
opportunities, reforms, etc.

The Department for Promotion of Industry and Internal Trade (DPIIT) worked
with a group of highly specialised agencies to build brand new infrastructure,
including a dedicated help desk and a mobile-first website that packed a wide
array of information into a simple and sleek menu. Designed primarily for
mobile screens, the site’s architecture ensured that exhaustive levels of detail
are neatly tucked away so as not to overwhelm the user. 25 sector brochures
were also developed - contents included key facts and figures, policies and
initiatives and sector-specific contact details, all of which was made available
in print and on the website.
Make in India – Schemes

Several schemes were launched to support the Make in India programme.

These schemes are discussed below:
Skill India
This mission aims to skill 10 million in India annually in various sectors. Make
in India to turn into a reality, there is a need to upskill the large human
resource available. This is important because the percentage of formally
skilled workforce in India is only 2% of the population.
Startup India
The main idea behind this programme is to build an ecosystem that fosters
the growth of startups, driving sustainable economic growth, and creating
large-scale employment.
Digital India
This aims to transform India into a knowledge-based and digitally empowered
economy. To know more about Digital India, click on the linked page.
Pradhan Mantri Jan Dhan Yojana (PMJDY)
The mission envisages financial inclusion to ensure access to financial
services, namely banking savings & deposit accounts, remittances, credit,
insurance, pension in an affordable manner. Click the linked article to know
more about Pradhan Mantri Jan Dhan Yojana (PMJDY).
Smart Cities
This mission aims to transform and rejuvenate Indian cities. The goal is to
create 100 smart cities in India through several sub-initiatives.
AMRUT
AMRUT is the Atal Mission for Rejuvenation and Urban Transformation. It
aims to build basic public amenities and make 500 cities in India more livable
and inclusive.
Swachh Bharat Abhiyan
This is a mission aimed at making India more cleaner and promoting basic
sanitation and hygiene. For more information on Swachh Bharat Mission, click
on the linked article.
Sagarmala
This scheme aims at developing ports and promoting port-led development in
the country. Read more on the Sagarmala Project in the linked article.
International Solar Alliance (ISA)
 The ISA is an alliance of 121 countries, most of them being sunshine
countries, which lie either completely or partly between the Tropic of Cancer
and the Tropic of Capricorn. This is India’s initiative aimed at promoting
research and development in solar technologies and formulating policies in
that regard.
AGNII
AGNII or Accelerating Growth of New India’s Innovation was launched to push
the innovation ecosystem in the country by connecting people and assisting in
commercializing innovations.

Make in India – Progress

 In a short space of time, the obsolete and obstructive frameworks of the past
have been dismantled and replaced with a transparent and user-friendly
system. This is helping drive investment, fostering innovation, developing
skills, protecting Intellectual Property (IP) and building best-in-class
manufacturing infrastructure. The most striking indicator of progress is the
unprecedented opening of key sectors – including railways, defence,
insurance and medical devices – to substantially higher levels of Foreign
Direct Investment.
 The ministry has engaged with the World Bank group to identify areas of
improvement in line with World Bank’s ‘doing business’ methodology. Several
workshops with Ministries and State governments have been conducted by
the Department for Promotion of Industry & Internal Trade (DPIIT) and World
Bank for Business Reforms Action Plan.
 An Investor Facilitation Cell (IFC) dedicated for the Make in India campaign
was formed in September 2014 with an objective to assist investors in
seeking regulatory approvals, hand-holding services through the pre-
investment phase, execution and after-care support.
 The Indian embassies and consulates proactively disseminate information on
the potential for investment in the identified sectors. DPIIT has set up a
special management team to facilitate and fast track investment proposals
from Japan. The team known as ‘Japan Plus’ was operationalized in October
2014. Similarly, 'Korea Plus', launched in June 2016, facilitates fast track
investment proposals from South Korea and offers holistic support to Korean
companies wishing to enter the Indian market.
 Various sectors have been opened-up for FDI like defence manufacturing,
railways, space, single brand retail, etc. Also, for ease of doing business, the
regulatory policies have been relaxed to facilitate more investments.
  Across various regions of the country; six industrial corridors are being
developed. Industrial Cities will also come up along these corridors.
 Today, India’s credibility is stronger than ever. There is visible momentum,
energy and optimism. Make in India is opening investment doors. Multiple
enterprises are adopting its mantra. The world’s largest democracy is well on
its way to becoming the world’s most powerful economy.

