Make in India: A Powerful tool for strengthening India

Home»Make in India: A Powerful tool for strengthening India


Confidence in macro economic management is hard to gain, but easy to loose as the unfolding events in India seem to reflect. Confidence is an outcome of a confluence of various factors: positive expectations about the performance of the domestic economy in terms of growth, price stability, fiscal discipline and consolidation and above all the faith in “political stability” and governance. Such expectations have a spillover effect on the external sector which can turn adverse very quickly in the face of a confidence deficit.

India is the second most populous country with 1.25 billion people. So from a social standpoint, India is a very complex country. Almost 2000 ethnic groups make up the diverse population of India. India boasts the world’s 10th largest economy and is considered always an “emerging economy”. Poor, but economic growth has been strong particularly of late.

From 2011 through 2013 India’s economic growth slowed – from 6.5% to 4.4%. National elections were held in 2014, heralding into power the BJP with it’s champion Narendra Modi. Mr. Modi is viewed as one of the most powerful prime ministers in Indian history.

Mr. Modi’s focus is away from socialist “handouts” towards overall economic growth. Many view that political developments that have occurred in India as a historic opportunity to improve India’s performance and perhaps more important to expand the presence of a true middle class in the society, uprooting the age-old caste system that has so long hampered upward mobility in this society. This will be a long challenging road for India, with many potholes. However the country faces a real opportunity for long lasting economic growth tied with a more broad-based sharing of economic pie.

So make in India is an initiative of the government of India, to encourage companies to invest in the manufacturing sector in India. The major objective behind the initiative is to focus on job creation and skill enhancement. Some of these sectors include automobiles, textiles, railways, energy, bio-technology and it hopes to increase GDP growth and tax revenue. The initiative also aims at high quality standards and minimizing the impact on the environment. So this initiative hopes to attract capital and technological investment in India. Therefore it focuses on achieving high quality standards of each and every goods produced. However, before this initiative was launched , foreign equity caps in various sectors has been relaxed/ improved. The application for licenses were made available online. The validity of licenses was increased to three years. Various other norms and procedures were also relaxed. This campaign was designed by the Weident Kennedy( W+K) group which had previously worked on the “Incredible India” campaign and a campaign for the India Air Force.

Some of the major initiatives in this regard include manufacturing of LAVA mobiles from a Noida plant in April 2015. The spice group said it would start a mobile phone manufacturing unit in Uttar Pradesh with an investment of Rs.500 crore. Furthermore , Hyun Chil Hong, the president and CEO of Samsung south West Asia, met with Kalraj Mishra, union minister of micro, small and medium enterprises( MSME) to discuss a joint initiative under which 10 MSME- Samsung Technical Schools would be established in India. A classic example in this regard highlights the fact that Royal Enfield –the two wheeler division of Eicher Motors is set to invest Rs. 500 crore in various activities including setting up of two technology centres and to increase it’s production to 4.5 lakh units annually. It aims to expand the overall business plan and would set up the technology centres one in Chennai and the other in the United Kingdom. So the production continues to grow at a phenomenal pace this year whereby the sales has increased over 3,00,000 units and is likely to increase 4,50,000 units.

We know that the world has started de-globalising. The US has taken the lead. So therefore India needs to correct it’s economic policies and decouple according to united nations latest report on world economic situation and prospects. (WESP).

 To address this, “MAKE IN INDIA” launched by India with a signature flourish, has come sixty years after a post-war Japan bounced back, thirty years after China opened up and large number of Asian countries often termed as “ Tiger Economies” have marched ahead. Now in the second decade of new millennium, India is trying to kick-start it’s economy with the manufacturing boom. The government of India enacted the Micro, Small and Medium Enterprises Development Act ( MSME) 2006 whereby the enterprises are engaged in production and rendering of services. It provides 90% of employment to a decentralized mode of production, and service and trading practices. So the country should try to rejuvenate it’s policies on a broader scale. Sustained peace and stability are the key requirements of MSME’S and for attracting foreign investment. Dialogue and partnership foster ownership of MSME’S strategies, engenders them more implementable, politically credible and more sustainable. Participation of women in MSME’S is also noteworthy since women account for an important share of private sector activity and contribute to most poverty reduction. Apart from this, the ability of government to implement sound and consistent macro-economic policies is also crucial, because low inflation, low budget deficits, a stable and transparent currency exchange regime, help secure the minimum stability that businesses needs to make sound business decisions. Although the task is huge,  but has to be attended with a sense of urgency if this campaign have to move into high-growth hemisphere.

Apart from this, Chinese Telecom Company Huawei Technologies Co. Ltd. has invested 170 million to open a research and development centre in India. The campus is situated in Bangalore and it could accommodate five thousand software engineers.

“MAKE IN INDIA” is a very flourishing notion but at the same it should not only focus on the manufacturing sector. India is a developing economy , so we must be agnostic regarding what should work well in India. This has been a hit in the virtual world. However, this is also very popular in social networking sites like facebook and twitter. The reason behind this is that Mr. Modi has emerged as a popular face in today’s political scenario, because Mr. Modi fashioned a modern, high-tech national campaign to attract India’s large youth vote. The initiative has touched over 2.1 billion global impressions on social media and reached an overall base of over 3million on it’s facebook page. Inspite of this popularity, it has falied to provide any positive output in the manufacturing sector. It is so because it sounded like a pre-budget presentation that each ministry makes to the finance minister. It was the same old recipe of asking tax breaks or concessions to boost manufacturing. Besides, hiking FDI limit in Defence sector there is a demand to give financial incentives to make India attractive for big Defence companies. The main motive of “Make In India” is to follow a new model of urbanization by creation of various industrial corridors. The business world seems to witness a manufacturing revolution. The markets for land,labour and capital are badly distorted,until these things are changed, “MAKE IN INDIA” will remain nothing than a slogan. The government can help manufactures by following through on pledges to invest in roads, ports and connectivity. A true cost-competitive manufacturing revolution exist only when India’s markets for land,labour,power and capital will work efficiently. However to achieve this none of the bottle necks has yet been removed. Structural reforms are needed to clear the path which unfortunately none of the ministers seem to have understood. This year, prospects are for India’s economy to grow by 8.5%. If this occurs and historical and social barriers are honestly attacked, the “Indian Economy”, a “Potential Tiger” may start to truly roar.

Mr. Modi’s much hyped campaign offers more rhetoric than substance. The government need to provide a more convincing strategy for achieving it.

What is required in this period of faltering growth, is a concerted effort to build confidence so that the external sector gets strengthened. Besides dealing with inflation control and fiscal discipline , the policies should aim at giving a thrust to exports, encouraging capital flows on an enduring basis, reducing policy initiatives and removing opaqueness about interventions in the foreign exchange market. To conclude this essay in a lighter vein, in one of the famous cartoons of Dennis the Menace, the irrepressible boy tells his father with logic beyond his years: “Dad, if everything is made in China then God must be living in China”. When the Prime Minister’s vision of “Come, Make In India” is realized, and India becomes an enviable manufacturing hub of the world, Dennis may perhaps find God shifting his residence to India!


Posted by: Anushuya Ghosh. in General | Date: 25/01/2016

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