The idea of the ‘Make in India’ initiative, originated after Prime Minister Narendra Modi made a clarion call from the rampart of the Red Fort on the Independence Day, to make India a manufacturing hub, a country which can facilitate investments, foster innovation and build the best in class manufacturing infrastructure in an environmentally friendly way. Goods produced with ‘Zero defect and Zero effect’.
This campaign was launched on Sept. 25, 2014, at national and state levels and in all Indian Diplomatic Missions abroad. The government of India, through this initiative, is committed to pave a new path wherein business entities, both global and local, are extended a red carpet in a spirit of active cooperation.
This initiative is backed with a dedicated team which guides investors on all aspects of regulatory and policy issues and also assists them in obtaining necessary clearances. The ‘Make in India’ team would also answer all questions and queries from prospective investors within 72 hours and subsequently follow up and give customized advice on investments. ‘Make in India’ focuses on 25 sectors where India holds an edge over its competitors. These are Automobiles, Automobile components, Aviation, Bio-technology, Chemicals, Construction, Defense Manufacturing, Electrical Machinery, Electronic systems, Food Processing, Information Technology and Business Process Management, Leather, Media and Entertainment, Mining, Oil and Gas, Pharmaceuticals, Ports and Shipping. Among these sectors, IT Services, Auto Components, Textiles and Leather have enormous export potential. Infrastructure, Railways, Agriculture and Agro Processing are aimed at boosting domestic growth, and Defense Production, Electronics and Aviation sectors can substantially substitute imports.
One of the reasons for India to embark on ‘Make In India’ program is to create employment opportunities for its growing youth population. India has a population of 1.25 billion and its GDP has been growing at about 7% a year over the past one decade. However, 60% of India’s GDP comes from services sectors. 70% of India’s population is below 30 years old and India needs to create employment opportunities for its youth by enhancing the growth in manufacturing sector. It is envisaged that the ‘Make in India’ campaign would push manufacturing sector from the present 16% of GDP to 25% of GDP. This boost is estimated to add 100 million more jobs for India’s youth.
Any country which aspires to become a manufacturing hub should have a vast pool of talented manpower. The availability of a large pool of skilled workforce is a major advantage for India. Indians living across the globe have proved their mettle by their sincerity, hard work and their enterprising outlook. With its talented manpower, India can become a market leader in labour intensive manufacturing sectors like the Textiles and Garments, Leather, Food Processing and Gems and Jewelry. To reinforce this labor cost advantage, government of India has launched the National Skill Development Policy 2015 that aims at creating a large pool of skilled manpower which would provide a steady supply of skilled workforce to the labour market. In order to execute this, government of India is opening 1,500 additional industrial training institutes and 5,000 skill development centers across the country. The second biggest advantage of India is its domestic consumer market which has been rapidly growing. The aspiring middle class population in India would touch 270 million in the next five years. In the last decade, this middle class population witnessed substantial growth in disposable income and consumerism. Many global players have entered Indian market keeping in mind the business potential it offers. This advantage would boost manufacturing in consumer goods.
India is rich in raw materials such as cotton, coal and iron ore. India has the world’s fifth largest coal reserves, fourth largest iron ore producer accounting for 5% of global production, and is the second largest cotton producer. Around 50% of the world raw leather is produced in India.
Abundant raw materials give India a comparative advantage in terms of low-cost manufacturing inputs, thereby reducing the overall cost of production.
• Major economies in other Asian countries are slowing down. Manufacturing facilities are under stress in these countries and increase in wages is forcing a shift out of these countries. This has created room for India in global manufacturing space. Labor intensive sectors like garments, textiles, and leather products are expected to substantially grow in India in the near future.
• India’s macro-economic indicators have remained stable over the past several years and in spite of downturns in major economies around the world, India’s growth rate has remained stable at over 7% of GPD for more than a decade. India’s policies on Foreign Direct Investment have become open and almost all the sectors in India are open to FDI. While the global FDI has shown a reduction of 16% FDI flowing into India has increased by 42% in 2015. India in the last one year has also moved up 12 places in the World Bank’s ease of doing business index.
Government of India is aware that simplifying the process of doing business is the key to boost manufacturing. To achieve this, several reforms have been initiated. E-auction has been introduced to allocate natural resources and this has led to efficient utilization of resources.Fourteen Government Ministries and Departments are brought under a single online platform called ‘e-Biz’ which allows people to apply for licences and approvals on a 24x7 basis without any human intervention. Government has created mechanisms to increase investments in real estate and infrastructure by pooling investments and allowing easy exit options. Environmental laws are revisited and modernized.
Public sector banks are revamped. Some of other reforms which have been initiated are the launch of GST which will create a single tax for all goods and services across the country. Rationalizing of corporate taxes where by Government of India would reduce corporate taxes from 30% to 25% over a period of 4 years. Financial inclusion has been initiated by the Government by various schemes which would allow direct transfer of cash benefits to the beneficiary’s bank accounts. This mechanism would also bring down subsidies. Reforms in land laws and labour laws have also been planned. These reforms altogether are expected to give a push to manufacturing in India.
Major economies from around the world are becoming a part of India’s growth story. During the last one and a half years several countries have partnered with India and have started to invest in India. Australia has singed five agreements which would boost manufacturing and bilateral trade with India. Canada has singed 16 commercial agreements with India in the areas of defense, energy, mining and infrastructure. China plans to invest over $20 billion in India’s infrastructure over the next five years. France is engaged in building of smart cities in India. Germany has partnered in a big way to boost the ‘Make in India’ initiative. Japan has partnered with India to invest $35 billion in infrastructure projects in India and $4.5 billion in Delhi Mumbai Industrial Corridor. South Korea has partnered with India to invest $10 billion in infrastructure related projects. UAE plans to invest $75 billion in India. India and US are working on a bilateral investment treaty, which would boost bilateral trade substantially. India and Russia have put “Make in India” program at the centerstage of their strategic relationship and Russia would partner with India to build nuclear reactor components and military helicopters in India. Multinational companies like General Motors, Foxconn, Cummins, Bombardier, Siemens and many others have started to invest in India’s growth story.
There has never been a better time to ‘Make in India’. We invite you to join us to invest in India’s growth story and ‘Make Profit in India’. — SG
