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This article is more than 1 month old.

Whither “Make in India”?

Mini

The main aim of 'Make in India' initiative was to make India a global manufacturing hub by encouraging both multinational as well as domestic companies to manufacture their products within the country.

Whither “Make in India”?
The Prime Minister, Narendra Modi while launching the Make in India initiative scheme said, “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 to make in India.” This iterates the whole gist of the program.
The main aim of this initiative was to make India a global manufacturing hub by encouraging both multinational as well as domestic companies to manufacture their products within the country. It was declared that in 2013, India’s growth rate had fallen to its lowest level in a decade, thus putting it into the category of “Fragile Five” nations.
The main objectives of the campaign were to:
1. To transform India into a global design and manufacturing hub.
2. To introduce new initiatives for the promotion of foreign direct investment
3. To implement intellectual property rights.
4. To develop the nation’s manufacturing sector.
5. To boost the confidence of investors and manufacturers to build and invest in India.
6. To improve India’s rank on the Ease of Doing Business index.
7. To eliminate the hassles of laws and regulations in the bureaucratic process of business.
8. To promote job creation and innovation in the limits of the country.
9. To make government transparent and accountable in its work.
10. To encourage the avenues of skill development.
11. To improve the global competitiveness of the Indian manufacturing sector.
To promote the sustainability of growth:
1. To increase growth in the manufacturing sector to 12-14 percent per annum over the medium term.
2. To raise the contribution of the manufacturing sector to 25 percent of the Gross Domestic Product (GDP) from its current 16 percent.
3. To create 100 million additional jobs by 2022 in the manufacturing sector.
4. To increase domestic value addition and technological depth in the manufacturing sector.
There has been no formal evaluation (at least no such evaluation is available in public domain) of the outcomes of “Make in India” campaign that was launched world-wide at the expense of millions of Rupees.
Let us have a brief look at whether the objectives were actually achieved from the available data.
The campaign was to increase growth in the manufacturing sector to 12-14 percent over the medium term. This hasn’t happened by any stretch of imagination, even before the arrival of COVID. In fact, the actual manufacturing growth rate has been much below the targeted one
2016 : 2.8 percent
2017: 4.4 percent
2018 : 4.6 percent
2019 : 3.9 percent (Source : Statista 2021)
Poor growth in manufacturing sector got reflected in the overall GDP growth as well :
2016-17 : 8.2 percent
2017-18 : 7.2 percent
2018-19 : 6.1 percent
2019-20 : 4.2 percent (Source : GoI Data)
It is evident from the above that this particular objective of “Make in India” was missed by a long margin.
Now, let us look at whether we are on track for creating 100 million additional jobs by 2022. Thanks to COVID, it looks very unlikely. However, even before COVID arrived, the country was facing the worst unemployment crisis ever. The official data that was being released by the Ministry of Labour and Employment periodically was stopped in 2016 perhaps because it was revealing the ground reality.
Many have doubted the credibility of CMIE data but that is what we had. The CMIE Data shows that for graduates in the age group of 20-24 years, unemployment was 42 percent in 2017. It rose to 55.1 percent in 2018 and to 63.4 percent in 2019. Now, the World Bank has also endorsed the grim ground reality. The Bank has released the data for Youth Unemployment during 2019 for 181 countries. India lies even below the Congo Republic at 23 percent. Countries like Thailand (4.2 percent), Philippines (6.7 percent), China (11.0 percent) and Indonesia (13.4 percent) are well ahead.
So, what went wrong with “Make in India”?
1. The focus was almost totally on road-shows. There were grand announcements made and people travelled all over the world conveying to investors to come to India and invest. The “Make in India” lion was visible in all our embassies abroad. (I had the occasion to see one in Warsaw during my visit to Poland in my capacity as Secretary, Coal).
2. All effort was to “please” the mandarins of the World Bank to climb the ease-of-doing business ladder. It worked in the beginning as India did apparently climb the ladder and everyone went to town. Whether the business actually became easy is a million-dollar question. The whole process was a dubious one and recently, the World Bank has itself “dumped” this charade of comparing countries on the basis of ease-of-doing business.
3. There was no effort to engage intensively with the investors in India to ascertain why wasn’t investment happening here and what could possibly be the way forward. The road-show approach never revealed the ground reality as the investors didn’t have the courage to reveal the “truth” in public glare.
4. No concurrent evaluation of the scheme was done to ascertain what was going wrong to bring about a course correction. In fact, there was apparently never an admission that anything was going wrong. It was all hunky dory.
5. There were factors beyond “Make in India” that disrupted it. A well-intentioned but poorly implemented demonetization devastated the economy. Similarly, Goods and Services Tax was long overdue and eminently required but launching it without necessary preparatory work, virtually destroyed the small and medium sector.
Make in India hasn’t happened. It isn’t even a topic of discussion these days. We have moved on to the new “glitz”, “Transform India”. Yes, India needs to be transformed. We tried the “Make in India” way of transforming it. We may not admit, but we failed. So, what is the way forward?
–Anil Swarup is former Secretary, Government of India and author of the book 'Not Just A Civil Servant'. The views expressed are personal.
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