Make in India Initiative: Reigniting Indian Manufacturing Sector

Dr. Syed Khalid Perwez, Dr. G.Vijayalakshmi, Mr. Syed Zahid Perwaiz   Abstract- Over the decades when major reforms and policies...

Dr. Syed Khalid Perwez, Dr. G.Vijayalakshmi, Mr. Syed Zahid Perwaiz

 

Abstract-Over the decades when major reforms and policies were introduced the manufacturing sector could not keep up compared to the countries with similar development/growth phase and size. National manufacturing policy aims at enhancing the share of manufacturing in GDP to 25 % within a decade and creating 100 million jobs. The government has made efforts to provide favorable by simplification, rationalization and digitization of process. In this regard, ‘Make in India’ initiative is aimed at encouraging the spirit of entrepreneurship and making India the manufacturing hub of the world. This article takes a look at what has been done so far and what more needs to be done to give much needed force to the manufacturing sector. Secondary data has been utilized taken from various sources to advocate the views expressed in this article. Indian economy which has traditionally been agriculture based, is taking big leaps towards promoting manufacturing which constitutes 16% of GDP in India. But its contribution to employment sector and growth is well below its true potential. Restrictive and rigid labour laws, abundance of unskilled workforce over skilled workforce, lack of technology innovations are some of the factors contributing to this. ‘Make in India’ calls for clear vision, detailed planning, strong determination, vast resources, and efficient administrative instruments to achieve this monument task. It will automatically lead to more and more employment opportunities and a better quality of life.
Keywords:Manufacturing, Simplification, Rationalization, Digitization and Innovation.

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I. Introduction

The rapid expansion of manufacturing sector has been a major objective of economic policy in India. Starting with the second five year plan in 1956 and with the contemporary launching of ‘Make in India’ approach, policy makers always stressed the need to expand India’s manufacturing sector.
Manufacturing is the backbone of the economy in most countries, especially so in fast growing emerging markets. Historical evidence from different parts of the world demonstrates the indispensable role that industrialization plays in the economic development process of countries. The experience of East Asian countries, in particular, shows that export led industrialization is crucial for the attainment of sustained employment generation and poverty reduction.
Indian economy which has traditionally been agriculture based, is taking big leaps towards promoting manufacturing which constitutes 16% of GDP in India. But its contribution to employment sector and growth is well below its true potential. Restrictive and rigid labour laws, abundance of unskilled workforce over skilled workforce, lack of technology innovations are some of the factors contributing to this.

II. Rationality and methodology:

Over the decades when major reforms and policies were introduced the manufacturing sector could not keep up compared to the countries with similar development/growth phase and size. National manufacturing policy aims at enhancing the share of manufacturing in GDP to 25 % within a decade and creating 100 million jobs. The government has made efforts to provide favourable by simplification, rationalization and digitization of process. In this regard, ‘Make in India’ initiative is aimed at encouraging the spirit of entrepreneurship and making India the manufacturing hub of the world. This article takes a look at what has been done so far and what more needs to be done to give much needed force to the manufacturing sector. Secondary data has been utilized taken from various sources to advocate the views expressed in this article.

III. Make in India- new perspective and objectives:

‘Make in India’ initiative launched in September, 2014 to give an impetus to the manufacturing sector and seek foreign investment. The aim is to improve India’s ranking from 142 (among 149 countries) to 50 in the World Bank’s Ease of Doing Business Index in three years. For this purpose the government has charted out 25 key sectors out of which the main sectors are automobile, aviation, information technology, construction, textile etc. Five smart cities to be built around high employment generating industrial clusters such as textiles, leather and food processing. The ‘Make in India’ initiative assumes significance for its sheer criticality and ambition. The aim is to increase share of manufacturing in GDP and create more jobs by initiating reforms in key sectors. In a nutshell in can be presented in following way:-

IV. Ground realities for ‘Make in India’ program:

India is a country which has experienced a growth in GDP driven by its service sector throughout the last few decades; however the service sector led growth has largely been jobless, thereby creating large segments of unemployed population.

