Make In India– The Modi Era

Make in India has been a major national programme of the Narendra Modi led government, designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best in class manufacturing infrastructure and industrial corridors in the country. The primary objective of this initiative is to attract investments from across the globe. The focus of Make in India programme has been on 25 sectors. These include automobiles, aviation, chemicals, IT & BPM, pharmaceuticals, construction, defence manufacturing, electrical machinery, food processing, textiles and garments, ports, leather, media and entertainment, wellness, mining, tourism and hospitality, railways, automobile components, renewable energy, biotechnology, space, thermal power, roads and highways, and electronics systems. 

Make in India’s outstanding success can be gauged from the fact that after the launch, India received investment commitments worth Rs. 16.40 lakh crore and investment inquiries worth Rs. 1.5 lakh crore between September 2014 to February 2016. As a result, India emerged as the top destination globally in 2015-16, for Foreign Direct Investment (FDI), surpassing the USA and China, with a record of $60.1 billion in FDI. Another $60 billion in 2016-17, and $61.96 billion in 2017-18, meant that FDI, as a percentage of GDP under the 4.5 odd years of the Modi dispensation always averaged at a very healthy 1.6-2 percent of GDP approximately. Netting in FDI of  $250 billion in 5.5 years of its tenure, the Modi government has clearly been a favourite with long term offshore investors and entities and that was never a small ask to start with, in the first place, given the poor legacy of policy paralysis, that the Modi government inherited from its predecessor, an incompetent and corrupt, the Congress-led UPA coalition. 

Coming back to Make in India again, according to the data published by the Department of Industrial Policy & Promotion (DIPP), in December 2016, industrial activity rose by 29 per cent, primarily in states like Madhya Pradesh and Maharashtra, as part of the Make In India initiative. International brands like Huawei, Tristone Flowtech, LeEco, Zopo Mobile, Panasonic, and Havells, among others, have invested in India between 2015 and 2017. Other global electronics companies like the UK-based Dyson Ltd., and the Japanese Akai, either entered or plan to enter the Indian market, including Italian bike-maker Binelli. Samsung, Xiaomi, Foxconn, Monsanto, Microsoft, Qualcomm, Oracle, Gionee, Sony Ericcson, LG, and HTC, have all increased their commitments to India after the Modi dispensation came to power in May 2014. Again, in May 2018, retail giant Walmart acquired a 77 percent stake in e-commerce major Flipkart, for a good $16 billion, with Amazon outlining plans to invest $5 billion in India in the next few years. 

Online food delivery company Swiggy raised $1 billion in its latest funding round led by the South African internet group, Naspers, while hotel aggregator OYO Rooms raised $1 billion from the likes of Softbank of Japan and America’s Sequoia Capital, among others, in the last one year.
 
Vedanta’s over Rs. 5000 crore investment in the stressed asset, Electrosteel Ltd. and $67 billion global steel behemoth, Arcelor Mittal’s decision to pump in a massive Rs. 42,000 crore to acquire Essar Steel, among others, are just a few examples of how Make in India has been giving decisive contours to the entire manufacturing process through a mix of greenfield investments, brownfield expansions, M&A deals, start-up ventures and Digital India led e-commerce businesses. More importantly, Make in India has also embraced the agri-economy wonderfully well. 

ITC’s 83,338 odd E-Choupals, covering about 5000 villages and 10 lakh farmers, are making rapid strides in improving agricultural productivity and quality of farm produce, besides risk mitigation and cost minimisation. It is important to note here, that the most dominant contribution by any government anywhere in the world, to help industry, is to weed out policy paralysis, which the erstwhile Congress-led UPA regime was infamous for. In contrast, the very essence of Modinomics has been “Minimum Government, Maximum Governance”. 

