Make in India, It would really make India!

CA Dinesh Kumar

Make in India is an initiative of the Government of India, to encourage companies to manufacture their products in India. It was launched by Prime Minister, Narendra Modi on 25 September 2014.

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, aviation, leather, tourism and hospitality, wellness, railways, auto components, design manufacturing, renewable energy, mining, bio-technology, and electronics. The initiative hopes to increase GDP growth and tax revenue. The initiative also aims at high quality standards and minimizing the impact on the environment. The initiative hopes to attract capital and technological investment in India.

The campaign was designed by the Wieden+Kennedy (W+K) group which had previously worked on the Incredible India campaign and a campaign for the Indian Air Force.

It is a dream project of NDA. They are trying very hard to make it too popular and inviting foreign countries to invest in India, in form of establishing manufacturing hub. The success of this project depends on various factors.

First it is very crucial to know the idea behind Make in India (MII) and how it is different from exiting scenario.

India is a big hub of various raw materials, which are used to manufacture various products. At present raw materials are being exported to foreign countries then these raw materials are converted there into finished good and then finished goods (FG) are imported by India. It is like someone taking our product and selling to us on higher rate. While in MII, the foreign countries are being invited to establish their own manufacture unit in India, take raw materials from here and sell FGs in India. The idea behind it, to reduce FG price, increase employment and move India towards development. But this is not so easy and so beneficial as it looks from over. In this article we will know, what it would really make India.

Pros

(i) Generation of Employment: As Mr. Modi emphasized on the development of labour intensive manufacturing sector. So, this campaign will generate a lot of employment opportunities.

(ii) Decrease in Poverty: Employment will increase people’s purchasing power which ultimately helps in poverty eradication and expansion of consumer base for companies.

(iii) Strengthen Industries: The model of “look east and link west” policy will strengthen the industrial linkages as well as bilateral ties with many countries.

(iv) Industry Friendly Environment: Government has decided to formulate an auto response mechanism and issues pertaining to procedural clearings will be resolved at different levels in a given time frame, which is a positive step in making industrial friendly environment.

v) Foreign investment will bring technical expertise and innovative skills along with the much needed foreign capital.

vi)This campaign will make India a key part of global value chain and unfolds numerous opportunities for other countries as well

Cons

(i) Increase unemployment: with the entrance of big industries in country, the small manufacturing plant become sick and people working in these units will be unemployed.

(ii) Issue of survival of Domestic Industries: With existence of both domestic as well as foreign industries, the survival of domestic industries may be very difficult.

(iii) Inequality of Income: inequality of income will become very high, as to capture more and more skilled labour foreign investor will offer high pay but existing domestic company hesitates in higher pay .

(iv) Affect over our culture: with entrance of foreign industries, their culture will also come and which may affect our Indian culture

v) Requirement of Heavy investment: India has a myriad of infrastructural bottlenecks and to overcome these it needs to invest $ 1trillion during 12th five year plan. Generating such a huge capital will be a daunting task.

vi)Another contentious issue is of environmental clearance, which has been surfaced in many projects especially related to mining sector.

(vii) Uncertainty in tax regime (highlighted by Vodafone case) and delay in implementation of GST is also a matter of concern for industries.

(viii) Poor Infrastructure: India along with poor infrastructure lacks a proper logistical network for the supply chain of components and materials required in manufacturing industries.

(ix) Lack of skilled labour: Manufacturing sector demands highly skilled labour whereas India lacks highly skilled labour

(x) Complex processes have proved to be hurdles in getting procedural and regulatory clearances especially for new entrepreneurs. This also reflects in World Bank’s “Ease of Doing Business” report which ranked India at 134 out of 189 countries in 2013.

(xi) Land acquisition for establishing manufacturing industries will prove to be a tedious task for successful unfolding of this

(xii) Depletion of own, mainly natural, resources: most of the industries require either water or land beside river to release all its shit. That’s more than enough to pollute our already polluted rivers thereby indirectly affecting agriculture. With the existing manufacturing companies itself, Ganga has the highest pollution level ever. Summing of other companies makes it worse.

Responses

The make in India project within a period of very short span received very good reponse, some of them are as follow:

a) In October 2014, Lava Mobiles CMD Hari Om Rai said Lava will start manufacturing from a Noida plant from April 2015. In November 2014, Lava was in talks with Nokia to buy its Chennai plant.

b) In January 2015, the Spice Group said it would start a mobile phone manufacturing unit in Uttar Pradesh with an investment of ₹500 crore. A memorandum of understanding was signed between the Spice Group and the Government of Uttar Pradesh.

c) In January 2015, HyunChil Hong, the President & CEO of Samsung South West Asia, met with Kalraj Mishra, Union Minister for Micro, Small and Medium Enterprises (MSME), to discuss a joint initiative under which 10 “MSME-Samsung Technical Schools” will established in India. In February, Samsung said that will manufacture the Samsung Z1 in its plant in Noida.

d) In February 2015, Hitachi said it was committed to the initiative. It said that it would increase its employees in India from 10,000 to 13,000 and it would try to increase its revenues from India from ¥100 billion in 2013 to ¥210 billion. It said that an auto-component plant will be set up in Chennai in 2016.

e) In February 2015, Huawei opened a new research and development (R&D) campus in Bengaluru. It had invested US$170 million to establish the research and development center.

f) Also in February, Marine Products Export Development Authority said that it was interested in supplying shrimp eggs to shrimp farmers in India under the initiative.

g) In March 2015, Sony India’s head, Kenichiro Hibi, said at the Mobile World Congress that they may open a factory in India.

How foreign counties would enter in India

The foreign counties industries may enter in Indian economy by two ways

a) Direct entrance: in this way of entrance, the industries will start from ZERO and would set their own manufacturing unit. It will be very difficult, as acquisition of each and very thing will demand huge investment/follow-up. And with

India’s poor infrastructure, paralyzed administrative policies it is very difficult way of entrance.

b) Under second or indirect way of entrance: the foreign industries will use Merger & Acquisition policies and capture small units. This is easiest way, as they get some base to start.

Why Foreign Counties will invest in India:

There may be various reason to invest in India, some of them are

a) To earn more profit: if they will realize that investing in India is more profitable than other counties, then may come

b) To have good market: every investor attracts toward potential market

c) To have good return of investment: Higher return investment may attract investors

d) To feel more safe than existing location: safety in term of business may also entice .

e) To capture new market: to expand business and capture new market may also be big reason of investing India

f) To produce products at cheaper cost: cost efficiency may also catch the attention etc

Although the outcome of this project will be visible only in long run, but it totally depends over Indian Government endeavor to make it successful. The followings are challenges ahead Indian Government to make it fruitful:-

a) Political instability: it requires political stability, which is very stiff in India. The poor coordination with state and centre make it worse.

b) Undeveloped Infrastructure: Existing Indian business is already suffering from poor

c) Safety: The Indian internal as well territorial force are already under shortage and terrorism are unfolding our security strength.

d) Unskilled labour: India is already facing with brain-drain problem and lack of skilled

e) Complicated business policies.

f) Complex taxation gamut.

g) Slow decision making at ministries level to clear projects.

h) Slow & Weak dispute resolution council, judiciary etc.

We have studied various aspects of Make in India project but till date it is very difficult to say, whether MII will really make India or not, but with incessant positive, careful, strong and revolutionary steps, it may make India a global recognized economy. But other side, Govt. must also emphasize over strengthen of our own domestic industries and make India self depended.