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MAKE IN INDIA

BUSINESS CAN BE MATTER OF GREAT TASTE


INTRODUCTION

Make in India is an international marketing campaigning slogan coined by the Prime


Minister of India, Narendra Modi to attract businesses from around the world to invest and
manufacture in India. The campaign has been concentrated to fulfil the purpose of Job
Creation, Enforcement to Secondary and Tertiary sector, Boosting national economy,
converting the India to a self-reliant country and to give the Indian economy global
recognition.

MAKE IN INDIA as the name sounds is an ambitious project by the Narendra Modi led
government to encourage the companies to manufacture their products in India. Be it plastics
or cars or satellites or agricultural products.

The logo for the Make in India campaign is an elegant lion, inspired by the Ashoka
Chakra and designed to represent India's success in all spheres. The campaign was
dedicated by the Prime Minister to the eminent patriot, philosopher and political
personality, Pandit Deen Dayal Upadhyaya who had been born on the same date in
1916.

Key policies:
1. Ease of business: Make in India is a policy that combines incentives with easy handling of
businesses and a faster redressed machinery. Only Business, NO harassment is the
underlining idea. India lies at 142nd place in the Ease of Doing Business Index below several
African countries and it's a shame.

Ranking of economies - Doing Business - World Bank Group

2. Skill and jobs for the youth: Skill endowment and job creation in 25 key industries will
be encompassed under this plan for able youth development and relevant training in certain
key areas. These industries include roads and highways, construction, defence development
and automobiles among others.

3. Making India a manufacturer: Urging global investors to make India an industrial hub is
the eye-catching feature about which all of us read every day. Narendra Modi is urging
investors to set up industries in India instead of just FDI. This includes making India a
destination for production of goods and exporting the same to the world over.

India has demand, demography and democracy and we need $$$, technology and exposure.

4. Getting away with archaic laws: Raising FDI caps in a controlled manner and parting
with the red tape restrictions in decision making is another important feature of this plan.
Archaic laws have become synonymous with our country's business-related environment and
hence this Make in India campaign aims at eliminating them.

The problems faced by Walmart in setting up in India paint a gloomy picture and this sets a
precedent for others to follow. Infrastructure is ailing and set up in red-tape and this plan aims
at redressing that.

5. 100 smart cities: This will also help in achieving the target of 100 smart cities and
affordable housing schemes by making the investors a partner in the plan and investors
adopting a city.

6. Disinvestment of PSU: Certain inefficient and loss-incurring PSUs will be disinvested i.e.
a certain part of them will be sold off to private players so as to generate revenue and do
away with the resource-sucking headaches. Private firms have an unmatched administration
and management at times.

There's no denying that India, a country with demand, demographic dividends and
democracy lagging in 142nd place in the Ease of doing business Index is a heart-breaking
scenario.

What a great sea of opportunities with extraordinary demands but there are more than one
stumbling blocks that hold us back. What a great land of oozing abundance and startling
scarcity.

To raise the standard of living, to make our country a major hub for industries and to embrace
progress leaving behind our anti-business leanings for good this is the right step ahead. There
will be professional training in important sectors, more employment opportunities and the
business houses will adopt a city to help in the creation of 100 smart cities.\

Why it is necessary:

1. the following image shows manufacturing value added as a share of the GDP in 2013
for various countries
This World Bank data shows, Indias manufacturing sector contributed 13% to its economic
output in 2013. That is its worst record in 10 years. The manufacturing sectors contribution
to gross domestic product (GDP) is even lower than that of Pakistan and Bangladesh.

2. Manufacturing is the key to employment and thus growth of the weaker sections of the
society. More the number of manufacturing hubs, and factories, more the employment
opportunities. Not everyone can be employed into Google of Facebook.

3. Import bills:
India is one of major importers of the world. From arms to everyday electronic items,
everything is imported. This adds up to the import bills. India has the distinction of being the
biggest arms importer of the world. If we start manufacturing these items in India, not only
will they generate millions of jobs and a better infrastructure, but will also boost our economy
and lower the import bills.
A look at various responses to make in India scheme recently:

In January 2015, the Spice Group said it would start a mobile phone
manufacturing unit in Uttar Pradesh with an investment of 500 crore.

In January 2015, HyunChil Hong, the president & CEO of Samsung South West
Asia, met with Kalraj Mishra, Union Minister for Micro, Small and Medium
Enterprises (MSME), to discuss a joint initiative under which 10 "MSME-Samsung
Technical Schools" will established in India.