For instance, environmental clearances which used to take upwards of 600 days before the Modi government took charge, saw a turnaround time of fewer than 180 days in most cases, post-May 2014. It is for good reason, therefore, that the “Lion” on the move, is the logo of the Make in India campaign. If there is one home-grown success story of Make in India under the Modi government that needs to be commended, it is the KHADI revolution. Sales of Khadi, including solar and poly vastra, grew 24.71 percent to Rs. 2503 crore during 2017-18 as against Rs. 2007 crore in the previous fiscal, as per data by Khadi and Village Industries Commission (KVIC).  

Incredibly, the total average Khadi sale, which was Rs. 914.07 crore during the years 2004 to 2014, jumped to Rs. 1828.3 crore in merely three years after that, i.e. from 2015 to 2018, there was a phenomenal over-hundred percent increase. Moreover, with the average Khadi sale of Rs. 120.09 crore by Departmental Sales Outlets (DSOs) in the 2015-18 period, a growth of 168.24 percent has been recorded, as compared to Rs. 44.77 crore in the 2004-14 decade. As many as 375 new Khadi institutions were established after 2015 in some two-odd years, whereas the number of new Khadi institutions established in the 10 years between 2004 and 2014 was only 110, as per the KVIC, reflecting, once again, how erstwhile Congress-led regimes never capitalised on India’s core, home-grown strengths. 

Unarguably, the Make in India programme is very important for the economic growth of India as it aims at utilising the existing Indian talent base, creating additional employment opportunities and empowering the secondary and tertiary sectors, by raising the share of manufacturing from 16.8 percent in 2016-17, to 25 percent of GDP by 2025. The programme that aimed at improving India’s rank on the Ease of Doing Business index by eliminating unnecessary laws and regulations, making bureaucratic processes easier, making the government more transparent, responsive and accountable, saw India’s ranking jump by a massive 65 places from 142 in 2014, to 63 in 2019, indicating how an enabling business climate under the Modi dispensation has worked wonders. The World Bank’s electricity accessibility ranking for India, too, improved, going from the 99th position in 2014, to the 26th position, underlining the huge strides made on this front. 

Lame-duck critics who allege that the World Bank’s EODB ranking only takes into account surveys done in Mumbai and Delhi are clearly off the mark because Mumbai alone accounts for a little over 6 percent of the country’s GDP, over 10 percent of factory employment, well over 30 percent of the entire direct tax collection in India, 40 percent of foreign trade, at least 70 percent of India’s maritime trade and capital market transactions, and before GST came into effect, it accounted for over 20 percent and 60 percent of all excise and customs collections, respectively. Hence, Mumbai is a microcosm of the Make in India story in more ways than one.

Beyond Mumbai, the Modi government’s decision to transform India into an electronics manufacturing hub was sealed with the shortlisting of Ghaziabad in Uttar Pradesh, Vadodara, and Gandhinagar in Gujarat, and four cities in Maharashtra, namely, Nagpur, Nasik, Aurangabad, and Thane. Greenfield electronics clusters would be set up at Bhopal, Bhubaneswar, Hyderabad, Maheshwaram, Bhiwandi, Jabalpur, Hosur and Kakinada.  
Gautam Buddh Nagar in Noida in Uttar Pradesh is well-positioned too, to become the electronic hub of India, a reflection of how Make in India has become the progressive development mantra of even pockets that were either lesser known or deliberately ignored by the likes of “Behenji”, “Netaji” and Netaji’s inept son, who ruled the state for years together. That Uttar Pradesh, for the last few decades, under the thoroughly incompetent, erstwhile Samajwadi Party (SP) and, Bahujan Samajwadi Party (BSP) regimes, was a horribly neglected region due to lack of political will and rampant corruption and lawlessness, is well-documented. However, after the mercurial and dynamic Yogi Adityanath stormed to power in UP in 2017, the state has undergone a make-over, with some 150 plots allotted via a public lottery after which some big companies, including TCS, PayTM, and Kent, got land in Noida.