We must consider that the Index of /industrial production has languished in some previous years, dipping into negative territory in 2013-14, as mega projects got stuck in huge time and cost over runs.

As on March 2014, out of total 721 projects monitored by ET, only 136 were on schedule with another 218 delayed. 238 projects across different sectors show a cost overrun of around 1.94 lakh crore in the last three decades. The original cost of these 238 projects was pegged at Rupees 2, 51,198.1 crore while the anticipated cost has now shot up to ` 4, 45,267 crore, a difference of 1, 94,069 which is around 77%. The difficulty in getting projects moving is reflected in India’s abysmal ranking in the World Bank’s Ease of Doing Business Index – 142 out of 189 countries. The following table shows the same:-

V. ‘Make in India’ the positive aspects to revive manufacturing:

‘Make in India’ is a timely policy initiative to convert India into a manufacturing super power by encouraging and inviting manufacturers to set their bases in India. It is a program that aims to boost investment and encourage innovation by creating world class manufacturing infrastructure and making it easier to do business in transparent and credit friendly environment. It is clear that only a labour intensive manufacturing sector can meet with the increasing employment needs in India and cater to the needs of increasing local demand. In a young nation with over 800 million people under the age of 35 and a median population of around 26 years, the initiative would definitely provide sufficient opportunities and a clear headway towards employment and fulfilling the demands of the available talent and labour pool. Much has also been said about the initiative’s key objective of attracting foreign investors and increasing FDI inflows into India through the manufacturing sector. The government has already made investor friendly policies on FDI and 100 percent FDI schemes under the automatic route in many sectors. The following points are important in this regard:-

Source: based on queries received on Make in India website, log in to same on Oct 21, 2014

VI. Areas for improvement:

While a good start has been made towards promoting the ‘Make in India’ initiative and inviting global companies to look at India as a potential manufacturing destination. It is clear that the Indian economy to successfully distribute wealth across its population, manufacturing has to grow. This growth will require several significant changes including significant increase in productivity and quality at the plant levels, pursuit of worldwide competitive manufacturing strategies and operations and successful integration into the global supply chains.
While there are significant challenges for Indian manufacturing entering the global arena whether through the expansion of domestic enterprises or investment by global manufacturers from abroad the opportunities are arguably more than worth the effort? Global competitiveness in manufacturing fosters growth, productivity and employment, and strengthens the agriculture and service sectors. The Make in India initiative need to relook India’s ability to continue to develop its manufacturing sector to the point where it might revolutionize global industry. For the same the following information is important:-

VI. Need to be done for success of Make in India initiative:

 

VII. Conclusion:

The importance of manufacturing sector is reviving the fortunes of the economy is well understood. What is less noticeable, however, is what prevents the manufacturing industry from growing faster. The five focus areas are: - capacity utilization, encouraging alternative technologies, power sector, incentivizing utilization, and defense production and localization. ‘Make in India’ calls for clear vision, detailed planning, strong determination, vast resources, and efficient administrative instruments to achieve this monumental task. It will automatically lead to more or more employment opportunities and a better quality of life.
To conclude one can say that manufacturing sector has the potential to play a crucial role for India to achieve its goal of becoming the fastest growing economy in the world. And the right mix of strong commitment from the government as well as the industry can make this a reality.

VIII. REFERENCES RÈFÈRENCES REFERENCIAS

1. Daily readings of The Economic Times, Kolkata addition.
2. Sundaram, Asha, D mitra, (2013), “Complementarity between formal and informal manufacturing in India in Reforms and economic transformation in India”, Oxford University Press, New York.
3. Hasan ,Rana, Mitra, Asha Sundaram, (2013b) “What explains the high Capital Intensity of Indian Manufacturing”, Indian Growth and Development Review, 6(2),212-241.
4. Panagariya, Arvind (2007), “India lags behind China and how it can bridge the gap”, World Economy 30(2): 229-248.
5. Economic Survey, various annual reports.

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