A presentation by a U.S. based advertising agency, Wieden Kennedy, who designed the much talked about ”industrial-wheels-lion-silhouette “mascot later, with first slide reading “Industrial Revolution Part 2” was taken to the Prime Minister Narendra Modi by Department of Industrial Policy and Promotion Secretary Amitabh Kant. The presentation along with the promising nature of the project got the Prime Minister’s attention, and the campaign,initially started for investments mainly pushing for manufacturing was taken to another level after its instigation.
Why Make in India(MII)?
Dr. Manmohan Singh once stated,” Manufacturing has to be the sponge which absorbs people who need to move out of agriculture in pursuit of higher incomes. I do not accept the proposition that India can skip the manufacturing stage of development and go from being an agrarian society directly to becoming a services and knowledge-based society.”
The U.S. Census Bureau predicted that by 2025,India will surpass China as the world’s largest country, with a majority of those in the working age category.And this working age category needs “work” in their hands.Hence the government is pushing to lure the manufacturers that can create millions of jobs,thus taking advantage of the demographic dividend.
Roadblocks in MII:
Poor Infrastructure and Transportation
“Today, it takes 14 days for goods to reach the ports in west India from the north. (Once) The corridor will be ready in 2018, goods will reach the ports in 14 hours,” said DIPP Secretary at a seminar by FICCI. The corridor in question is the Delhi-Mumbai Industrial Corridor. This is a striking example of how efficient infrastructure and speedy transportation play a major role in manufacturing sector. Infrastructure creates job opportunities along the added advantage of facilitating faster mobility of the required raw materials across the length and breadth of the country.
Land acquisition issues
Scarcity of land and complications faced in acquiring them has proved to be a dampening problem over the MII initiative.While a lot of hours and adjournments have been put into the parliament over the proposed amendments which were termed to be “pro-development”,there hasn’t been clarity on the the final outcome as the bill is struck in the house.Any industry or firm,if desires to set up their branch in a place,the first thing they require is adequate land.This is the exact reason why many companies,even some India-based shy away from setting their businesses here in India and prefer foreign locations.This robs us of a big pool of employment sector along with profits that arise by getting what we want in our own backyard rather than importing it.
High Burden of Taxation and Excessive Red Tape
The country requires an ecosystem that fosters FDI and the tax obligations are eroding the very ecosystem and hampering the growth. Taxes and stringent laws are,no doubt beneficial for smooth business transaction however,the problem starts when the very rules framed after elaborate debate and dialogue are twisted and turned, and applied retrospectively. A combination of indirect taxes raises both the tax burden as well as administration costs of the investing companies,which was highlighted by the 2015 DBS which revealed that Indian firms’ total tax obligations are among the highest. In the fag end of its 10 year rule of UPA government,new investments had come to a halt and projects worth millions of rupees were turning unfeasible since majority of them were caught in extensive red tapism. Thus to avoid a repeat of that in MII initiative, the regulations and the excessive bureaucracy should be eased up to smooth bottlenecks for businesses.
“You and I come by road or rail, but economists travel on infrastructure.” Margaret Thatcher.
And along with them economies thrive on the rate of infrastructure.A glaring example can be that of China, where the rate was expanded so much that some reports claimed the government overspent in the sector. But nevertheless, the Chinese economy flourished. India will invest a trillion dollars over the coming years in improving infrastructure. Stimulating investments in basic manufacturing materials such as cement, steel and also in construction equipment, locomotives, power generation equipment would be the first step. Everything we install should be “Made in India”.
The formation of the National Industrial Corridors Authority along with labor reforms are helping overcome critical constraints in acquiring land. Action has been taken to remove regulatory uncertainty by passing law to streamline land acquisition.A perfect paradigm:Konkan Railway-A herculean task,laying of rail tracks through the challenging terrains of Western ghats was faced with an even more strenuous task of acquiring lands owned up by generations. Negotiating with roughly 43,000 landowners with government or railway jobs,government started convincing people to give up their lands.With many,envisaging the importance of the project,agreeing to let go of their acres of land,the complete process was completed in about year’s time,with the whole project wrapping up in a record six years period!
The Goods and Services Tax(GST)whose clearance has been marred with controversies in the Parliament can prove to a boon for the intricate web of tax reforms.The many faces of indirect taxes which affect the businesses, especially the small and medium enterprises (SMEs) can be curbed by implementing GST.In the recently concluded Make In India Week in Mumbai,a placard read-“Red Carpet instead of Red Tape”.That is exactly what is needed so that the foreign companies face no complications in setting up industries in here which in turn creates jobs and aims at skill enhancement.
After 16 months since its launch on 25th Sept at Vigyan Bhawan,Make in India is equivalent to a extravagantly decorated and hugely talked-about gift hamper with the insides still to be revealed! Having said that, this is a efficacious step towards realizing the “Indian Dream” of employment and seeing India as an economic hub, going neck to neck with the West and China. The dream could become a reality if the investments and actions are initiated and channeled properly and efficiently. Implementation is the key to open up the closet full of policies that will revolutionize India beyond imagination!