25 sectors under Make in India scheme

 Automobiles
 Automobile components
 Aviation
 Biotechnology
 Chemicals
 Construction
 Défense manufacturing
 Electrical machinery
 Electronic systems
 Food processing
 IT and business process management
 Leather
 Media and entertainment
 Mining
 Oil and gas
 Pharmaceuticals
 Ports and Shipping
 Railways
 Renewable energy
 Roads and highways
 Space and astronomy
 Textiles and garments
 Thermal power
 Tourism and hospitality
 Wellness

Why Make in India?

 Gain in Rise in
Industrial Investment Employment purchasing
profit power

And the way to do this, according to Make in India, is to increase the share of
manufacturing India’s GDP to 25% by 2022(later revised to 2025), which is expected
to generate approximately 100 million jobs for Indian workers.

There are multiple reasons why the government has chosen to focus on
manufacturing. The key ones are discussed below:

1. For the past two decades, India’s growth story seems to have been led by the
services sector. This approach paid off in the short-run, and India’s IT and
BPO sector saw a huge leap, and India was often dubbed the ‘back office of
the world’. However, even though the share of the services sector in the Indian
economy rose to 57% in 2013, it contributed to only 28% in the share of
employment. So, the manufacturing sector needed to be augmented to boost
employment. This is because the services sector currently has low absorption
potential considering the demographic dividend in the country.

2. Another reason to launch the campaign is the poor condition of

manufacturing in India. The share of manufacturing in the overall Indian
economy is only about 15%. This is way lower than our neighbours in East
Asia. There is an overall trade deficit when it comes to goods. The trade
surplus in services hardly covers one-fifth of India’s trade deficit in goods. The
services sector alone cannot hope to answer this trade deficit. Manufacturing
will have to chip in. The government is hoping to encourage businesses, both
Indian and foreign to invest in manufacturing in India, which will help this
sector and also generate employment in both skilled and unskilled levels.

3. To focus on manufacturing is that no other sector seems to have such a huge

multiplier effect on economic growth in a country, according to various
studies. The manufacturing sector has larger backward linkages and hence,
growth in demand in manufacturing spurs growth in other sectors as well.
This generates more jobs, investments, and innovation, and generally leads to
a higher standard of living in an economy.
Challenges in the way of Make in India

 Investment from shell companies: The major part of the FDI inflow is neither
from foreign nor direct. Rather, it comes from Mauritius-based shell
companies that are suspected to be investing black money from India.

 Productivity: India’s manufacturing sector’s productivity is low and the skills of

the labour force are insufficient. According to McKinsey’s report, the Indian
workers in the manufacturing sector are, on average, almost four to five times
less productive than their counterparts in Thailand and China.

 Small industries: The size of the industrial units is small. Therefore, it cannot

attain the desired economies of scale. It also cannot invest in modern
equipment and develop supply chains.

 Complicated labour laws: One of the major reasons behind the small

companies is the complicated labour regulations for units with more than 100
employees. The government’s approval is required under the Industrial
Disputes Act of 1947 before the industry can lay off the employees.
Additionally, the Contract Labour Act, 1970 requires the government’s and the
employee’s approval for simple changes in an employee’s description of
duties.

 Electricity: The cost of electricity is almost the same in India and China.

However, the outages are far higher in India.
  Transportation: The average speed in China is about 100 km/hour. In India, it
is about 60 km/hour. Also, the Indian railways are overloaded and the Indian
ports have outperformed by a lot of Asian nations.

 Bureaucracy: India’s bureaucratic procedures and corruption within the

government makes India far less attractive for investors.

 Though India has made progress in the World Bank’s Ease of Doing Business
Index (EDB index), it is only ranked 77th among 190 nations.

 Although EDB rank has improved, the Make in India initiative has not
succeeded in increasing the size of the manufacturing sector relative to the
domestic output.

 India ranks 78 out of 180 countries in Transparency International’s Corruption

Perception Index.

 Land acquisition to build a plant is very difficult. India has come down to 10
places in the World Economic Forum’s latest annual Global Competitiveness
Index.

 Prior steps were not taken to improve India’s labour laws and land acquisition
laws before attracting foreign investments in India through the Make in India
initiative.

 Capital Outflow is a major challenge for Make in India’s initiative. The net
outflow of capital has increased as the rupee value has dropped from 54 a
dollar in 2013 to more than 70 a dollar in 2019. The economic slowdown and
oil prices are also contributing to this major challenge.