The government has got a Memorandum of Understanding (MoU), signed with Haier for Rs. 3000 crore, while VIVO has also been allotted land too. Within just 5 months of being in power, the reformist Yogi government had ground-breaking ceremonies worth Rs. 60,000 crore for a plethora of projects as part of the overall Make in India campaign, with another Rs. 4.28 lakh crore of MOUs being inked in February 2018, at the global investor summit held in the state. What a pity that a deplorably left-leaning media in India has never been able to go beyond the charismatic Yogi’s saffron robes. 

Talking of electronics, FDI in electronics manufacturing in 2016 was an all-time high of $18.36 billion. The Indian IT-electronics sector has witnessed consistent growth in terms of market-size post-2014 but challenges like high costs of power and finance, high transaction costs, a lopsided tax structure and lack of development of a healthy supply chain, under a clueless Manmohan Singh-led Congress establishment, kept India behind in electronics hardware manufacturing capabilities. Bucking that trend, the Modi government gave excise and customs duty benefits to local producers and many Information Technology Agreement (ITA) goods. Customer Premise Equipment (CPE) goods to be included under the differential duty scheme for locally made devices, and a proposal for a ‘Component Trading Hub’ to bring down logistics costs by creating a robust infrastructure for connectivity, are being worked upon. According to a report by Consumer Electronics and Appliances Manufacturers Association (CEAMA) and Frost and Sullivan, the Consumer Electronics Industry in India is projected to grow at a Compound Annual Growth Rate (CAGR) of 9.5 percent from 2018 till 2021.  

While talking about Consumer Electronics, India’s smartphone adoption is growing at a CAGR of above 23 percent and the country overtook the US in 2016 to become the world’s second-largest smartphone market by users. Components worth over $80 billion would be required for smartphones and feature phones sold in India over the next five years. Removing duties on well over 35 capital goods components, besides tax holidays, providing benefits under differential duty scheme and a facilitative, business-friendly environment for manufacturing mobile handsets, which made India the 2nd biggest mobile handset maker in the world, is a ringing endorsement of how Modi’s Make in India has truly made India a force to reckon with in the global manufacturing sweepstakes. 

The IT and electronics ministry reworked the Modified Special Incentive Package Scheme (M-SIPS) for mobile manufacturing units. To attract investments in electronics manufacturing, the M-SIPS was notified in 2012 for both new and expansion projects. The Union government approved 75 proposals worth $885 million in the first phase under M-SIPS for manufacturing in 2016. Under the CFC Scheme, the government provides 75 percent grant for the project for a minimum of seven companies. The Southern India Electronic Industries Chamber (SIEIC), together with 15 ESDM companies, which planned to establish an Electronic Common Facility Centre (CFC) in the Electronic Manufacturing Cluster of Vellore district in Tamil Nadu, through the Union Ministry of Electronics, to focus on electronics hardware manufacturing skill development, research, and development to promote electronic hardware manufacturing and an innovation centre for engineering and design, are steps in the right direction. In the later phase, the focus would be on establishing advanced electroplating for electronic industries. 

The Indian electronics industry is certainly on the right track to becoming a preferred manufacturing destination, thanks to the tremendously collaborative effort of the Make in India initiative. “I want to tell the people of the whole world: Come, Make in India. Come and manufacture in India. Go and sell in any country of the world, but manufacture here. We have the skill, talent, discipline and the desire to do something. We want to give the world an opportunity that comes, Make in India”, Prime Minister of India, Mr. Narendra Modi said while introducing the programme in his maiden Independence Day speech from the ramparts of the Red Fort on 15th August, 2014. The initiative was formally introduced on September 25, 2014, by Mr. Modi at Vigyan Bhawan, New Delhi, in the presence of business giants from India. Five years hence, Make in India has a lot to look back at and feel proud about, and a lot more to look forward to, as India, thanks to its most powerful and popular mass leader, Prime Minister Narendra Modi, who epitomizes Modinomics, is on the cusp of an industrial revolution. 

Ms Sanju Verma is an Economist, Chief Spokesperson for BJP Mumbai and Author of Best Selling Book, "Truth&Dare--The Modi Dynamic".