Make In India: Paving The Path To Industrial Dominance
It is the result of Make in India and other reforms initiated by the government that India is one of the fastest growing economies amid global economic headwinds and geopolitical uncertainties
As the world celebrates September 25 as the day of fulfilment of dreams, Prime Minister Narendra Modi also envisioned turning India into a global manufacturing hub by reviving the manufacturing sector in 2014. He launched a flagship scheme 'Make-in-India' with the iconic slogan of 'Come, make in India' to facilitate investment, create best in class infrastructure and transform India into a global hub for design and manufacturing.
The initiative attempted to stimulate economic growth by simplifying business processes and enhancing skills, as well as facilitating investment, innovation and infrastructure development. Its ultimate goal is to create a business-friendly environment through cooperative governance, modern infrastructure and increased foreign investment opportunities. The government is seeking make-in-India initiative as a significant boost to employment and economic growth.
To take the initiative forward, the government has rolled out a series of reforms including the Production Linked Incentive (PLI) scheme, PM Gati Shakti programme, National Logistic Policy, comprehensive tax reforms encompasses GST and 15 per cent lower income tax rate for manufacturing units, unified payment interface and recently announced 12 industrial smart cities to foster a supportive ecosystem and create a vibrant environment for manufacturing, innovation and startups that encourage growth entrepreneurship and job creation.
The flagship scheme completed 10 years last month as an important step in India's nation-building efforts. As a decade has passed, the government should conduct a retrospective analysis to assess the success of the scheme, identify its shortcomings and formulate strategies to meet the upcoming challenges.
Notable feats
It is the result of Make in India and other economic reforms initiated by the government that India is one of the fastest growing economies amid global economic headwinds and geopolitical uncertainties. The country has emerged as a global leader in economic expansion, achieving a remarkable growth rate of 7.5 per cent and serving as a beacon of prosperity amid the global economic sluggishness.
The scheme has made notable considerable progress since its launch. The scheme is focusing on promoting 27 key sectors as part of its 2.0 iteration. "Make in India" has spurred remarkable export growth across various sectors in the last decade, enhanced capacities and strengthened the economy, the Prime Minister stated. In a LinkedIn update, he shared insights about prosperous sectors that have achieved remarkable growth in exports.
The Press Information Bureau has come out with a detailed note '10 Years of Make in India' detailing how the scheme transformed India into a global manufacturing powerhouse in ten years. The impressive results of flagship scheme are detailed in the PIB report and LinkedIn post, highlighting:
First, India has emerged globally with top rankings in investment attractiveness, economic growth and innovation. India ranks fourth globally in renewable energy production. It is also ranked 7th in national brand value and has significantly improved in ease of doing business and global competitiveness index. In the World Bank's Doing Business report, India leapfrogged 79 places from 142nd in 2014 to 63rd in 2020.
Second, the electronics sector has seen a rapid growth mainly due to the country's mobile exports which have witnessed a staggering 7,500 per cent growth from Rs 1,556 crore to Rs 1.2 lakh crore. The country has emerged as the second-largest mobile manufacturer globally and has significantly reduced its reliance on smartphone imports. Mobile manufacturing units which were only two in 2014 have now grown to over 200 units.
Third, India has become the fourth-largest renewable energy producer globally with 400 per cent capacity growth in the last decade. The electric vehicle industry, which was almost non-existent in 2014, is now worth $3 billion. Furthermore, India's defence production is gaining momentum, exemplified by the launch of INS Vikrant. This milestone supports India's vision of self-reliance, which has production worth Rs 1.27 lakh crore and exports to over 90 countries.
Fourth, India's indigenous Vande Bharat trains represent the triumph of 'Make in India'. With 51 trains serving 102, they connect the states, highlighting the progress in the country’s rail technology. Additionally, the toy industry has seen a significant turnaround, with exports increasing by 239 per cent and imports halving, benefiting local manufacturers and sellers.
Fifth, India's FDI inflows increased from $45.14 billion in 2014-15 to $84.83 billion in 2021-22. Total FDI between 2014 and 2024 was $667.41 billion, rising to $70.95 billion in FY23-24, solidifying India's position as a preferred global investment destination.
Stumbling Blocks
Although a pioneering "vocal for local" effort, the Make in India initiative seeks to strengthen India's manufacturing landscape while showcasing its industrial strength globally. However, there are many obstacles along the way that need to be overcome. The manufacturing sector is grappling with issues of rising input costs due to rising raw material prices, labour costs, higher freight charges, higher borrowing costs arising from increased interest rates and disruptions in supply chains, hurting their profits.
Moreover, growth in the manufacturing sector in recent times has not been satisfactory, whether measured in absolute or relative terms. According to the CMIE, the share of exports among manufacturing companies has declined by about 67 per cent over a ten-year period. This has declined from 18 per cent in FY13 to 6.8 per cent in FY23 and is expected to decline further in FY24.
The ongoing conflict between Israel, Lebanon, and Iran is increasing the concerns of Indian exporters. Because volatile energy and oil prices, supply chain disruptions and mounting global inflation may adversely impact manufacturing exports, which will impact India's manufacturing sector.
The next chapter
There are still many other constraints that need to be addressed to boost the manufacturing sector. Major initiatives are also impeded by inadequate infrastructure, excessive logistic costs and inefficient supply chains. The government should implement regulatory reforms, prioritise investment in infrastructure development including industrial corridors, parks and zones, upgrade transportation networks and logistic and warehousing facilities to reduce logistic expenses, streamline supply chains and support manufacturing growth. The government should simplify regulatory frameworks, streamline labour legislations, improve power and water supply and support start-ups and MSMEs to unlock the potential of the initiative.
The author is an associate professor of finance and area head at Institute of Technology and Science, Ghaziabad.
[Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP News Network Pvt Ltd.]
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