Top 10 Facts you should know about Make in India

In last couple of my blog we covered IOT , Smart Wearable , Instant Messengers  and WiFi monetization and so on ...however post having some very engaging and passionate discussion with many of you and going with the input from a large segment Its imperative to have a thoughtful and structured discussion on the Make In India. 

So here we go , The 3 sectors which contribute to GDP of any country are Agriculture sector, Industry/ Manufacturing sector and Service sector. Current contributions of these sectors in Indian Economy are Agriculture 28%, Manufacturing / Industry 16% (lowest), & Service 56% (highest). So, it is clearly visible that India's GDP is overly dependent upon Service Sector.

During the 2013, Indian Economy was in trouble. News on the economy had been disappointing for two years, with growth falling to 4-5 per cent; consumer-price inflation had remained stubborn at 10 per cent; the current account deficit had soared to almost 7 per cent of GDP at the end of 2012 and was expected to be 4-5 per cent in 2013-14; and the rupee had dropped to an all-time low and 13 per cent below its level just three months earlier. This situation of economy was 2nd worst after 1991.

Modi Government has identified the reasons why economy is in bad shape. At the same time Gov. has taken right steps to bring Indian economy back on track. Make in India campaign is Right Step in Right Direction. Make in India is recognized globally and has featured in "100 Most Innovative Global Projects". Make in India initiative aims to correct the composition of Indian GDP which is the root cause of recession. The aim of this initiative is to make manufacturing/industrial sector strong, which can contribute up to 25% by 2022, because if a country is largely dependent upon service sector, the risk of recession in that country gets increased. The other benefits are, the manufacturing sector can create a lot of jobs, much more than jobs created by service sector, and also in diversity. Manufacturing superiority is essential for research to national security. 

But these things are not easy to implement, before implementation the government of India has to simplify some norms and regulations and make them easy, has to make investment flow very simple, and build the infrastructure so that industrialist can move goods across the country in very less time. Many of the state government and central government have taken steps for ease of doing business in India.

Government has chosen 360 degree approach to make this initiative a successful program. As we know it will provide jobs to lakhs of people. To make those people literate in digital domain, our PM has launched 'Digital India'. The skilled labors are required for jobs, so PM announced 'Skill India' program. Therefore, the new initiatives of the government whether it is Make in India or Digital India or Skill India, should all converge so that India can grow at 9-10 per cent per annum and create jobs.

25 sectors are focused in this initiative, which are assumed to be major contributors in nation's GDP. And 100% FDI is permitted in all those sectors, except for space (74%), defence (49%) and news media (26%). At this point of time, many of the big companies of different sectors have already invested heavily to set up manufacturing units in India, which shows the popularity of the program across the world. Many of the live projects are running, like Delhi- Mumbai Industrial corridor, Bengaluru-Mumbai economic corridor, Chennai-Bengaluru economic corridor, Vizag-Chennai economic corridor and Amritsar-Kolkata industrial corridor. Among these only DMIC project is being implemented and rest of them are under planning and consideration phase.

Our honourable Prime Ministers' foreign visits bring opportunities to India. Last year he had visited many of the strong countries, but never came empty handed back. He made agreements with many countries who will invest in India under make in India program, or they may help in making this program a successful initiative. The main countries are Russia, UK, Japan, China, France, South Korea, Germany, etc.

But Make in India faces many challenges that limit the impact it makes on the ground. Manufacturing is capital and resources intensive sector which will require conducive environment for business. Labour issues will be major hurdle which the government is trying to handle through labour reforms. Besides this, a major push is required to upgrade infrastructure of country. The program has undoubtedly reduced mental barriers to investing in India for many foreign executives, and demonstrated clear government resolve. However, the government has not been able to build on Make in India as rapidly as planned, while aspects of the Make in India scheme remain difficult for foreign investors to piece together in meaningful ways. 

So in order to understand the whole thing better lets organise our discussion to the Top 10 must cover aspects w.r.t Make In India the brain child of our PM  Mr. Narendra Modi. 

