(GIST OF KURUKSHETRA) Make in India Challenges, Opportunities and Outcomes

(September-2023)

Make in India Challenges, Opportunities and Outcomes

Context:

The Government of India, 'Make in India' was launched on 25 September 2014. This timely and appropriate international marketing slogan, aimed at encouraging companies and individuals across the globe to facilitate investment, foster innovation, build world-class infrastructure, and build a hub for manufacturing, design, and innovation in India. Unique ‘vocal for local’ interventions within the activities of this initiative envisaged promoting India’s manufacturing domain to transform the nation into a global manufacturing centre.

Why Make in India?

lay focus on employment creation and skill upgrading in 27 sectors of the economy.
increase contribution of the manufacturing sector to overall GDP growth.
enhance tax revenues of the nation by positively enhancing business activity through the manufacturing revolution.
eliminate unnecessary laws, controls, and bureaucratic procedural hurdles.
ensure and adopt higher quality standards for manufacturing products with reduced impact on the environment.

The initiative Make in India envisaged the following to:

attract FDI for capital financing and technological investment in the different economic schemes of the country.
identify and promote the growing services and industrial sectors in the Indian economy.

Pillars of Make in India

Considering the importance of the manufacturing sector in India in the national development and based on the hopes to attract more capital, entrepreneurship, and technological investment in India, the ‘Make in India’ initiative is built on following four vital pillars:

New Processes: The Government of India introduced several reform measures to ensure an enabling environment for growth by creating possibilities for attracting both domestic as well as foreign investment, and fostering effective business partnerships with efficiency. The reform measures are aligned with positive parameters of the World Bank’s ‘Ease of Doing Business (EoDB)’ with a view to enhance India’s ranking on business facilitation through process reforms.
It is ‘Make in India’ that recognised EoDB as the single most important factor to promote entrepreneurship and expand enterprises with the capability to withstand competition in the open market. The review of processes and procedures, along with schematic customisation has a positive impact on the manufacturing sectors growth with reduced adverse economic impact of post-Covid economic
deceleration.
New Infrastructure: Make in India intends to develop well-equipped industrial corridors with all necessary facilities for the expansion of industrial activities, build smart cities to provide citizen services with ease, and create world class infrastructure with state-of-the-art technology, and high-speed communication network amenities. While research, innovation, and technology transfer activities are supported through an integrated registration system, the infrastructure of the Intellectual Property Rights (IPR) registration system has been improved and made simpler. At the time when a big push was given to improve industrial infrastructure, necessary steps were taken to enhance the capacity of various sectors by providing training and education for creating respective sectoral skilled workforce, covered and promoted under the ‘Make in India’ initiative.
New Sectors: Economic growth centres in a large economy like India needed to be identified. Keeping this in view, the ‘Make in India’ initiative identified 25 sectors to begin with, followed by two additional sectors. While investment gaps were removed in certain sectors, restrictions for expansion were either removed or relaxed for some other sectors, considering their growth potential and their share in national economic development.
New Mindset: Efforts were made to review the Government’s interaction with various core and dynamic entities of the economy. It was felt that Make in India requires a change in the mindset of all the stakeholders – be it the Government, industry partners, service providers or the community. Make in India brought about a paradigm shift in the way the Government interacts with various industries. Attempts were made to transform the Government’s outlook towards the industrial growth by making it a partner in the economic development of the country along with the development of the corporate sector.

Carrying out Reforms

Guarantee basic production inputs – power, minerals and water at competitive prices.
Make modern transport, logistic, and communication infrastructure accessible.
Ensure accessibility to domestic and international markets.
Develop entrepreneurship and improve the capacity of entrepreneurs.
Extend support for bringing in EoDB through access to venture capital, strong industrial delicensing and deregulating environment, etc.

