The philosophy behind MAKE IN INDIA
Why is that mostly foreign service giants like Google(Sundar Pichai),Microsoft (Satya Nadella) etc are headed by Indians. Why is that Indian engineers (especially software),doctors, nurses ,are in great demand in developed and developing countries(Arab ,USA etc). Why since our childhood had goods named as MADE in CHINA,MADE IN JAPAN?Why is that students from Electronics and Telecommunication,Mechanicle etc find it difficult to be employed. To understand this please read the following.
Every economy undergoes a economic transition in stages as follows
Primary (agriculture ,forestry,mining etc)
Secondary (manufacturing etc)
Tertiary(like telecommunication Services,doctors,drivers,teachers etc)
This transition happens in same order.
However, In India’s case ,transition has been most unusual for a large economy. If one sees the sectoral composition in 1951:
Service : 20%
we can understand that Agriculture had largest share of Indian gdp, workforce during independence ,while service had the least.
But today’s (2016-17)economic sectorial share shown in Image_2 shows an abnormal transition from Primary to Service sector,despite India blessed with good amount of resources, minerals and labour force, demographic dividend and stable polity. Why so? The answer to this question is the main philosophy behind Make in India.
To make it understand more simply,India importsprocessed/manufactured goods like mobile phones, steel while we export our raw materials like iron ore, Coal ,and software services like Information Technology.
Why Secondary/Manufacturing sector is more important for any country.
1. They add more value to a product ,hence can help in raising the standard of living of citizens. EG:Ghee is more valuable than milk,iron ore is less use than steel.
2.It ensures that we become stragically independent of other countries in critical sectors like Defence.
3.Linkages with other economic sectors. The substantial links with dozens of other sectors throughout the economy ensures that manufacturing output stimulates more economic activity across the wider economy than any other sector. This is called as the multiplier effect of manufacturing.Ex:Mobile phones are helping in creating jobs in healthcare,education,transportation(ola,uber),Agriculture,good governance etc.
4.Balance of trade :Manufacturing helps in ensuring that a Economic crisis like 1991 (balance of Payment) doesn’t occur because there will be continous international markets for our exportsand more forex reserves.
Why India lags in manufacturing.
The reasons for India’s low level of industrial growth are manifold .These are:
*Acquring land is a cumbersome process and often face public anger : Ex: Tata Nano in West Bengal
• Inadequate Infrastructure:Manufactruing is a infrastructure intensive sector that require land, power,access to ports and good roads,logistics support,freight railway carriers etc.
• Investment Regulations:Eg: Too much regulation by RBI,SEBI ,TRAI etc
• Inflexible labour laws:Difficult to fire a employee, paying maternity benefits,employment compensation etc
• The Skill Gap:70% of our graduates are unemployable .
India’s formally skilled workforce is just 2%, while that for countries like South Korea and Japan is 96% and 80% respectively .
Strict environmental issues recent banning of diesel vehicals,industries around Belandur etc
Even the 1991 reforms of Liberalisation and Privatisation led to investments largely in service sectors mainly BPO,telecommunication ,Education ,healthcare while less in manufacturing sector .
How Make in India initiative seeks to overcome these barriers.
Some of the key recent initiatives include:
1. Ease of Doing Business:
a. To improve India`s ranking, reforms are being undertaken in areas such as starting a business,
obtaining construction permits, property registration, getting power supply, paying taxes,
enforcing contracts, and resolving insolvency.
b Other important reforms relate to the licensing process, time bound clearances for applications
of foreign investors, automation of processes for registration with the Employees Provident
Fund Organization and Employees State Insurance Corporation, reducing the number of
documents for exports, adoption of best practices by states in granting clearances and ensuring
compliance through peer evaluation, self-certification, etc
c. E-Biz Portal: The Government to Business (G2B) portal is being set up to serve as a one-stop
shop for delivery of services to investors and to address the needs of business from inception
through to the entire life cycle of the business. The process of applying for industrial licence (IL)
and industrial entrepreneur memorandum (IEM) is now available to businesses on a 24x7 basis
at the E-Biz website. Other services of the central government are also being integrated with the
d. Environmental and forest clearances: Applications for environment, coastal regulation zone
(CRZ), and forest clearances can now be submitted online. The decision-making process for
clearances has been decentralised. The requirement for environment clearance has been done
away with for projects such as construction of industrial sheds which house plant and
machinery, educational institutions and hostels.
2. Infrastructure: The government is seeking to improve the physical infrastructure in the country primarily
through the PPP mode of investment. There has been increased investment in ports and airports. The development of dedicated freight corridors is being done and these corridors are expected to house industrial clusters and smart cities.
3.Investment Regulations: The government has liberalised FDI policy:
a.100% FDI under automatic route has been allowed in construction, operation and maintenance
of specified rail infrastructure projects.
b. FDI cap in Defence has been raised from 26% to 49%.
c. The norms for FDI in the construction development sector are being eased.
4. Labour-sector reforms: Multiple overlapping and inflexible labour laws have been an impediment to the
growth of manufacturing sector in India. The new government has initiated a set of labour reform measures such as:
a. A Shram Suvidha portal has been launched for online registration of units, filing of self-certified
online return by units, computerised labour inspection scheme, online uploading of inspection
reports within seventy-two hours and timely redressal of grievances.
b. A Universal Account Number has been launched to ensure portability of Provident Fund
accounts for employees.
c. With a view to providing flexibility in working hours and increased intake of apprentices for on
the job training, the Apprentices Act, 1961 has been amended. An Apprentice Protsahan
Yojana has been initiated for the micro, small and medium enterprises (MSME) sector.
5. Skill Development: For the manufacturing sector to take advantage of the improved business environment and physical infrastructure, the need for having a strong human capital .
Government has established a separate Ministry of Skill Development and Entrepreneurship.
Under Make in India the Government has identified 25 key sectors in which Indian industries have the potential to compete with the best in the world. The sectors include like automobiles, aviation, chemicals, IT, leather, pharmaceuticals, ports, textiles, tourism and hospitality, wellness and railways among others .
The main challenge is in implementation. Governments in the past have announced lofty policies to transform India’s manufacturing .The National Manufacturing Policy of 2012 ,SEZs etcannounced ambitious goals such as increasing manufacturing’s share of GDP from 16% to 25% by 2022. It also sought to increasing manufacturing growth to 12-14% per annum over the medium term. The make in India should be address the bottleneck of these policies by learning lessons .
Publishes on : 23-Sep-2017 01:24 PM