“Make in India”: A boost to Indian manufacturing

Make in India was launched by Hon’ble Prime Minister of India Mr. Narendra Modi as a holistic strategy to promote the manufacturing sector of the country. The formal program was unveiled in 2015 and was launched at the Hanover Messe in the presence of Chancellor Angela Merkel and Prime Minister Modi.


The Make in India is a seminal initiative in India’s current growth story. Launched with the objective of facilitating investment, fostering innovation, enhancing skill development, protecting intellectual property and building best in class manufacturing infrastructure, the initiative focuses on 25 key sectors of the economy, including automobiles, aviation, biotechnology, defense manufacturing, electrical machinery, food processing, oil & gas, and pharmaceuticals, among others.

The Make in India initiative has been built on layers of collaborative effort, based on four critical pillars, namely: new processes, new infrastructure, new sectors, and new mindset. The key focus areas included Ease of Doing Business, attracting foreign direct investments, strengthening the intellectual property rights regime and developing infrastructure.

How well has Make in India fared? It’s been five years since the launch of the Make in India initiative in 2014. Under each of the pillars of the strategy, substantial policy work has been carried out.

Ease of Doing Business
With their focus on a strong mission, the country managed to improve its ranking in the Doing Business report of the World Bank from 142 to 77, greatly facilitating business procedures through online, transparent and quick processes. Introduction of a digital online application and tracking processes have replaced paperwork and red tape. A number of new initiatives have been launched in order to streamline and rationalize procedures including in the Federal States, aligning them with global best practices. These include amendments in labor returns, online applications and returns, rationalization of the regulatory environment, increasing the validity of industrial licenses, and many others.

FDI reforms
Under the rubric of Make in India restrictions on foreign direct investments were relaxed and rules and procedures have been simplified. FDI liberalization in 87 policy areas across 21 sectors is paying off. Now, most of the sectors are under the automatic approval route. Sectoral caps across major sectors including defense and aviation have been increased to 100%. With these changes, India is now one of the most open economies in the world for FDI.

Tax reforms
The Goods and Services Tax (GST) became a reality in July 2017, making India a single market and streamlining processes for paying taxes. Indirect taxes in different states were subsumed under a single structure, thus removing tax cascading and reducing production costs.

Industrial Corridors
Five industrial corridor projects across India have been identified, planned and launched by the Government of India. These corridors are spread across India, with a strategic focus on inclusive development to provide an impetus for industrialization and planned urbanization. Smart Industrial Cities are being developed along the Corridors. These cities are being developed to integrate the new workforce that will power manufacturing and lead to planned urbanization. The Government has also fast-tracked the Delhi-Mumbai Industrial Corridor along the Western Dedicated Freight Corridor for railway lines. The project includes eleven industrial regions and three industrial areas of which eight industrial townships are underway.

IPR regime
India’s IPR regime compares with global benchmarks in terms of legislation. The Government has now brought out a new IPR policy to strengthen the implementation of the policies. This has led to a higher number of offices and staffing for the structure. About 1,000 global companies have set up development centers in India to lead their design initiatives through competitive and quick models.

Insolvency and Bankruptcy Code
Enacted on May 28, 2016, the Insolvency and Bankruptcy Code 2016 consolidates all rules and laws relating to insolvency into a single legislation and brings India’s bankruptcy code on a par with global standards. The code is designed to promote entrepreneurship—it enables companies to tide over financial difficulties and opt for restructuring while still fulfilling orders. It also promotes greater confidence among investors and increases the availability of credit, by strengthening procedures.

Electronics manufacturing
With a high level of imports of mobile phones, India brought out a new policy for encouraging electronics manufacturing in the country. The Phased Manufacturing Program (PMP) has significantly reduced imports of cheaper mobile phones, with more than 250 manufacturers starting up in India.

Infrastructure Boost
Programs to build infrastructure and connect India are picking up pace. New railway lines have been constructed. The roads and highways program has picked up considerable speed with about 27 kilometers of roads being constructed every day. The Sagarmala project focuses on connectivity by sea. It envisages a role for multiple central ministries and agencies as well as state governments to complete 415 projects in just 20 years by 2035. The projects comprise port modernization, new port development, port connectivity enhancement, port-linked industrialization and coastal community development.

Renewable Energy
India ranks four in the world in terms of installed capacity to harness power from wind, and ranks six in terms of installed solar power capacity. The Government of India has set an ambitious target to install 175 GW of renewable power capacity by the end of 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power. Considerable progress has been made towards this goal.

Education & skill development
The Government has stepped up its focus on skill development and rolled out a new Apprenticeship policy to incentivize companies to take up skill development. Under higher education, the upgrading of of 20 universities to institutes of eminence is planned. India currently has the second largest number of graduates in the fields of science, technology, engineering and mathematics (STEM), a pool which is helping create good capacity for R&D, design and product development.

Sectors
Make in India has identified 25 sectors for special support,, including services and infrastructure sectors apart from manufacturing sectors. To boost these, national policies have been introduced in various sectors such as capital goods, textiles and garments, defense production, and others.

Outcomes
Manufacturing outcomes are seen in significant increases in production in certain sectors. Electronics manufacturing has been a definite success story, inviting foreign investors to set up production facilities in India. In the automotive sector, too, production has increased from 2.3 million to 3.1 million from 2014-15 to 2018-19. Various other sectors are also doing well. India’s exports went up by 9% in 2018- 19 compared to the previous year, to over $330 billion.

Conclusion
Make in India involves a mindset change to ensure that manufacturing grabs attention among domestic and global investors. This has certainly taken place and businesses are viewing the changes in India’s business environment positively. We in CII (Confederation of Indian Industry) are happy to see the strong focus on the manufacturing sector and are working with the Government to implement the strategy. With the slowdown in the global economy, manufacturing has remained subdued in the last fiscal year. As a new Government under the leadership of Hon’ble Prime Minister Modi is now well settled back for a second term, the Make in India mission can be expected to go to the next level of development.


Chandrajit Banerjee

Chandrajit Banerjee has been the Director General of the Confederation of Indian Industry (CII) since 2008, and responsible for overall operations of CII. He did his Masters (MS) in Economics specializing in the Economics of Planning and Econometrics at the University of Calcutta. The CII serves as a reference point for Indian industry and the international business community.