1. Lessons from world economy
2. Why do we need manufacturing
3. Where we need to push
4. Steps taken by government for ease of doing business
5. Convergence of Make in India, Digital India and Skill India
6. Sectors covered in Make In India
7. Major Investment in different sectors
8. Live Projects
9. PM Narendra Modi's foreign visits and signed MOUs for Make In India
10. Challenges Limit Scope for Growth Up and is there any Downside of Make In India.

Make in India is an initiative launched by the Government of India to encourage multi-national, as well as national companies to manufacture their products in India. It was launched by Prime Minister Narendra Modi on 25 September 2014 as part of a wider set of nation-building initiatives. Devised to transform India into a global design and manufacturing hub. India would emerge, after initiation of the program in 2014, as the top destination globally for foreign direct investment, surpassing the United States of America as well as China. Make in India' aims at increasing the GDP and tax revenues in the country, by producing products that meet high quality standards and formulate an action plan for the next three years, aimed at raising the contribution of the manufacturing sector to 25% of the GDP by 2022. 

Ultimate objective is to make India a renowned manufacturing hub for key sectors. Companies across the globe would be invited to make investment and set up factories and expand their facilities in India and use India's highly talented and skilled manpower to create world class zero defect products. Mission is to manufacture in India and sell the products worldwide.

1. Lessons from world economy : It is not only about Indian Economy but for that matter if you observe that any world economy with over dependence on Services sector are in deep trouble. Contribution of Services sector in GDP of major world economies are, USA: 76%, China: 43%, Japan: 74%, Germany: 71% etc. Except China, all these countries are struggling to revive their economy. Recently quite surprisingly Japanese economy falls into Recession. Chinese economy maintained fine balance between Services and Industrial/ Manufacturing Sector. Contribution of Industrial sector is 47% to Chinese GDP & Services Contribute 43%. Because of meticulous fine balance, Chinese economy is stable and growing at healthy rate. It can be concluded that common reason for worldwide economic recession is over dependence on Service sector. 
2. Why Companies were not manufacturing in India : 
   China is a major rival to India when it comes to the outsourcing, manufacturing, and services business. India's ailing infrastructure scenario and defunct logistics facilities make it difficult for the country to achieve an elite status as a manufacturing hub. The bureaucratic approach of former governments, lack of robust transport networks, and widespread corruption makes it difficult for manufacturers to achieve timely and adequate production. The Modi government has vowed to remove these hurdles and make the nation an ideal destination for investors to set up industries.
3. Where do we need to push? 

• Excessive, complicated and regulations, laws and taxes. Time to simplify them. Getting approvals for a factory should take hours and days, not years.
• Make investment flows very simple. The company or proprietor can accept investment from any corner of the world.
• Fix our infrastructure. Build a lot and lot of new roads. Build new ports & waterways.
• Build new railways. Make it easy for an industrialist to move goods across the country in           hours, not weeks.

4. Steps taken by Government for Ease of doing business in India : 

 Central government initiatives:

1. Eliminate requirement of minimum paid-up capital and common seal
2. Integrate processes for obtaining PAN, TAN, ESIC and EPFO registration with
3. incorporation of company 
4. Single-window clearance for import and export

State government initiatives: 

• Online portal for the grant of construction permits (Mumbai)
• Joint inspection by all departments to grant NOCs for construction permits (Mumbai               Simplified procedure to install electricity connection in 15 days (Delhi) 

5. Convergence of Make in India, Digital India, Skill India:

In the last decade, everything that had to be manufactured in India and exported, were being imported from various parts of the world. That's why our import bill has grown substantially. Therefore, the new initiatives of the government whether it is Make in India or Digital India or Skill India, should all converge so that India can grow at 9-10 per cent per annum and create jobs. The Make in India looks at 25 sectors. It looks at core competencies of India across the sector and how India can penetrate global markets.

But Make in India cannot happen without Digital India because India has been a reluctant manufacturer and a reluctant urbanized. If India needs to achieve a quantum jump, the broadband, the spectrum behind it, the country needs to use technology to leapfrog. What

Digital India aims to do is to provide the technology, the broadband and the spectrum behind it. But manufacturing and technology alone cannot help you—you can grow faster but that will be jobless growth. What Skill India does is to create skills for a vast segment of population so that as India manufactures, as India urbanizes, as Indians moves from rural to urban areas—as it happens in economic development—you keep creating jobs. This is what happens when economy expands. 