Make in India Products

The contributions of the Swedish companies are the best example of Make in
India products. These manufacturing units are contributing to the GDP of India
for a very long time. They have helped to create tons of thousands of
employees over the years.

There are 5 main products under the Make in India initiative are as follows:

1. Tetra Pak (packaging)

This multinational and food packaging and processing company has been
making in India for the last 30 years. They have excelled in the food-safe
packaging and processing with their innovative technology even in the remote
parts of the country. Tetra Pak is the number one manufacturing company in
 holistic food packaging and food processing. Tetra Pak is in a long-lasting
Partnership with clients such as Amul, Parle Agro, and Coca-cola. As of 2015,
It has more than 276 packaging machines, 4400 food processing units, and
312 distribution units all over the country. India is one of the largest and
fastest-growing Tetra Pak markets in the world. 

2. IKEA (Furniture)

IKEA has been working in India for the last 30 years, sourcing for its stores
around the world. IKEA has provided direct employment to estimated 45,000
personnel and indirect employment in the supply chain to 400,000 people in
India. IKEA opened its first store in India in August 2018. Now IKEA is
operating three retail stores in India. IKEA has four land sites in India and
looking for more in major Indian cities. Four land sites are in Telangana,
Maharashtra, Karnataka, and Delhi/NCR.

3. HALDEX (Slack Adjusters)

HALDEX is one of the leading manufacturers of automatic and manual slack

adjusters, automatic breaks adjusters, and air treatment products for
commercial vehicles and trailers in India. It is also India’s first automotive
parts manufacturer that provides an emergency brake system with rollover
control for trailers.

4. ERICSSON (Mobile Phones)

The partnership between India and Ericsson started in 1903 when Ericsson
started supplying manual switchboards to the government of India. Since then,
Ericsson has become an essential aspect of telecommunications in India,
across mobile broadband, managed services, also exploring new sectors such
as Indian Media and IT industries. In the wake of the Make in India initiative,
Ericsson now has set up a manufacturing unit in Pune, Maharashtra.  This
manufacturing unit facilitates the local needs as well as South-East Asia,
Middle East, and Sub-Saharan Africa markets.

5. ASTRAZENECA (Pharmaceuticals)

AstraZeneca India was established in 1979. It’s headquartered is based in

Bangalore, Karnataka. AstraZeneca deals in the research, development, and
commercialization of innovative medicines in the healthcare and wellness
sector. They are known for their work in cardiovascular/ metabolic disease,
cancer, and respiratory, Inflammatory, and autoimmune diseases. AstraZeneca
has employed over 1500 personnel across the country.
Key Stakeholders

 Invest India

 Department of Defence Production

 Ministry of Information & Broadcasting

 Department of Space

 Department of Promotion of Industry & Internal Trade

 Department of Financial Services

 Ministry of Mines

 Foreign Investment Facilitation Board

 Ministry of Home Affairs

 Ministry of Civil Aviation

 Department of Telecommunications

 Department of Economic Affairs

 Department of Pharmaceuticals

Advantages and disadvantages of Make in India

Advantages:

 Develop Job Opportunity

 Ameliorate the Vicinity
 Expand GDP
 Fortify the Rupee
 Increase in Brand Value
 Up-gradation of Technology
 Ease of Business
 Availability of Young Minds
 Development of Rural Areas
 Flow of Capital

Disadvantages:

 Negligence of Agriculture
 Depletion of Natural Resources
  Loss for Small Entrepreneurs
 Disruption of Land
 Manufacturing based Economy
 Interest in International Brands
 Pollution
 Bad Relations with China

Therefore, it can be safely stated that make in India is an opportunity for everyone. It
is a prospect, which if given time will flourish like a spring flower and would provide
with the expected fruit.

