|Demand of the question
Introduction. Contextual Introduction.
Body. Discuss progress made under Make In India. Mention various shortcomings. Suggest some measures to improve outcomes.
Conclusion. Way forward.
Make in India is a national program initiated by the Indian government to promote investment, innovation, skills development and build a world class manufacturing ecosystem in the country. Since its inception, the government has announced several steps to improve the business environment by streamlining processes of doing business in the country. But results under the Make In India initiative are mixed.
Progress so far in Make in India initiative:
- Boost in investment: Make in India initiative led to radiant growth in the IT and manufacturing sectors. This has encouraged various global/foreign investors to make investments in India and boost their business by building the products in the country. In 2015, India emerged as the top destination for foreign direct investment, surpassing the U.S. and China.
- Boost to MSMEs: The ‘zero defect zero effect’ phrase which came with Make in India campaign has shown positive impact on the Micro, Small and Medium Enterprises (MSMEs) of India. As a result, many companies are manufacturing goods with ‘zero defects’ and ensuring that the goods have ‘zero effect’ on the environment.
- Accountability: The implementation of Goods and Services Tax (GST) and demonetisation have made the industry as a whole much more transparent and accountable. Now the processes have been simplified such as obtaining licenses and clearances that have brought in more transparency into the system. The digitisation initiative that is part of Make in India has helped make processes much more transparent and easier to implement.
- Ease of doing business: Steps taken to improve ease of doing business include simplification and rationalisation of existing rules. As a result of the measures taken to improve the country’s investment climate, India jumped to 63rd in World Bank’s ease of doing business rankings as per World Bank report.
- Boost to research: First indigenously developed and manufactured Rotavirus vaccine, ‘Rotavac’, launched. 30 bio-incubators and Biotech Parks supported.
Various shortcomings in meeting objective under Make in India:
- Not much impact on manufacturing: One of the major objectives under Make in India was to increase the manufacturing sector’s growth rate to 12-14% per annum. Monthly index of industrial production pertaining to manufacturing shows that only on two occasions during the period April 2012 to November 2019, double-digit growth rates was registered. Data show that for a majority of the months, it was 3% or below and even negative for some months.
- Employment generation: Under Make In India, it was envisaged that 100 million additional manufacturing jobs would be created in the economy by 2022. Data shows that employment, especially industrial employment, has not grown to keep pace with the rate of industrial growth in the labour market.
- Decreasing investment: Make In India aimed that the manufacturing sector’s contribution to GDP is increased to 25% by 2022 (revised to 2025) from the current 16%. This was envisioned to be achieved through increased investment. Unfortunately, the last 5 years witnessed slow growth of investment in the economy. Gross fixed capital formation of the private sector (a measure of aggregate investment) declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-14 (Economic Survey 2018-19). The private sector’s share has declined from 24.2% to 21.5%.
Measures needed to improve the outcomes:
- Labour reforms: Large-scale exclusions of workers from labour law, violence and arrests are the reasons for India’s poor performance. India must introduce labour reforms at earliest like raising minimum wages, providing better social security for the labour.
- Simplifying Tax system: The complex taxation system, a huge amount of paperwork and corruption is a main cause of worries among the investors. An overly complex GST, which has dampened investor sentiment and created compliance burdens on SMEs need to be simplified.
- Land reforms: Stringent land acquisition laws and inflexible labour regulations make it difficult for India to attract investors in the manufacturing sector. India’s benchmark land acquisition law can be amended to make it easier to buy land for defence and development projects in the fast-growing economy, while also ensuring the rights of farmers.
- Skill training: Despite various government efforts like Skill India initiative, Yuva kaushal Kendra etc., India still lags behind other nations in imparting skill training. Many youths have not joined the skill initiatives. Efforts must be made for encouraging youth to join the mission to make them available for industrial needs.
- Co-operative federalism: Indian states play a very crucial role in the implementation and success of the Make in India initiative. But different states differ and are not on the same page. To make the concept of Make in India a success, a common consensus among the states is needed. There is a need to bring the less performing states at par with the better performing ones through collaborative efforts.
The Make in India programme aims to turn India into a manufacturing, design, and innovation hub in order to get big investments. This initiative is undoubtedly an inspiring initiative, which has reduced the risk factors of investing in India for many foreign companies. The availability of skilled labour, a business friendly environment, good infrastructure and low manufacturing cost are some conditions required for the success of the Make in India campaign.