Make in India is a national program in which policies will be made to foster manufacturing in India. It is designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property, and build best manufacturing infrastructure. It covers in total 25 major sectors like automobile, IT&BPM, oil & gas and wellness etc. These cover not only areas, which require high skills, but low skills and service oriented areas as well. It’s an initiative taken by Prime minister of India, Narendra Modi to make India self-reliant and give Indian economy a much-needed boost. It’s main objective is to make India a manufacturing hub for domestic and foreign companies. For this government is looking to make five National Corridor Authority to coordinate, integrate, monitor and supervise development and channelize institutional funding for smart cities across these corridors.
“Make in India can add 90mn jobs in the next decade”
– CEO & MD, ICICI bank, Mrs. Chanda Kochhar
It will create job opportunity for large unemployed youth of India as noted. It can help in reducing Current Account Deficit largely by export promotion and reducing our imports. It will lead to higher net export of India. It will increase India’s GDP through multiplier effect and help in boosting trade. India is rich in natural resources with skilled labours. Make in India can use India’s demographic dividend and manage them efficiently. It will enhance the skills of Indian labours, as they will be exposed to global technology and processes. We can get better quality with lesser cost, as many foreign companies are more efficient in manufacturing. A manufacturer can export the products as well as can make the products for the huge domestic market i.e. manufacturer can make for India as well as make for world as it was stated by commerce and industry minister Nirmala Saitharaman. Infrastructure can be developed using Public Private Partnership (PPP) model that can provide two fold benefits as India will get world-class infrastructure and government can retain the control. Development of niche industries can help India realise its potential. Due to all the reforms and benefits from Make in India, brain drain will be reduced and entrepreneurship will be nurtured. As central government is giving major impetus on this program, various bureaucratic red tapes and other impediments to investments are being removed which in turn attract people in business. Various sectors are being opened up for FDI and limits are being raised, which will attract foreign capital and would enable technology transfer in sectors like defence and IT.[sociallocker]
Still there are many difficulties lying ahead. India’s labor law and attrition rate of MNCs make them inconsistent with Make in India. Currently, India is at 142nd position in World Bank’s ease of doing business index. Though PM has shown promising signs in changing labours law and promoting ease of doing business, overhaul in laws is needed. India needs to have a clear industrial or manufacturing policy. Besides India needs many administrative reforms in order to have effective bureaucracy.
Moreover, It’s cheaper to import then to make in India. Recent experiences of the private sector with infrastructure sector, as a whole has been discouraging. Fare dispute in Mumbai Metro project is an example of a poor PPP project in terms of coordination. There has been Lack of real actions in Make in India campaign. As an Example, just one month after Make in India campaign, Tata Motor’s Jaguar Land Rover opened its first plant in Changshu, China worth $1.78bn under Make-in-China in spite of getting admiration from Chairman of Tata Group, Cyrus Mistry.
Recently, there have been many controversies and many people have raised concerns about the benefits from ‘Make in India’ to India and Indian economy.
“Export promotion and import substitution may not work for the country in the current global economic scenario” – RBI Governor, Raghuram Rajan
As stated by RBI governor, external demand growth is expected to be low for next five years makes Make for India inevitable. Lot of dollars inflow can appreciate Indian Rupee sharply. All the global projects will pump in more dollars into India economy and appreciate rupee, which in turn will reduce exports. Make in India will give benefit to foreign manufacturers who can finance them with l ower interest rate from foreign banks but some of India’s domestic players don’t have access to foreign banks and have to finance themselves though Indian banks who are financing with high interest rate. Choosing or subsidising a particular sector (i.e. Manufacturing) may not work for India as it has worked for China, instead we have to figure out public goods each sector needs and strive to provide them. Focused should be on domestic investment i.e. FDI should be preferred over FII that will help in serving the purpose. Excessive dependency on foreign company can work against India by making it more reliable on foreign countries. Environmental clearance issue will be there if all the international products are made in India i.e. fulfilling international demand can degrade Indian environment. Make in India should be backed by Make it green.
Till now, Make in India has been lauded by experts and raised many expectations but a lot of hard work is required to turn these expectations into ground reality.