Experts predict that, with a few economic and governmental reforms, by 2030 India will be the world’s third-largest economy. In September of 2014 the Modi Administration took a major step towards this goal with the launch of the Make In India initiative which has since garnered a great deal of momentum and press coverage along with a huge following on social media.
Make In India is a governmental effort to portray India as a manufacturing hub, and to encourage national and multinational companies to manufacture products in India. The 2014 launch was especially timely as international opinion held that the BRIC nations (of which India is one) would be experiencing an emerging markets bust. It also came at a critical juncture as China was losing its competitive advantage due to wage pressures and cost of resources for manufacturing.
The initiative breathes fresh life into the Indian growth story. It’s a confidence call to potential investors around the world and a show of national credibility that the government is strongly in support of business. It reinforces the expectations set from our extensive human capital, a growing entrepreneurial mind-set and a rapidly maturing consumer segment with disposable income.
The major focus is to create jobs and enhance skills across 25 economic sectors. It is on pace to increase manufacturing’s share of GDP, currently at 17 percent, to 25 percent by 2020 while simultaneously creating 100 million more jobs. If this target is achieved, India will be a global manufacturing powerhouse.
The sectors covered by Make In India include Information Technology and BPM, and there is an increased focus on the development of infrastructure for Information and Communication Technology (ICT) throughout the country.
Changing business environment
The Modi Administration is undertaking a number of steps to ensure that momentum doesn’t die down. The plan was kicked off with a development fund equal to $16 billion (U.S.) with an extra infusion of $1.2 billion (U.S.) for the creation of smart cities.
The government is also stepping up efforts to recruit foreign direct investment (FDI) by changing age-old rules. Under this objective, the cap for FDI was raised to 100 percent in the railway sector and 49 percent for the insurance and defence sectors. Since its launch, the FDI influx has increased by 37 percent.
Historically, India’s bureaucracy hasn’t been viewed as being favourable for business — and with good reason. To help dispel this notion, the government is trying to expedite the approvals process for new businesses and development. It has also established an online approval system for development projects, in addition to processing environmental permits and other clearances in a stream-lined manner.
It is expected that increased investment will also bring an increase in intellectual property issues. To this end, the government has begun to replace inefficient and outdated policies with new and effective legal protections.
The government strongly believes that the Make In India initiative will not succeed unless the micro-, small- and medium-sized enterprises (MSMEs) that make up a huge chunk of India’s business sector are empowered. To achieve this end, the government has set up a capital fund of INR 10,000 crores to foster innovation and wide-spread usage of state-of-the-art technology by group members.
There is also an awareness of tomorrow’s needs. Prime Minister Modi has called upon the “nation to make India the skills capital of the world.” His goal is to develop an updated and educated workforce to meet the future needs of India.
In line with this goal, the government has created the Skill India Portal — a platform to help stakeholders connect with one another by sharing relevant information catering to the development of skills in the citizens. The focus of this program is to impart manufacturing skills to the workers and prepare them to fill the expected 100 million jobs that will be created.
Since many foreign nations have multinational companies with operations in India, they have also recognized the need for a skilled Indian workforce. Foreign governments are helping push the initiative with diplomatic visits and media outreach. Japan recently pledged investments of $35 million (U.S.), and the United States another $42 million (U.S.) over the next two years.
A plethora of other developmental programs such as Digital India, Smart Cities, Atal Mission for Rejuvenation and Urban Transformation, and Start-up India are expected to contribute to making the initiative a roaring success.
The Digital India campaign in and of itself is a significant effort. The goal is to develop an investment equal to $20 billion (U.S.) for the purpose of revamping governmental processes to an e-format. The goal is to connect the entire nation so that all governmental services to the citizens are accessible via technology enabled systems.
A national fiberoptic network layout is also being conceived that will connect rural areas of the country—the FDI cap for this is 100 percent. Other aspects of Digital India include cyber cities and special economic zones to give an impetus to the IT sector. Governmental and legal reforms designed to support IT expansion include reduced tax rates, increased transfer pricing limits and updated laws concerning cyber security.
Make In India has also set a corpus of INR 20,000 crore to fund entrepreneurship in the IT sector. All these measures will positively impact India’s IT sphere and lead increased entrepreneurial interest in the sector.
Apart from the above efforts, Make In India has a dedicated team of people helping to sell it via social media. All success stories are widely touted on Facebook, Twitter, YouTube, LinkedIn and just about every other site imaginable. It has a great many followers, within three months of launching, the initiative had more than 2.1 billion social media impressions.
To further propagate the initiative, the government even sponsored a Make In India week in Mumbai — the industrial capital of the country. State wide investor summits were held to provide information to potential investors on the opportunities available in that particular geographic area.
Many potential investors got on board during the multi-sectoral display during the event. It has since become a vocal medium for the initiative to effectively showcase its achievements and gather a host of investors from multiple sectors under a single roof. During the week a magazine was also launched to further propagate word on the initiative.
Make In India promises many reforms and has started having a positive impact on India’s business environment — we’ve already moved up four ranks on the World Bank’s Ease of Doing Business parameter from 134 to 130.
In a brief span of 20 months, Make In India has become popular at home and abroad with native and foreign business leaders openly praising its accomplishments. A reference can be drawn to the recent comments by John Chambers, Cisco CEO: “If you still haven’t invested in India you may miss the bus … India will become a country that will leapfrog your counterpart in global basis and India will be a country that no longer follows what others have done but leads in terms of innovation and leadership.”