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Make In India’ Framework Needs An Overhaul

An insight indicates every 1% incremental share of the global manufacturing market will add 20 million jobs, and is a threefold multiplier. Manufacturing is the new hope, and at the beginning of the curve.

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In the last decade the developed world has ‘lost’, downsized, and off shored 20 million manufacturing jobs for, and leading to productivity gains. While China has perched itself as the ‘workshop’ of the world, our share is a miniscule 2 per cent. 

An insight indicates every 1% incremental share of the global manufacturing market will add 20 million jobs, and is a threefold multiplier. Manufacturing is the new hope, and at the beginning of the curve.  

‘Make in India’ campaign, as expected was cheered and lauded, capturing everyone’s imagination. Industry envisaged this to be a comprehensive overhaul and the advent of ‘Minimum Government Maximum Governance’.

Mr. Modi timed it well, planned better, and committed fully; leaving nothing to chance. Several sectors including the holy cows like Defence, Railways, Space, etc. were ‘opened’.   Regulatory framework ‘relaxed’ infrastructure corridors off the drawing board. Focus on ‘ease’ of doing business enhanced credibility. The states vied, persuading the industry to invest and ‘make’ in their state. 

However, the   campaign is out of square with the ground realities and inherent challenge. 

‘Slowing’ China is correlated to India’s arrival as the ‘factory’ to the world and challenging China’s dominant position. This is far from the truth. Leather and footwear business moving to Bangladesh and Vietnam are a case in point. 

Our competition is not China. Even a slowing China adds in India’s GDP every three years. 

The government needs to appreciate that modern manufacturing necessitates specialised and cutting-edge technology. Quality is the currency to compete. The key feature is its dependence on capital & skill as against unskilled labour and low capital. This precisely is the main challenge. 

Our bane is a serious shortage of capital and much needed technical expertise. ‘Investment’ in poorly planned, badly implemented upskilling   hasn’t helped. Similarly, debt laden, precariously leveraged industry causing slower traction, triggers a vicious cycle of increasing NPA, credit ‘trimming’ and choking industry. Eventually. 

Also, our response to currency devaluations and dumping is mostly inadequate, often timid. Infrastructure is the big elephant in the room. Merely dismantling the obsolete and obstructive frameworks & bottlenecks will not help. More is needed; amongst them, fostering innovation, upskilling, and global scale infrastructure etc. 

Revitalising the manufacturing sector will need a holistic policy framework and a healthy ecosystem that enables regulatory clearances, eases stringent procedures, equitable land acquisition, speeds implementation and rewards innovation & outcomes. Bankruptcy Act and GST is value enhancing, yet not robust, not holistic enough.

More is needed on the ‘softer’ side. Our ability to insight, design and deliver, as well as the flexibility & competency of the bureaucracy is key to reshaping our world. Prevalent labour laws, complex tax structure, and bureaucratic hassles only diminish competitiveness. 

Problems are real, and the efforts; the L move i.e. two steps forward and one sideway.

Sadly, leadership alone will not do it.

Robust macroeconomic policies, sustained and multiple directional action is required to realise the goal of ‘Make in India’.

The goal should be to establish India as a global hub for manufacturing, design and innovation, linking this as an instrument for foreign investment to turn around the manufacturing sector. The larger goal should be to kick-start the economy, fuel economic growth, capitalise on the demographic dividend and propel India in the league of developed nations.


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