In February, Samsung said that will manufacture the Samsung Z1 in its plant in
Noida.

In February 2015, Hitachi said it was committed to the initiative. It said that it
would increase its employees in India from 10,000 to 13,000 and it would try to
increase its revenues from India from 100 billion in 2013 to 210 billion. It said
that an auto-component plant will be set up in Chennai in 2016.
In February 2015, Huawei opened a new research and development (R&D)
campus in Bengaluru. It had invested US$170 million to establish the research and
development centre.

In April 2015, Airbus said that it will manufacture its products in India and
invest 2 Billion US dollars.

Also in February, Marine Products Export Development Authority said that it


was interested in supplying shrimp eggs to shrimp farmers in India under the
initiative.

In May, 2015 Tata JLR (Jaguar Land-Rover) announced that it will move its
production of the Land Rover Defender to its Pune facility in India in 2016.

A latest development, FOXCONN has agreed to setup a $5 Billion Plant in


Maharashtra.

Posco will establish a new steel plant in Maharashtra which is expected to bring
an investment of around $2 Billion.

With so much investments and upcoming projects you can well imagine the benefits!!

Make in India Project is an initiative by Government of India to promote the manufacturing


of goods in the country. It was initiated by Indian Prime Minister Shri Narendra Modi on 24th
September 2014. This would encourage foreign investors to invest in our country and help
India to grow economically. Make in India will have positive impact on the GDP of India and
create more jobs there by utilizing the human resources which India has.

Make in India project focuses on the following factors to increase the economy of India. They
are:

Automobiles
Automobile Components
Aviation
Biotechnology
Chemicals
Construction
Defence Manufacturing
Electrical Machinery
Electronic systems
Food Processing
Information Technology and Business Process Management
Leather
Media and Entertainment
Mining
Oil and Gas
Pharmaceuticals
Ports and Shipping

There are 4 major policies under the 'Make in India' program:

1. New Initiatives:

2. Foreign Direct Investment (FDI):

3. Intellectual Property Facts:

4. National Manufacturing:

Make in India is basically invitation to the world that we can now be manufacturing centre of
the world. This will help us to import less and export more. Becoming a manufacturing hub
will help India to produce goods in the country and export it to the rest of the world. This will
increase the revenue of the country. More is the manufacturing power of the India, more will
be the job opportunities in the country.
The major objective behind this initiative is to:
Focus upon the heavy industries and public enterprises while generating employment,
empowering secondary and tertiary sector and utilizing the human resource

Making India a manufacturing hub and economic transformation in India while eliminating
the unnecessary laws and regulations, making bureaucratic processes easier and shorter, and
make government more transparent, responsive and accountable.

Criticisms surrounding Make in India campaign:

Siphoning billions of dollars:


There are enough evidences of siphoning billions of dollars from developing countries to
other developed countries through MNCs .BBC Radio 4's File on 4 has learned that almost
100bn a year is taken out of Africa through accounting practices - several times what the
continent receives in aid.

The Ghanaian development economist Charles Abugre said this capital flight amounted to
"the looting of the continent (Africa)".
Developing countries receive about $136 billion in aid from donor countries each year. At the
same time, however, they lose about $1 trillion each year through offshore capital flight,
mostly in the form of tax avoidance by multinational corporations. Thats nearly 10 times the
size of the aid budget.

Setting higher prices:


Corporates can maintain setting prices at high levels while still competing to cut costs,
advertise, and market their products. The actual and potential economic surplus generated
exceeds the existing outlets for investment and capitalist consumption. Private accumulation
therefore requires the support of government spending geared primarily towards imperialistic
and militaristic government tendencies, which is the easiest and surest way to utilize surplus
productive capacity.

More profit to MNCs keeping plant in India


Indians to purchase the goods produced within the territory of India but by MNCs. MNCs
have more profit to keep their plant in India.

Acquisition and grabbing of land


Acquisition and grabbing of land in India by MNCs.

Re-entry of black money


there have been the suspicion of return of black money to India in the form of FDI through
make in India.

Challenges:

Let's have a look at five challenges that the 'Make in India' could face.

1. Creating healthy business environment will be possible only when the administrative
machinery is efficient. India has been very stringent when it comes to procedural and
regulatory clearances.

2. India should also be ready to tackle elements that adversely affect competitiveness of
manufacturing. Unfavourable factors must be removed. India should also be ready to give tax
concessions to companies who come and set up unit in the country.

3. India's small and medium-sized industries can play a big role in making the country take
the next big leap in manufacturing. India should be more focused towards novelty and
innovation for these sectors.