6. PM Narendra Modi's foreign visits and signed MOUs for Make In India

ü  Japan announced $12 billion fund for 'Make in India' movement.

ü  The two countries India and Germany inked 18 Memorandums of Understanding (MoU) in fields ranging from renewable energy and aviation security to human development.

ü  $600bn are allocated for the India-South Korea Business Summit on Jan 14-15 to give push to Make in India initiative by bringing together Indian skills and the Northeast Asian country's manufacturing capabilities.

ü  India and the UK agreeing on Rs90,000 crore in commercial deals and concluding negotiations over a deal that seeks to increase bilateral cooperation in the field of civil and military technology and nuclear research projects.

ü  An agreement between Airbus Group and Mahindra for manufacture of helicopters and three MoUs under the 'Smart City' theme were among the 16 pacts signed between India and France.

ü  Prime Minister Narendra Modi met CEOs of top Chinese companies in Shanghai. 21 Memorandum of Understandings were signed between Indian and Chinese companies.

ü  Russia sign 16 deals in defence, nuclear technology and counter-terror 

7. Challenges Limit Scope for Growth

 Make in India faces many challenges that limit the impact it makes on the ground. The program has undoubtedly reduced mental barriers to investing in India for many foreign executives, and demonstrated clear government resolve. However, the government has not been able to build on Make in India as rapidly as planned, while aspects of the Make in India scheme remain difficult for foreign investors to piece together in meaningful ways.

Sate Power: The success of Make in India does not lie exclusively within New Delhi. India has a federal political system like the U.S. - New Delhi relies on the cooperation of state-level decision- makers, who in turn rely on New Delhi for national funding to support development projects. Many BJP-led state governments have successfully implemented reforms to support Make in India, and even developed copycat state-led investment schemes. However, other states have yet to rally around the program, especially those without a BJP-led government. Modi and his government will need to foster more state-level consensus around their investment promotion schemes to achieve national progress with Make in India. Otherwise, development in India will likely remain fragmented.

Too many Eggs for the Basket:The Make in India program has been tied into a number of schemes that are difficult for many foreign observers to assess on an industry by industry basis. For example, Skill India, Housing for All, Smart Cities and Digital India, amongst many others, are all partly designed to encourage domestic manufacturing, job creation and greater investment. Where one initiative ends and another begins is less than clear. Although these initiatives have been pitched as inducements for investors, foreign investors need to invest in local support to design a market entry plan that avails of all available schemes.

Manufacturing Ecosystem Needed: Initial investments have been tremendously exciting, more so as India's economy is seen as the next Asian juggernaut after China. However, a lot needs to be achieved for these investments to convert into actual physical growth. For instance, India has to develop sophisticated supply-chain systems, internet connectivity, and roads and highway infrastructure - in other words, the right manufacturing ecosystem.

Up and Downsides of Make in India

Upside

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

2) Employment will increase people's purchasing power which ultimately helps in poverty eradication and expansion of consumer base for companies.

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

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

Downside

1) The biggest challenge is to restore the broken trust between industry and government, which was hampered by the policy paralysis.

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

3) Uncertainty in tax regime and delay in implementation of GST is also a matter of concern for industries.

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

5) Manufacturing sector demands highly skilled labour whereas India lacks highly skilled labour force.

6) 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.

7) Land acquisition for establishing manufacturing industries will prove to be a tedious task for successful unfolding of this campaign.

Conclusion

The apprehensions of industrial sector are genuine. But the government's effort will act as the catalyst in mitigating these apprehensions. Also, PM has clearly mentioned that India is seeking long term capital investment because short term investment is volatile in nature and only aims at profit making. This aspect also reflects in PM's definition of FDI i.e. "First Develop India". So, these efforts will give the much needed initial thrust to this campaign and its success will make India the powerhouse of manufacturing sector in the world.