Make in India – Impact on Indian economy

The impact of this campaign is felt both domestically and internationally. The
development of the manufacturing sector will create employment opportunities for
the youth in the country, alleviate poverty, attract investments, create value for Indian
goods, and fix the rising trade deficit. Internationally, it will improve India's standing
in the world and investors will look at India not merely as a market but as an
opportunity. The interaction between domestic and international firms will, inevitably,
help transform domestic firms into MNCs. Just as China has emerged as the top
manufacturing country in the world (replacing the US in 2010), generating an
estimated $2.9 trillion in output in 2012 according to United Nations, India, too, can
exploit the advantages of democracy, demography, and demand to transform itself
into a self-reliant force, capable of meeting the aspirations of its people as well as
becoming a preferred destination for the foreign fund.
 Furthering his development agenda, the Prime Minister has been making an
aggressive pitch at various forums to woo not just Indian companies but foreign
investors as well. Though it is too soon to predict the outcome of this particular
campaign, the initial signs are encouraging. Foreign governments and investors are
warming up to the 'Make in India' campaign. The US-India Business Council has
identified upwards of $41 billion for investment in India by its members in the next 3
years. Japan has pledged to invest $33.6 billion in India within the next 5 years.
China, too, has pledged investments worth $20 billion. 

The government has backed this campaign by taking steps such as:

 setting up 'Invest India' (will act as the first reference point for assisting
investors)

 setting up a dedicated web portal "http://www.makeinindia.com" to resolve all

queries

 setting up an expert panel to redress grievances and handle queries of global

and domestic investors within 24 hours

 raising FDI caps in railways and Défense production to 100% and 49%
respectively    

The environment of positivity created by this campaign has significantly improved

the perception of the Indian economy.
Infrastructure support for make in India

Recently, Government has taken various steps in addition to ongoing schemes

to boost domestic investments in India. These include the National Infrastructure
Pipeline, Reduction in Corporate Tax, easing liquidity problems of NBFCs and Banks,
trade policy measures to boost domestic manufacturing. Government of India has
also promoted domestic manufacturing of goods through public procurement
orders, Phased Manufacturing Programme (PMP), Schemes for Production Linked
Incentives of various Ministries.

Is Make in India a fail?

Given that big-ticket projects for grand initiatives such as ‘Make in India’ have
long gestation periods and lag effects, assessments of such initiatives can be
premature. Also, governments often use the excuse of inheriting an economy riddled
with macroeconomic problems and demand more time to set things right. This is an
argument that the current government invokes frequently. However, five years is a
reasonable period to assess the direction and magnitude of outcomes. As the policy
changes were intended to usher growth in three key variables of the manufacturing
sector — investments, output, and employment growth — an examination of these
will help us gauge the success of the policy.

The last five years witnessed slow growth of investment in the economy. This
is more so when we consider capital investments in the manufacturing sector. Gross
fixed capital formation of the private sector, a measure of aggregate investment,
declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-14 (Economic Survey 2018-
19). Interestingly, though the public sector’s share remained more or less the same
during this period, the private sector’s share declined from 24.2% to 21.5%. Part of
this problem can be attributed to the decline in the savings rate in the economy.
Household savings have declined, while the private corporate sector’s savings have
increased. Thus, we find a scenario where the private sector’s savings have
increased, but investments have decreased, despite policy measures to provide a
good investment climate.

Concerning output growth, we find that the monthly index of industrial

production on manufacturing has registered double-digit growth rates only on two
occasions during the period April 2012 to November 2019. Data show that for a
majority of the months, it was 3% or below and even negative for some months.
Needless to say, negative growth implies a contraction of the sector. Thus, we are
waiting for growth to arrive.
 Regarding employment growth, we have witnessed questions being raised over
the government’s delay in releasing data as well as its attempts to revise existing
data collection mechanisms. The crux of the debate has been that employment,
especially industrial employment, has not grown to keep pace with the rate of new
entries into the labour market.

Thus, on all three counts, ‘Make in India’ has failed.

Conclusion

India is a country rich in natural resources. Labour is plenty, and skilled labour
is easily available, given the high rates of unemployment among the educated class
of the country. With Asia developing as the outsourcing hub of the world, India is
soon becoming the preferred manufacturing destination of most investors across
the globe. Make in India is the Indian government's effort to harness this demand
and boost the Indian economy. Also, Make in India has the potential to make India a
$5 trillion economy. If measures are not taken by the Indian government to improve
the FDI inflow and creating a favourable environment for the manufacturing sector, it
may only be a distant dream.

Bibliography

https://en.wikipedia.org/wiki/Make_in_India

https://www.makeinindia.com/about

https://www.businessalligators.com/advantages-disadvantages-make-india

https://www.theindianwire.com/politics/make-in-india-215144

https://www.ibef.org/research/india-study/make-in-india

https://www.thehindu.com/opinion/op-ed/why-make-in-india-has-failed/
article30601269.ece

https://www.iasexpress.net/make-in-india