February 25, 2024

HPAS/Allied Mains 2022 Answer Writing Challenge Day 217: Model Answer

Question: What is ‘Make in India’ initiative? Has it succeeded in attaining its objectives? Examine Critically. (20 marks/400 words)

Answer:

Make in India campaign was launched by the Prime Minister of India on September 25, 2014.

The make in India program is one of the key projects of the government of India. Through the Make in India program, the government intends to:

  • Revive the hitherto lagging manufacturing sector of India to enhance the growth of the economy.
  • Encourage foreign businesses to invest in India for their manufacturing needs.
  • Improve India’s rank in ‘Ease of Doing Business index. Ease of doing business is a report published by The World Bank. It compares the Business Regulation in 190 Economies. In 2020, India’s rank in the Ease of Doing Business Index was 63.
  • Develop India into a global manufacturing hub.
  • And to boost employment opportunities in the country.

Objectives of Make in India Program

There are several targets aimed at by the Make in India Program. They are:

  • Raising the growth in the manufacturing sector to 12-14% per year.
  • Creation of 100 million additional jobs in the manufacturing sector by 2022.
  • Increasing the share of the manufacturing sector in the GDP to 25% by 2022.
  • Skill Development among the urban poor and the rural migrants to foster inclusive growth.
  • Encouraging environmentally sustainable growth.
  • Enhancing the global competitiveness of the Indian manufacturing sector.

Positive Developments under ‘Make in India’ initiative’ are as follows:

  • FDI inflow has increased 29% during the period October 2014 to December 2015 (15 months after Make in India) compared to the 15 months period prior to the launch of Make in India.
  • FDI equity inflow has increased 36%. There is an improvement in business environment with the initiatives taken to improve Ease of Doing Business under the Make in India programme.
  • This has resulted in the UNCTAD World Investment Report (WIR) 2015, in its analysis of the global trends in Foreign Direct Investment (FDI) inflows, ranking India as the third top prospective host economies for 2015-2017.
  • Frost & Sullivan has ranked India as number 1 amongst 100 countries on the growth, innovation and leadership index.
  • In 2015, a global consultancy firm namely Ernst & Young (EY) India conducted the India Attractiveness Survey 2015, where they had taken responses of 505 investors on three most attractive markets for investment. On the basis of response received from these investors and data provided by FDI Markets (a service of The Financial Times Limited), India ranked number one FDI destination in the world during the 1st half of 2015.

Various MoU’s were signed for making India a manufacturing Hub.

  • A memorandum of understanding (MoU) was signed between the Spice Group and the government of Uttar Pradesh stating that Spice would start a mobile phone manufacturing unit there, with an investment of Rs 500 crore.
  • Huawei opened a new R&D campus in Bengaluru. It had invested $170 million to establish the centre. It is also in the process of setting up a telecom hardware manufacturing plant in Chennai.
  • Foxconn announced it would invest $5 billion over five years to set up R&D and hi-tech semiconductor manufacturing facility to be set up in Maharashtra.
  • Micromax announced that it would put up three new manufacturing units in Rajasthan, Telangana and Andhra Pradesh, at a cost of Rs 300 crore ($44 million). The plants will begin functioning in 2016, and will employ 3,000-3,500 people each.
  • France-based LH Aviation signed an MoU with OIS Advanced Technologies to set up a manufacturing plant in India to manufacture drones.

Though various steps have been taken under ‘Make in India’ initiative for making India a Manufacturing Hub, but still it was not able to achieve its desired objectives. There are certain reasons which affected the ‘Make in India’ initiative success:

  • It set out too ambitious growth rates for the manufacturing sector to achieve. An annual growth rate of 12-14% is well beyond the capacity of the industrial sector.
  • The initiative brought in too many sectors into its fold. This led to a loss of policy focus. Further, it was seen as a policy devoid of any understanding of the comparative advantages of the domestic economy.
  • The uncertainties of the global economy and ever-rising trade protectionism also affected the Make in India initiative.

Apart from these reasons there were some other issues that hampered the ‘Make in India’ success.

  • 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.
  • Complicated Labour Laws: One of the major reasons behind small companies is the complicated labour regulations for plants with more than 100 employees.
  • 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.

Way forward: The govt. has launched Make in India 2.0 which focuses on 27 sectors with a special focus on ten champion sectors including; 1. capital goods, 2. auto, 3. defence, 4. pharma, 5. renewable energy, 6. biotechnology, 7. chemicals, 8. leather, 9. textiles, 10. food processing.

  • These sectors have the potential to become global champions and drive double-digit growth in manufacturing.
  • In manufacturing, the action plans are coordinated by the Department for Promotion of Industry and Internal Trade (DPIIT).
  • In services, action plans are coordinated by the Department of Commerce.
  • Under the Make in India initiative, the following industrial corridors are proposed to be created: Delhi-Mumbai Industrial Corridor, Visakhapatnam-Chennai Industrial Corridor, Bengaluru-Mumbai Economic Corridor, Amritsar-Kolkata Industrial Corridor, Chennai-Bengaluru Industrial Corridor.

Conclusion: Make in India has the potential to make India a $5 trillion economy. If measures are not taken by the Indian government to improve the FDI inflow and creating a favourable environment for the manufacturing sector, it may only be a distant dream.

Print Friendly, PDF & Email

© 2024 Civilstap Himachal Design & Development