Make In India: Manufacturing or Infra? India’s major dilemma . . .
- Jan 26, 2015
- 3 min read
‘Make in India’ campaign is an impressive pitch to attract investors and to place India as a manufacturing hub on the Global map. It has an ambitious target of increasing the share of manufacturing in the country’s GDP from 15 % to 25% [1]. Right now only 24% of the workforce is employed in the manufacturing sector. At this juncture, when China is losing its hold as a global manufacturing destination, MAKE-IN-INDIA comes as a great opportunity to project India on a global scale. This is due to increase in hourly labor compensation to $3 as compared to $1.5 in India, and somewhat contributed by falling Rupee making Indian exports competitive with Yuan rising. MAKE IN INDIA is a step forward towards being a manufacturing based economy and results in large scale employment.
Is India ready. . .? Reviving the manufacturing sector, planned single-window and time bound project clearances will help attract investors. But, the real question is that whether India is truly prepared for this. Archaic labor laws, Infrastructural roadblocks, FDI restrictions, unclear taxation rules and land acquisition make it tough to bet high on India. For India to become a global manufacturing destination structural changes are required and infrastructure has the biggest role to play.
After the change in the dispensation at Delhi, India has shown its intent to shed the image of being unfriendly to business. The government is expecting to build a collaborative relationship with investors across the globe. But a paradigm shift in intent is required for this initiative to become a success and not become one of the many good initiatives which failed due to implementation problems. Manufacturing is beholden to the growth of Infrastructure and addressing infrastructural bottlenecks are of prime importance.
What it takes to make the Lion roar . . . For MAKE IN INDIA to be a success, the government should first focus upon ‘Make India’, wherein visible measures to build new ports, highways, power generation plants and many more focus areas are to be adopted. Proportionate investment in infra will help India gain competitive advantage over China. The following graphic shows India’s comparison with China:
MAKE IN INDIA is all about attracting FDI, and investors need to be convinced that India offers world class infrastructure and skilled labor. These measures will turn the wheel towards industrialization and convert investments into results.
India is trying to go the China way to achieve the target of being the world’s factory, but cheap labor and skilled engineers don’t guarantee this. Allowing FDI, channelising resources towards business, ability to scale up operations and adopting the latest technology are going to play an important role. India cannot expect corporate houses to invest and make in India, but not sell, say the example of Multi brand retail or e-commerce.
It's time for right moves . . .
The expectations from MAKE IN INDIA need a reality check as the expectation that boosting manufacturing will create jobs and eliminate poverty might not be a sanguine thesis. With advancements in technology, advent of 3-D printing and automation, overall development needs to be undertaken to stay competitive across the fields. Continuous efforts are required not only to project India as an investment destination but to create a business friendly environment. Lest Make-In-India gets relegated to a marketing gimmick. All in all, concerted efforts are required and the true aim should be ‘Make-India and then Make-in-India’!!
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[1]http://www.business-standard.com/article/economy-policy/govt-aims-to-raise-manufacturing-share-to-25-of-gdp-114111201603_1.html
[2] http://www.makeinindia.com/policy/national-manufacturing/
[3] http://businesstoday.intoday.in/story/infrastructure-development-roads-rail-sanitation-make-in-india/1/211142.html
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