Make in India (MII), a mega roadmap aimed at making India a global manufacturing hub was announced by Government of India in September 2014. Its goal was to raise the share of the manufacturing sector to the gross domestic product (GDP) to 25 per cent by 2022, from 16 per cent. As it has been more than five years to the policy, Xavier Institute of Management and Entrepreneurship, Electronic City, Bengaluru organised a two-day conference that discussed the journey of MII so far and the way forward.
The speakers at Make in India: Make it work discussed the nature of this policy, perspectives for viewing it in times of economic slowdown and challenges to be addressed for achieving it within the intended time-line.
B. Muthuraman, Former Vice-chairman, TATA steel in his keynote address stated: “No country in the world has achieved progress without going through dominance in the manufacturing sector. It’s our time to take advantage of this.” Listing opportunities India has historically missed in the areas of invention of steam engine, assembly-line production, textile, communication etc., Deepak Kumar Hota, CMD, BEML observed: “Except that India has taken some advantage of the digital revolution, everything else it has terribly missed. We should not be repeating our past mistakes now at the time of fourth industrial revolution (industry 4.0).”
Its course so far
“Therefore, Make in India is the right frame at the right time,” said R. Mukundan, Managing Director, Tata Chemicals in another panel discussion that followed the inauguration ceremony. If Muthuraman listed sectors that have been doing well like the construction, railway, insurance and medical, Mukundan segregated the sectors based on their level of performance. “While digital, FDI and petrochemicals are doing really well, automobile industry is performing poorly. Biotech, pharma and tourism are doing moderately well,” he observed.
What is stopping industries in some of the sectors from performing well? Addressing this question, Mukundan observed: “Why out of 56 Japanese companies that wanted to relocate from China, only three of them came to India? This data shows the extent of industry-friendly environment we have in India.” If complex government approval route was stated as the prime reason for India not attracting foreign companies, instability of policies was mentioned as the second-most-stated reason by MNCs. Apart from these, there are also problems related to labour such as unskilled labour, untimely delivery and cultural issues, explained panellists.
“Unskilled and unprepared labour force is unpleasant for MNCs and this has to do with our higher education system. While we are targeting to provide jobs to 100 million workforce, are we making sure that they are employable?” asked Jaimini Bhagwati, Former High Commissioner to the U.K. in his inaugural talk.
Providing an example of how to make students industry-ready, Raghavan Srinivasan, Editor, Business Line narrated how Singaporean government introduced world-class aerospace engineering curriculum years before approaching world’s best aerospace companies to set up their manufacturing units in Singapore. “They even got globally approved certifications done for their universities. That’s the way to go about. Planning requires looking at the complete chain of production,” he opined.
According to him, there is enough home talent but it’s not being utilised properly. “As a result we are lagging behind in intellectual property rights (IPRs) as well,” he added. Other reasons why India is not attracting investors might be pollution, political instability, communal conflict etc., enumerated Raghavan.
For home industries to flourish, resources should be available to them. “I don’t think we should be exporting iron ore any more,” he felt.
If MII is a smart idea for Raghavan, it’s a fine policy document for Mukundan. In the opinion of Muthuraman, there is no reason to doubt the potential of MII at all. He said: “The slowdown is mostly the effect of global market fluctuations. In fact, this slowdown helps in the long-run development of India.” Similar views were expressed by Deepak Hota.
What’s the reality?
Whereas, Rajeev Gowda, MP provided a reality check of the policy on the second day of the conference. “Growth of manufacturing sector instead of being at the intended rate of 12-13 percent, has declined miserably. In paper MII had to provide 100 million jobs, but in reality it has thrown out 20 million labourers from work in the textile industry. In the automobile sector about 3.5 lakh people have lost their jobs in 2019 alone. Besides, there have been constant lay-offs and factory shut downs. Therefore ground reality has to be juxtaposed against aspiration, only then do you see the truth,” said Gowda.
For him, manufacturing does not just include big players such as Volvo, but also micro, small and medium enterprises (MSMEs) and people being employed in these manufacturing units. “The demonetisation measure has destabilised the informal economy as they were largely cash-driven. Due to fear of lynching, leather industry in which India had competitive advantage in the global market is also badly hit.”
According to Gowda, we have missed the bus again. “Even in textile industry, countries like Vietnam and Bangladesh are outshining us,” he added.
Gowda also explained how each component of the GDP is contributing negatively. When food consumption has gone down in the rural areas, he felt that instead of cutting corporate tax, the revenue foregone could have been used for uplifting the poor.
“All the government has done is it has fixed some visible issues. Therefore, the grandiose of MII lies more as a rhetoric than a reality,” he said.
The way forward
If Mukundan proposed for recycling old industrial areas instead of grabbing agricultural lands for setting up manufacturing units, Bhagwati urged policy makers to focus on higher education in order to obtain competent labour force.
While MII is being touted as a Swadeshi movement, Narayan Ramachandran, Advisor, Takshashila Institution, observed, “as MII is manufacturing in India for the world, Indian education system should be a mix of both, desi and international.” Knowing the best of both worlds is necessary in the current times, he felt.
The conference was a timely review of the much-talked-about government policy.
