BUSINESS ENVIRONMENT

What should India do to make “Make in India” successful?

The ease of doing business in any country is dependent on the factors and the state of business
environment in the concerned economy – the policies of the country, the resources the country
possesses, the objectives the country wants to achieve through a particular business.
The Make In India initiative which was launched by the Modi government in 2014 the aim of which
was to turnaround the current scenario of manufacturing and production industry in India – mainly to
facilitate India in becoming a global manufacturing hub - thereby increasing manufacturing’s
contributory share in the country’s GDP. As a byproduct, the initiative aims to create more employment
for the masses in the manufacturing industry. The target to increase the contribution of the
manufacturing sector towards the national GDP is said to be 25% within the stipulated timeframe of
2025.
The initiative sets out 11 areas of concentration, including focus sectors, easing of regulatory
environments and acquisition of technology and development. It identifies 25 specific focus sectors but
the growth has been sluggish because many of the measures were more than two years old and the
department should have taken effective steps to implement initiatives such as Make in India in a 'more
robust manner'.
One key factor to achieve the aforementioned target is to encourage more Foreign Deposit Investments
(FDIs). The Indian market and economy should seem like a lucrative and attractive opportunity to the
large manufacturers of the world – so as to attract them to setup manufacturing and production facilities
within the borders of India. This can be done if India’s ‘Ease of Doing Business’ index (given by the
World Bank) seems more than plausible to the foreign companies.
According to the latest data collected in 2017, India ranks 100 in the Ease of Doing Business scale,
meaning the aggregate of some of the following factors which define the Ease of Doing Business scale
makes India the 100th easiest country to setup a business in:

Source: http://www.doingbusiness.org/en/data/exploreeconomies/india?topic=enforcing
The right way to make ‘Make In India’ a success will be to create a manufacturing strategic plan for
India and its states. The plan should be crafted by an independent commission comprised of a
representative cross-section of business, academic, government and other leaders with appropriate
experience and expertise. The commission can draw upon the National Manufacturing Policy and
multiple other studies and position papers as inputs for the plan.

If India has to scale up the manufacturing sector to the next level of competence, a lot more companies
that present need to join the initiative. The key success factor for any manufacturing company is the
efficiency and productivity. A high level of efficiency is required at the engineering stage (since
engineering related to complex machinery and plants across various manufacturing facilities) to
facilitate faster, flexible and more smart production. A seamlessly integrated automation system would
ensure efficient interoperability of all the automation components.

The current scenario sees a rise in adoption of the open system architecture that comprise the entire
production processes and has consistent characteristics like data management, global business
standards, and uniform interfaces – both software and hardware.
To execute all the above, the government of India needs to be at a point where the aforementioned Ease
of Doing Business Index for India is an eye-catching entity for interested foreign companies as well as
internal facilities, since the Index is sort of a benchmark – which changes annually based on the factors
changing in the countries across the world. Going by the current rankings of India based on the grid,
the following are some ways India can improve the index and hence make the Make in India initiative
a revolution:

1) Starting a new business: The costs incurred in setting up a new business in the country are
very steep and the procedures and laws involved regarding the same are very tedious and hectic.
The entire process entails 12 procedures to be followed to initially set up a business, which
takes nearly a month or two in average. The costs incurred at each sub-step also make the
entrepreneurs apprehensive of starting a new business.
The unified authority under the Make in India banner alongwith seamless integration of all the
sub-steps would not only speed the process but also reduce the costs incurred at each stage as
a whole.
2) Speeding Up process of Construction Permits: Due to the unplanned and unorganized
urbanization, the ease of giving permits for construction of plants and facilities gets hindered
since the place to setup might be near a railway station, hospitals or residential complexes.
The solution is to create more manufacturing zones and special economic zones alongside
central business districts with their own governing bodies (controlled by the Make In India
commission) .
One of the other problems for getting a permit is the tediousness of the procedure – it involves
34 stages and takes around 200 days. Intimation of Disapproval from the Building Proposal
Office and paying of the fees takes around a month. Non-Objection-Certificates must be
obtained from the Tree Authority, the Storm Water and Drain Department, the Sewerage
Department, the Electric department, the Environmental Department, the Traffic &
Coordination Department and the CFO.
Streamlining this problem through digital application usage and management information
system where each step is automatically pushed forward through various approval channels
would serve to be a boon for the manufacturing industry and hence the Make In India campaign.
3) Implementing e-governance: Online portals should be incorporated by the government which
would allow simpler and much smoother process of application for registering a business,
paying taxes etc. Making most of the process related to business online will allow entrepreneurs
not to visit the government officials and thus will not only reduce cost to start business and
increase efficiency but also will significantly reduce cases of bribery and corruption.
4) Smooth Judicial System: One of the main reasons why entrepreneurs don’t want to start
business operations in India is that because of legal case related to patent violation, labour laws
usually go on for a very long time. Since our courts keep delaying cases it affects brand value,
consumer base and operations of a company until no final judgement is made by court. There
 should be provision for special courts which would specifically look into the cases related to
business operations. This would speed up the process and parties involved will get faster
judgement.

5) Trading across borders: To improve the ease of trading across borders, reforms should be
made to improve indicators like the time taken to import/export. This can be done by reducing
the amount of paperwork and using digital applications to make the process smoother and faster.
The costs to export/import can also be reduced to ease the trading process. India should attempt
to increase the number of custom officers at duty, so as to reduce the time taken to process
shipments that are moving to-and-fro between the borders. Technology, can be used as
leverage, and a unified kiosk system that brings all the aspects of the paperwork together under
the same system, and in digital format, can be used.

Apart from the above, India should strategically pick up spots to double down on in the future – both in
terms of industries and manufacturing capabilities and aim to become world-class in those areas.
The aforementioned factors should be able to address the major issues that are hindering India from
achieving a better index. Considering the abundant amount of human resource capital that our country
possess, these measures should be able to boost the manufacturing industry, making the ‘Make in India’
program a success.
Its also important that India should ensure the sustainability of such initiatives beyond short-term hype.
R&D is critical to enable the success of manufacturing capabilities. We must aspire to spend more on
innovation and R&D, thereby attracting industry leaders to invest in India thereby furthering the Make
In India campaign.