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Make in India’ Programme

  • IASbaba
  • September 29, 2022
  • 0
Governance
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In news: Make in India’ recently completed 8 years since its inception

About the scheme: Make in India campaign was launched by the Prime Minister of India  in 2014.

Objectives of the scheme:

  • To attract foreign investment for new industrialisation and develop the already existing industry base in India to surpass that of China.
  • Target of an increase in manufacturing sector growth to 12-14% per annum over the medium term.
  • To increase the share of manufacturing sector in the country’s Gross Domestic Product from 16% to 25% by 2022.
  • To create 100 million additional jobs by 2022.
  • To promote export-led growth.

Review of ‘Make in India’:

Accomplishments:

  • Ministry of Commerce & Industry said that the program, which is aimed at self-sufficiency or being ‘aatmanirbhar’, has substantial accomplishments across 27 sectors, including strategic sectors such as manufacturing and services.

Attracting record FDI Inflows:

  • In the first year of the ‘Make in India’ scheme, FDI inflows stood at $45.15 billion.
  • The year 2021-22 recorded the highest ever FDI at $83.6 billion and India is on track to attract $100 billion FDI in the current financial year.

Steps taken to ensure ease of doing business:

  • In order to simplify the various aspects of doing business, the government has taken various steps to increase the ease of doing business in India.
    • A Phased Manufacturing Programme along with reduction in corporate taxes,
    • Public procurement orders
    • The National Single Window System (NSWS),

Improving toy exports, reducing imports:

Custom duty on toys:

  • In an attempt to reduce the import of foreign made toys and enhance India’s ability to manufacture toys domestically, the Basic Custom Duty on the import of toys was increased from 20 percent to 60 percent.
  • Initiatives such as The India Toy Fair 2021, Toycathon 2021, Toy Business League 2022 have been conducted to encourage innovation in this sector.

The growth of toy industry:

  • Export: Despite the pandemic, the Indian toy industry has grown, boasting of export of $326 million (Rs 2,601.5 crore) of toys in FY21-22, which is an increase of over 61 percent over $202 million (Rs 1,612 crore) in FY18-19.
  • Import: The import of toys in FY21-22 has reduced by 70 percent to $110 million (Rs 877.8 crore), compared to imports worth $371 million (Rs 2,960 crore) in 2018-19.

Other measures to strengthen the Make in India initiative:

Labour reforms:

  • Recent labour reforms have brought flexibility in hiring and retrenchment.

Promotion of manufacturing:

  • Steps to promote manufacturing and investments also include reduction in corporate taxes, public procurement orders and Phased Manufacturing Programme.
  • Quality control orders have been introduced to ensure quality in local manufacturing.

Production Linked Incentive (PLI) schemes:

  • As a part of the ‘Make in India’ program, the government introduced Production Linked Incentive (PLI) schemes across 14 key manufacturing sectors in 2020-21 as a big boost to the ‘Make in India’ initiative. This also included a $10-billion incentive scheme to build a semiconductor, display, design ecosystem in India.

The One-District-One-Product (ODOP) initiative:

  • It is aimed at facilitating the promotion and production of indigenous products from each district of the country and providing a global platform to the artisans and manufacturers aiming to contribute to the socio-economic growth of various regions of the country

‘Gatishakti’ programme:

  • The programme will ensure logistical efficiency in business operations through the creation of infrastructure that improves connectivity.
  • This will enable faster movement of goods and people, enhancing access to markets, hubs, and opportunities, and reducing logistics cost.

State initiatives:

  • In line with the Make in India, individual states too launched their own local initiatives, such as “Make in Odisha”, “Tamil Nadu Global Investors Meet”, “Vibrant Gujarat”, “Happening Haryana”, and “Magnetic Maharashtra”.

Issues Associated with the scheme:

  • Investment from Shell Companies: Large part of the Indian FDI is neither foreign nor direct but comes from Mauritius-based shell companies which are suspected to be investing black money from India only, which is routed via Mauritius.
  • Low Productivity: Productivity of Indian factories is low and workers have insufficient skills.
    • McKinsey report states that Indian workers in the manufacturing sector are, on average, almost four and five times less productive than their counterparts in Thailand and China.
  • Small Industrial Units: Size of the industrial units is small for attaining the desired economies of scale, investing in modern equipment, and developing supply chains.
  • Infrastructure: Electricity costs are almost the same in India and China but power outages are much higher in India.
  • Transportation: Average speeds in China are about 100 km per hour, while in India, they are about 60 km per hour. Indian railways have saturated and Indian ports have been outperformed by a lot of Asian countries.
  • Red Tapism: Bureaucratic procedures and corruption make India less attractive for investors. India has made progress in the World Bank’s Ease of Doing Business (EDB) Index, but even then, is ranked 63 among 190 countries in 2022.
  • Insufficient Rules and Regulations: Labour reforms and land acquisition laws were not completed before making attempts to attract foreign investors to Make in India.
  • Capital Outflow: In future India will have to face another external challenge in the form of capital fleeing the country. The net outflow of capital has jumped as the rupee has dropped

Way Forward:

  • The Make in India initiative has been striving to ensure that the business ecosystem in the nation is conducive for investors doing business in India and contributing to growth and development of the Nation.
  • This has been done through a range of reforms that has led to increased investment inflows as well as economic growth.
  • With this initiative at the forefront, the businesses in India are aiming that the products that are ‘Made in India’ are also ‘Made for the World,’ adhering to global standards of quality.

Source: PIB          

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