4. Indias make in India campaign will be constantly compared with China's 'Made in China'
campaign. The dragon launched the campaign at the same day as India seeking to retain its
manufacturing prowess. India should constantly keep up its strength so as to outpace China's
supremacy in the manufacturing sector.

5. India must also encourage high-tech imports, research and development (R&D) to upgrade
'Make in India' give edge-to-edge competition to the Chinese counterpart's campaign. To do
so, India has to be better prepared and motivated to do world class R&D. The government
must ensure that it provides platform for such research and development.
Make in India is Essentially India's push to deviate from an Agrarian, Services based
economy to a Manufacturing hub.
Prime Minister's dream project to focus on Make in India can be attributed to the following
factors

1. Depleting Foreign Exchange Reserves: India's imports technological expertise from


countries around the globe thus deteriorating the forex reserves of the countries. Make In
India would enable India to not only save forex reserves but also would enable India to gain
some substantive gains in the foreign exchange reserves.

2. Independence from Technology Sharing: Importing technologies India is dependent on


other countries where the technological expertise is imported from. The past instances of
Russia denying technology in 1993 for providing cryogenic engine for ISRO's ambitious
space programme.

3. Immunity (to some extent) from Currency Volatility: With a backdrop of a strong US
Dollar and expectations of USD becoming stronger it is essential that countries are less
exposed to these volatility shocks. Making in India would not only contribute to India being
averse to these currency shocks but also increasing the Gross Domestic Product. (GDP) (GDP
is the measure of the National Income which is calculated as follows:

GDP= Consumption{C} + Investment {I} + Expenditure {E} + Exports {X} - Imports {M})

Thus Making in India would not only have an Overwhelming effect on the Manufacturing
sector but also on the Entire National Income of the country

However saying this there are a couple of Inherent problems associated which have to be
tackled if India becomes a Manufacturing Hub

1. Finding Suitable Consumers: With the manufacturing capacity multiplying exponentially


there would be a need to find countries who would consume products manufactured in India.
It is also imperative to understand that China for that matter is not going to bog down from
this competition from India (Remember when India launched Make in India 1.0 China on the
same day launched Make In China 2.0)

Chinese economy with its sheer size of $12 trillion can afford to have some sectors which
have a sluggish growth and some sectors that have humongous growth figures. Read report of
Mckinsey Insights (What might happen in China in 2016).
India on the other hand having an Economy of the size of $2 trillion could not afford to have
sectors that have sluggish growth

2. Inflation Rate: With an increase in the number of jobs the buying power of the individual
consumer goes up (see formula for GDP). With this increase in the buying power of the
consumer the demand for the goods and other associated services would also go up. This
primarily could be a cause for the inflation

3. What happens after the Peak Production is reached: Investing to make India a
Manufacturing Hub would also mean that India would have to achieve a peak production
stage. After achieving the peak production stage where the economy is stagnated (which
means that no further jobs could be added and no higher production levels can be achieved).
India would have to plan for this eventuality.

4. Battling Counterfeiting: With the emergence of Manufacturing there would be many


companies that would invest in India. These companies products would cater to consumers
from all the sections of the society. The luxury brands would also be Vulnerable to be copied
or Counterfeited. India would have to make stringent laws and also implement them to tackle
this.

Make in India: A Longer Run

The initiatives longevity depends on its wholesomeness.

Desperate times call for desperate measures. Rising unemployment in the international arena
and increasing costs of labour have created yet another need for redressed. Back in 2014,
with the latent objective of increasing the rate of employment, and make the economy a
manufacturing hub. The economy seems to be tasting progress through the initiative, in spite
of criticism and opposition from various segments.
Urbanisation has been in one of its most aggressive forms in India. In 2015 alone, the rate of
urbanisation was 32.7%. However, as a developing economy, India faces the dual conundrum
of rising urbanisation and unemployment rates, in quite a boggling sense. On the one hand,
there is need for more resources to initiate and develop urban industries, trade and commerce,
while on the other, there exists an increasing requirement of agricultural land to boost these
urban functions. What cuts these two extreme paradoxes right in between, is the need to
improve livelihoods and standards of living. The current unemployment rate in India stands
at 4.9 percent, down by almost 50 percent since 2010.

