Indian
economy was a primarily an agrian
economy during the post independence stage with over 60% contribution to GDP of
the country. Today, the service sector
contributes 53 % of the Gross Value added whereas manufacturing is at 30%. The share of service sector has grown rapidly
in India whereas as manufacturing sector has had low growth. In line with this, the GoI has launched the “Make in India” Initiative to boost the
manufacturing growth in the country as well as to create India a manufacturing
hub in the world. No doubt, with such
initiatives, India can soon be global power in the coming years.
Modi
government has been big on promises, but short on delivery is the constant
allegation since it has come to power in 2014.
In beginning of 2016, consumer demand is low, rupee is at a 30 month
low, the industrial output has fallen by 1.3%, rural economy is in a distress
for 2nd year in a row with monsoon failure, NPAs of PSBs paint a
scary picture. A debt overriding and
rising NPAs mean that even if there is demand, banks may not be too willing to
lend. (Stressed loans in infrastructure sector)
All these are worrying signs.
For
make in India mission to be successful, the GoI needs to make its roots very
strong. We need to have a very strong infrastructure in place in terms of good
road connectivity, transportation and competitive prices which will reduce the
lead time of transport and reduce the costs. We also need to focus on
industrial relations, productivity and quality of goods produced as India is
having complex labour rules. This is one of the points where we are behind the
other countries. At the same time, the
various government department and state governments also have to come in
alignment with this initiative. On one
hand the centre is pushing for make in India whereas on other hand you have
Income-Tax department sending notices to Vodafone or a red tape in various
channels of clearance. To start a company in India for investors, they need to
get over 100 approvals from different agencies and this is a very tedious
process. This can be aligned in to singly point of clearance in alignment in
state in which the companies would like to invest. Also the issue of Land acquisition needs to be
carefully handled and arranged for investors. It takes a great amount of time
and effort to have land to be used by companies. The point is that once the
government takes care of all the root cause issues in the system, there is no
doubt that we would see huge actual spike in investments rather than promises. Cheap labour with young population is an added
advantage to the country along with growth in economy.
I
also believe along with the government, we the citizens can also play a crucial
role in Make in India initiative. We can
do our small bit in terms of buying made in India products. We still look whether the product is
manufacture in China, korea, US or any other country. This will also ensure
that the money spent is within the country instead of it being sent abroad.
India
can produce high quality products at low cost,. It has the potential and ability. We need to be more consistent and passionate with work. Eg Mangalyan, submarine,
India
needs to invest a lot in R&D facility.
With the combined efforts of the government and we the people, there is
no doubt that Make in India wish will be
realised as Made in India.
The world economy is witnessing another slow down and rapid decrease in Chinas growth. India couldnt have asked for a better time and opporutunity. India must savour the moment and push the make in India to made in India and be the global manufacturing hub. Our country stands to benefit greatly if the dream turns to a reality. Hope for the best.
Jai
Hind.
Excellent article. My bit of anecdote would be as follows
ReplyDelete- Indian manufacturing sector lacks predominantly in R&D and there is very low innovation happening there.
- In the service sector we innovated the global business delivery model which pushed us to the forefront.
- However innovation in mfg is lackadaisical. It is heavily bombarded with bureaucracy and over reliance on low technology.
- There is no active research taking place between institute and industry. Despite all the Make In India, I was disappointed that in this front no developments or schemes have been made public.
- The Indian corporates and SME's should take leading role with regards to initiating partnerships. Proper infrastructure and financial support should be enough from the GoI. Many of the manufacturing sectors are looking towards buying technology or transfer from foreign countries and this would always keep us one or even 3 steps backward.
- China is a good example where they invested heavily in developing their R&D, and though previously Made in China was looked down upon now it is the only options for Europeans to buy and they outperform European made products in terms of some aspects of quality like durability etc...
- Though I do not encourage china's method of implementing policies, I believe that without an innovation infrastructure there is no Make in India (China is still a much more attractive proposition for foreign investment in manufacturing). The Indian manufacturing sector has to shake itself up instead on overly relying on the GoI like a saviour; to help its sad state of affairs. Ofcourse there are premium manufacturers like ISRO who I feel are outstanding, but the onus is on Indian corporate manufacturers to lead the way.
- Last I leave with this note that Germany or any leading manufacturing country did not reach where it is, without significant investment in R&D and Innovation. So no policies can help the Indian manufacturing sector unless they learn how to make it in the first place. Being a dumping ground for outdated technology and relying on cheap labour only leads to exploitation of human resource and cost cutting on important factors such as quality work environment and safety.
I am bullish on the prospects of Indian manufacturing but bearish till I don't see any active R&D partnerships being bolstered