Make in India – Making India a global manufacturing hub

The program ‘Make in India’, a major national initiative which focuses on making India a global manufacturing hub,  was launched by the Prime Minister Shri Narendra Modi on 25th September, 2014, at an event in Vigyan Bhawan, New Delhi.

Speaking to more than 500 top global CEOs along with captains of Indian industry at the launch ceremony, Prime Minister termed ‘Make in India’ initiative a lion step to usher in increased manufacturing in the country, which will ultimately generate more employment opportunities for the poor and give greater purchasing power to their hands.

Key thrust of the program would be on cutting down in delays in manufacturing projects clearance, develop adequate infrastructure and make it easier for companies to do business in India. The 25 key sectors identified under the program include automobiles, auto components, bio-technology, chemicals, defence manufacturing, electronic systems, food processing, leather, mining, oil&gas, ports, railways and textiles.

The national program aims at time-bound project clearances through a single online portal which will be further supported by the eight-member team dedicated to answering investor queries within 48 hours and addressing key issues including labor laws, skill development and infrastructure.

It also aims to transform the economy from the services-driven growth model to labor-intensive manufacturing-driven growth. This will in turn help in producing jobs for over ten million people, who join the workforce every year.

Objective of the campaign:

The objective of the mega program is to ensure that manufacturing sector which contributes around 15% of the country’s Gross Domestic Product (GDP) is increased to 25% in next few years.

The objective of the campaign is also to get manufacturing sector to grow over 100% on a sustainable basis over a long run.

Features of the program:

  • The government will look into all regulatory processes to ease the burden of investors.
  • A dedicated cell has been created to answer all the queries from Business entities through a freshly created web portal.
  • While an exhaustive set of Frequently Answered Questions on this portal will facilitate investors find instant answers to their general queries, the back-end support team of the portal would answer queries in less than 72 hours.
  • The Department of Industrial Policy and Promotion (DIPP) and industry lobby the Federation of Indian Chambers of Commerce and Industry (FICCI) have jointly started an eight member expert panel to deal with queries and concerns of the investors. They will clarify Indian policies to the investors and suggest reforms to the central and state governments.
  • All central government services are being integrated with an e-Biz single window online portal.
  • States have been suggested to introduce self-certification.
  • The Union Ministry of Home Affairs has been asked to give all security clearances to investment proposals within three months.
  • An advisory has been sent to all departments/state governments to simplify and rationalize regulatory atmosphere which includes online filing of all returns in a unified form.

Steps being taken:

  • Cutting down on procedural delay.
    • To make India an investment hub, the first and foremost important step would be to create efficient administrative machinery which would cut down on delays in project clearances.
    • Delay in getting regulatory clearances lead to rise in cost of production. The quicker the government addresses these challenges its better for the industry to set up facilities in the country.
    • For providing better infrastructure for the industry, there has been a big constraint in terms of land acquisition. Often land acquisition for the industrial purpose run into trouble at the local level.
  • Tax sops and focus on innovation.
    • Economists are urging for providing tax concessions to any industry which would set up manufacturing facility in the country.
    • India should be more focused towards novelty and innovation for the sectors identified and integration with the country’s premier institute for carrying out research and development. This would be critical to the success of the make in India program.
    • The country’s huge small and medium-sized industries which could play a big role in making the country take the next big leap in manufacturing.
  • Skill development and thrust on education
    • The country needs to focus on quality education not just skill development.
    • In the emerging economy, people will need to continuously learn new skills to meet the economy’s changing requirements.
    • The creation of Labor Market information system initiated by the National Skill Development Agency (NSDA) should help industry sourcing their manpower requirement.
  • Reforms in the labor laws.
    • Besides the skill development, labor law flexibility is a key element for the success of this campaign for increasing manufacturing in the country.
    • Labor law flexibility does not imply ‘hire and fire’ policy, it’s about providing a sound social safety net to workers.
    • India has some of the most comprehensive labor laws at the same time a large parts of working population do not have access to social security net.
    • The big challenge for ‘Make in India’ would face constant comparison with China’s ‘Made in China’ campaign. China launched the campaign at the same day as India seeking to retain its manufacturing prowess. India should constantly keep up its strength so as to compare China’s supremacy in the manufacturing sector.
    • There is a need for some fundamental changes in Indian economy so that the country emerges as global manufacturing base.
  • Demographic Dividend.
    • The demographic potential offers India and its growing economy an edge that economists believe could add a significant 2% to the GDP growth rate annually.
    • India is the only country in the world which offers the unique combination of democracy, demography, and demand from a rising middle class.
  • Besides, the campaign would ensure closer centre and state relations for promoting India as a global manufacturing hub.

Progress so far…

Among the many campaigns launched by Shri Narendra Modi, the Prime Minister of India, perhaps the most high-profile has been the Make in India campaign.

  • The government has already taken important steps to improve the regulatory climate, to enable manufacturing and to open Foreign Direct investment (FDI) in key sectors, i.e., the three pillars to bring about a positive transformation in manufacturing.
  • Important sectors like defence production, civil construction and railways have been opened to greater foreign investment by the government.
  • The process of applying for industrial licenses has been greatly simplified and made online.
  • Manufacturing units, except for those producing hazardous materials, can now do a great deal of self-certification, thereby reducing the ambit of government inspectors in the private manufacturing sector.
  • Much of the interface between entrepreneurs and the government, both central and state, has been made online.
  • Important economic structural reforms have been put in place.
    • Another reform: the government has put in place a new gas pricing policy in October 2014 which specifies that price notification will occur once in six months based on international prices of gas, thereby reducing predictability into this important price which affects almost every sector of the economy.
    • Another crucial reform which will also improve the availability of power within India is the establishment of a simplified system for auctioning coal mines online, which will introduce transparency into this sector, a most important one for power generation in India and which will, therefore, improve the economy as a whole.
  • Results of these reforms:
    • The index of industrial production has grown rapidly, while inflation has declined.
    • The stock market index is establishing new records every day, attesting to the large investments coming into, and to the enhanced industrial and economic activity in, India.
    • Both imports and exports have increased appreciably over the last few months.
    • The Indian currency remains stable.

“A major new national program. Designed to facilitate investment. Foster innovation. Enhance skill development. Protect intellectual property. And build best-in class manufacturing infrastructure. There’s never been a better time to make in India.”

Through this campaign, the Indian Government aims to clear the daunting image of complex rules and bureaucratic red tape of Indian administration. It will facilitate the world investors to foster their investment decisions and will also facilitate in realizing the aim of liberalized economy.