By Brinda Sapra
Edited by Anandita Malhotra, Senior Editor, The Indian Economist
Highlights of the Campaign
The newly elected Prime Minister, Narendra Modi officially launched the Make in India campaign on September 25th, 2014 after deliberations with the DIPP Secretary, Amitabh Kant. The recent mega initiative intends to create a hassle free, business friendly environment in order to invite investments from abroad in Indias Manufacturing Sector. The campaign was launched under the Logo of a Gir Lion, with a body of machine parts, signifying that India is on the move to become a manufacturing hub.
The aim of this move is to improve Indias ranking in World Banks Ease of doing business-index. It includes building 5 new smart cities related to high employment generating industries like textiles, leather and food processing. Tax relaxations are being planned to create workers colonies. Land and labour reforms are necessary to go hand in hand with these policies otherwise they could create hurdles in the process of achieving the goal.
LABOUR REFORMS
20 labour laws and regulations have already been identified that have to be either modified or removed entirely. For instance, it seeks to amend what is currently mandatory, i.e. to have government clearance before shutting down a factory which employs over 100 workers. This makes it difficult to exit a business and indirectly forbids expansion of units.
LAND REFORMS
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 states that the directly (land owners) or indirectly affected persons are entitled to the compensation. This puts no limit on the number of claimants for the same. It also involves making an SIA (social impact assessment) report of the people displaced by the land acquisition. The time taken to prepare assessment reports may delay government projects, such as community toilets or bus stops. The Rural Development Ministry identified a set of 19 corrections in this UPA drafted law.
The government has already identified 25 main sectors including Auto, chemicals, pharmaceuticals, IT, Aviation and tourism etc where India has the potential to become a leader. A team has been set up to collaborate with Invest India to address any queries online regarding investment and to fix appointments with the officials.
EXPECTED CHALLENGES
- India has been very strict with its procedural and regulatory clearances which automatically dissuade investors from investing here. This is one area where some efforts are essential to enable interested companies to gain an easy approval for projects.
- India should be prepared to give tax concessions to companies which wish to set up units in our country. This will eliminate competition from other countries and help India to become the manufacturing hub soon.
- India’s small and medium-sized industries can play a big role in making the country take the next big leap in manufacturing. The government must concoct strategies to give special privileges to these sectors.
- India’s Make in India campaign will be constantly compared with China’s ‘Made in China’ campaign which was launched on the same day as Indias, seeking to retain its manufacturing prowess.
- India must encourage high-tech imports, research and development (R&D) to ensure that ‘Make in India’ gives edge-to-edge competition to its Chinese counterpart.
CHINAS RESPONSE
India is number one priority, the best priority as it is second largest market after China,” said the External Communication Manager of a Chinese firm TBEA, which had invested in Gujarat.
On one hand, Modi’s ’Make in India’ campaign was warmly welcomed in China as many investors witnessed the special investment promotion event highlighting India’s investment liberalisation process. Around 250 investors, officials as well as journalists attended the event in Beijing in which Modi’s speech made in New Delhi was screened. A roundtable discussion on ‘Investing in India’s Manufacturing Sector’ was held to seek China’s in the backdrop of $20 billion commitment made during the just concluded visit of President.
On the other hand, China has simultaneously launched its Made in China campaign on the same day as India, reflecting how India has managed to keep its controversial frenemy on its toes. China intends to use tax concessions to tempt companies to upgrade their equipment and increase its efforts in R &D. Chinas aim is to promote technical improvement of companies, especially small and medium sized enterprises which have propelled it to become the 2nd largest economy on the world.
According to McKinsey and Company, Indias manufacturing sector could touch US$ 1 trillion by 2025. This is because of the immense demand in the country and the desire of multinational corporations to establish low-cost plants in India. There is potential for the sector to account for 25-30 per cent of the countrys GDP and create up to 90 million domestic jobs, by 2025.
Brinda Spara is a first year student studying Economics at Lady Shri Ram College, Delhi University. She likes to spend her time by reading books, whose genres range from social drama to thrillers to economics or by brushing up her general knowledge. She is a curious person, who wants to know more and more. She loves to participate in quizzes and paper presentations, where she gets different perspectives and views. Shes a person who doesnt talk much. An introvert, who doesnt quite fit in, but she doesnt want to.