It is no secret that rapid urbanisation has happened with the hope of better livelihoods. Hope
of greater number of opportunities, improved incomes, and a general opinion of a better
standard of living. This also increases administrative responsibilities on the part of
government. To provide for the more than adequate supply of labour in the form of part time
workers, contract workers, and daily labour in the cities, the administration would have to
come up with employment opportunities. Call it the method in madness, but the Make in
India initiative serves the purpose, among several others. From a macroeconomic perspective,
the initiative also acts as a tool to mend the current account, something that has been also
been substantiated by the initiative.
The other side of the story is dominated by detractors worrying about increasing levels of
unemployment in agriculture. Perhaps a reminder of the prevailing conditions would suffice.
The agricultural sector employs almost 58 percent of the population in India. The high
percentage is despite complex land acquisition laws, and several intermediaries that stand as
encumbrances. As if this is not proof enough, conducive monsoons have somewhat mitigated
the need to worry further about the need for sources of irrigation in drier areas. This is
notwithstanding the advancements in agricultural technology in the form of machinery and
storage, fiscal advantages, and the already high and increasing percentage of organic product
exports.

Some may argue that increased opportunities in cities would mean more aggressive migration
from rural areas to cities; however, as long as there are veritable opportunities created in not
only modernised industrial set-ups, but also traditional and unorganised establishments, there
will be space for innovation. Innovation also asks for awareness and higher levels of literacy.
Investments towards building educated, aware, and socially sustainable societies must happen
simultaneously. What may strike as an impediment now is that there would be sectorial and
regional imbalances, owing to limited participation of sectors only from the manufacturing
industries. A wider scope would definitely provide a larger base of r employment, innovation
and entrepreneurship.

Sectors in focus

For the Make in India campaign, the government of India has identified 25 priority sectors that
shall be promoted adequately. These are the sectors where likelihood of FDI (foreign direct
investment) is the highest and investment shall be promoted by the government of India. On the
campaign launch, the Prime Minister Mr Modi said that the development of these sectors would
ensure that the world shall come to Asia, particularly to India where the availability of both
democratic conditions and manufacturing superiority made it the best destinations, especially
when combined with the effective governance intended by his administration.

Automobiles, Food Processing, Renewable Energy, Automobile Components, IT


,Roads and highways Aviation ,Leather, Space, Biotechnology, Media
Entertainment, Textiles , garments Chemicals, Mining, Thermal Power,
Construction, Oil ,Gas, Tourism ,Hospitality, Defence, manufacturing,
Pharmaceuticals, Wellness, Electrical Machinery, Ports Electronic Systems,
Railways.

Benefits and disadvantages of Make in India

India is a country rich in natural resources. Labour is aplenty and skilled labour is easily available
given the high rates of unemployment among the educated class of the country. With Asia
developing as the outsourcing hub of the world, India is soon becoming the preferred
manufacturing destination of most investors across the globe. Make in India is the Indian
government's effort to harness this demand and boost the Indian economy.

India ranks 142nd low on the "ease of doing business index". Labour laws in the
country are still not conducive to the Make in India campaign. This is one of the
universally noted disadvantages of manufacturing and investing in India.

Reaction to the campaign-

The international community has reacted very well to this invitation of Make in India. In a
recent conversation I had with a German entrepreneur he had mentioned his enthusiasm
regarding the campaign. The West is looking towards India as an option and a genuine
competition to China. Even though China is way ahead of us, there was a certain discontent
in the way my German friend spoke about doing business in China. THIS is exactly what
Make in India wishes to capitalize on. To be as welcoming and as business friendly as
possible, to the investors not just from the international market but also from the domestic
market.
I have seen entrepreneurs from Bengal to Gujarat putting up Make in India logo over their
exhibition booths just to en-cash the ongoing enthusiasm.

Criticism-

A lot of people especially the Leftist parties have criticized this initiative as a clear cut
favouring to Mr Modi's friends in the business sector who have allegedly put in large sums in
his campaign to the throne.
Also, they say that the carrot of 'creation of jobs' is but a mask to hide the true intention of the
government to sell off India's precious resources to these business honchos.
Environmentalists also blame the government for being lose on the environmental
permissions to promote the manufacturing sector through this campaign.

Having said all that, I would also like to put in a personal opinion here. I have seen people
who come for these industrial exhibitions criticize the Indian infrastructure, our regulations
and almost everything that is required for an industry to prosper. This has been so because
there were a lot of things that needed change. I am sure that they haven't changed and there is
a long road ahead of us if we need to change them. Our PM is not a Messiah but he wishes to
change things and the initiatives he has come up with surely has put a small step towards the
greater goal. Instead of jumping on it with heavy criticism, we Indians are so famous for, let
us just once try our luck with this initiative.