Attracting FDI into India
The Government has taken various steps to boost domestic and foreign investment in India. These, inter alia, include:

Introduction of Goods and Services Tax
Reduction in Corporate Tax
Innovation to improve EoDB
FDI policy reforms
Measures for reduction in compliance burden
Policy measures to boost domestic manufacturing through public procurement orders
Phased manufacturing programmes

Advantages of Make in India

The ‘Make in India’ initiative has various socioeconomic dimensions.
Effective implementation of the initiative will have a positive impact on the overall socioeconomic growth of India, especially in manufacturing growth and the creation and provision of employment opportunities both in rural and urban areas.
A massive increase in employment will enhance the purchasing power of the citizen, expand the consumer base for companies, and address the problem of poverty.
Emphasis on improved education and training infrastructure to ensure a skilled workforce for each of the focused sectors will help reduce brain drain.
The Make in India initiative targets export-oriented growth. The export-oriented growth model of this initiative will positively impact India’s balance of payments position and support in accumulating foreign exchange reserves. A positive balance of payments will address volatility in the global economy, especially in the postCovid economic scenario.
The ‘Make in India’ initiative’s propensity to attract foreign investment will not only ensure an increased flow of foreign investment into India but will also ensure bringing in technical expertise
and creative skills. The holistic developmental approach under the ‘Make in India’ initiative will help in achieving higher credit ratings for the country, and making India a global manufacturing hub so as to attract more and more investors to invest in India.

Fostering Balanced Regional Development

Need-based and regular capacity building initiatives in collaboration with related government/private training and education imparting bodies, viz. the National Institutes of Design/the National Institutes of Fashion Technology,

On boarding onto e-commerce platforms, including Government e-Market (GeM).
Identify market players and conduct physical/virtual buyer-sellers meets along with Indian embassies and missions abroad. Facilitating trade events in India and abroad.
Promoting a brand image and propelling international marketing for local products.
Products to be selected by States/UTs by taking into consideration the existing ecosystem on the ground.
Channelising the potential and diverse identity in each District by setting up District Export Hubs (DEH)

Impact of Make in India

The ‘Make in India’ initiative has had a positive impact on the economy. The following are some of the major achievements of the last 8 years:

EoDB parameters have gone in favour of India during the last eight years. The industrial environment has become positive and progressive. The country’s rank in the World Bank’s EoDB ranking was 142 in 2014. As per the latest report, the World Bank has accorded India a rank 63 in 2022, indicating a rank improvement of 79 positions.
Foreign investments in domestic production have witnessed a positive outlook. Various production incentives under Atmanirbhar Bharat incentivized foreign investors to bring in more investment into domestic sectors. Liberalisation of policy towards foreign investors, opening up sectors for FDI have resulted in a structural shift in gross FDI flows into India during the last 8 years. Gross FDI in India has increased from an average of 2.2 per cent of GDP during Financial Years 2005 and 2014 to 2.6 per cent in Financial Years 2015 and 2022. FDI inflows in India which stood at US $ 45.15 billion in 2014-15 have increased continuously since then. The highest ever annual FDI inflow of 84.84 billion US $ was recorded in the financial year 2022.
Indian agriculture sector has been growing at an average annual growth rate of 4.6 per cent during 2014-15 and 2021-22. India has emerged as the net exporter of agri-products. In 2020-21, exports of agriculture and allied products from India grew by 18% over 2019-20, and agricultural exports reached a high of US $ 50.2 billion in 2021-22.
As per the Economic Survey 2021-22, there was a trend of positive overall growth of Gross Value Addition (GVA) in manufacturing sector. The total employment in this sector has increased from 57 million in the year 2017-18 to 62.4 million in the year 2019-20, in spite of the disruptions caused by Covid-19.
India witnessed a resilient performance of service trade, where the total services exports grew by 48.4 billion US $ in 2021-22 over 2020-21 from 206.1 US $ billion to 254.5 US $ billion.

Conclusion:

The Make in India aims at sustainable economic growth. This ambitious initiative has the potential to make India a centre of the manufacturing sector in the world. This initiative turned post-Covid situations into an opportunity for growth via the implementation of Atmanirbhar packages, the introduction of PLI scheme in various economic Ministries, creating investment opportunities under the National Infrastructure Pipeline (NIP) and the National Monetization Pipeline (NMP), India Industrial Land Bank (IILB), Industrial Park Rating System (IPRS), soft launching of the National Single Window System (NSWS), etc.