Make in India- With focus on increasing the share of manufacturing sector in overall GDP, boosting employment and creating a virtuous cycle government started the Make in India initiative in 2014. It included a host of policy measures like liberalizing FDI, focus on EDB through Minimum Government and Maximum Governance.
Nearly after 6 years of this initiative the investment scenario gives a mixed picture with increased FDI flows but dampened domestic investment because of a number of legacy issues.
- Make in India has been able to bring a lot of investments. FDI flows have touched all time high of $60billion and for the second consecutive year, India appears in top 10 of the FDI confidence index. Areas like defence manufacturing has seen JVs between Indian and foreign companies like Adaani and SAAB, Kalyani group JV with IAI (Israeli Aerospace industry).
- Automobile sector has seen investment flows with like of FIAT Chrysler focusing on exports from India to Australia, UK and Africa within two years.
- Isuzu Motors, the Japan-based utility vehicle manufacturer, has inaugurated its greenfield manufacturing unit in Sri City, Andhra Pradesh, with a $500 mill investment.
- POSCO has said that it will invest nearly $30 million in steel coil making mill in Gujarat
- In electronics Huawei, the China-based smart-phone manufacturer, has entered into an agreement with solutions provider Flextronics Technologies (India) Private Limited, to manufacture its smart-phones in India. Flextronics would start by making 3 million smart phones at its facility in Chennai. Similarly, other companies like Le Eeco, Panasonic etc. are planning investments.
- Ikea has committed investment of nearly $500 mill in store chain, e-retail companies like Paytm have been able to attract investments from foreign players.
Bottlenecks :
- Despite these large scale FDIs and domestic investment the overall scenario in domestic sector is not that rosy.
- Huge NPAs, Stressed balanced sheet of companies, Some new policy prescriptions like demonetization, changes in taxation structure to GST, Issue of tax terrorism has hampered the progress of Make in India Initiatives. These factors have dampened the investment scenario a bit, which is reflected in slowing of the economy to 5.7% in 1st quarter of 2017-18.
In light of less private investment government has been focusing on public sector investment through road, railways, opening new civil aviation routes etc.
- Apart from these to tackle the legacy issues government has come up with new Bankruptcy and Insolvency code
- Powers have been given to RBI to quicken the NPA issue
- Monetary Policy Committee has been constituted to make monetary policy setting broader based
- Demonetization has helped banks with greater deposits, which has resulted into lowering of interest rates.
- Inflation has been low
- UDAY scheme has been launched to reform power sector
All these initiatives will help in increasing the savings and investment rates in future and making the Make in India initiative successful.
- Improvement in Process
Setting up an e-portal to apply for Industrial License & Industrial Entrepreneur Memorandum 24×7.
Creating a transparent and faster environment to de-licence and de-regulate measures that increase complexity. - Increasing the validity of Industrial Licence to 3 yrs
Excluding a major list of components of Defence products’ list from Industrial licencing.
De-regulating those items that have both military and civilian applications.
Improvement In Infrastructure
- To better facilitate India’s manufacturing and design initiative the infrastructure and capacity is poised for phenomenal growth: new smart cities and industrial clusters, being developed in identified industrial corridors having connectivity, new youth-focused programs and institutions dedicated to developing specialized skills.
- There is a new impetus to develop smart cities and industrial corridors – On a pilot basis work is in progress along the following Industrial Corridors:
Delhi-Mumbai Industrial corridor to develop 5 smart cities like: Mumbai Industrial Corridor: Dholera, Shendra-Bidkin, Greater Noida , Ujjain and Gurgaon
Along the Chennai-Bangalore Industrial Corridor master planning of Tumkur, Ponneri & Krishnapatnam is in progress. - A feasibility study to see the viability of The East Coast Economic Corridor (ECEC) with Chennai-Vizag Industrial Corridor has been initiated.
Amritsar-Kolkata Industrial Corridor
North-eastern part of India planned to be linked with other Industrial corridors – Modified Industrial Infrastructure Up gradation Scheme has been approved for 21 Industrial Projects to
Re-cycle water through zero liquid discharging systems.
POSITIVE OUTCOMES:
- Some of the projects currently visible under the MII initiative to think as a success story in the making:
Enabling Chinese hand-set makers like Vivo to set-up manufacturing units in Greater Noida to produce 150,000 smartphones a month – Extending a warm hand to Vodafone, the British Telecom Giant to invest USD 1.96 billion in India to upgrade and expand its network in India. - US-based First Solar Inc and China’s Trina Solar have plans to set up manufacturing facilities in India. Clean energy investments in India increased to US$ 7.9 billion in 2014, helping the country maintain its position as the seventh largest clean energy investor in the world.
- Hyderabad has in its plans to become the mobile phone manufacturing hub in India for which it expects to create 150,000 – 200,000 jobs.
General Motors plans to invest nearly USD 1 billion by 2020 to increase its capacity in Maharastra.
Hyundai Heavy Industries (HHI) and Hindustan Shipyard Ltd have joined hands to build warships in India. Besides, Samsung Heavy Industries and Kochi Shipyard will be making Liquefied Natural Gas (LNG) tankers. - In 18 August 2015, Lenovo announced that it had begun manufacturing Motorola smartphones at a plant in Sriperumbudur near Chennai, run by Singapore-based contract manufacturer Flextronics International Ltd.
- On 16 October 2015, Boeing chairman James McNerney said that the company could assemble fighter planes and either the Apache or Chinook defence helicopter in India. The company is also willing to manufacture the F/A-18 Super Hornet in India if the Indian Air Force (IAF) were to purchase it.
On 30 November 2015, the Ministry of Railways signed formal agreements with Alstom and GE Transport worth 400 billion (US$5.9 billion) to set-up locomotive manufacturing factories in Madhepura and Marhaura in Bihar. - With the slogan “Zero Defect Zero Effect” coined by Prime Minister of India, Narendra Modi the future projects from the manufacturing sector are aimed at truly and effectively making India a super power in manufacturing for which the MII was envisioned.