Over four years since its grand launch, the Make in India programme has failed to live up to its grand promises. Does it need a re-think?
- Make in India was launched as a path-breaking initiative under the Modi government to transform India into a global manufacturing hub.
- The programme was an expression of intent to improve the manufacturing ecosystem across several areas – skilling, job creation, IPR, facilitating business, building infrastructure, etc.
- In the area of ‘Ease of Doing Business’, the government has ensured a huge improvement in India’s ranking.
- However, statistics on the ground show that the programme
hasn’t progressedmuch on most of its core objectives.
A war of words ensued between Congress President Rahul Gandhi and Railway Minister Piyush Goyal after the first Indian indigenous engineless train Vande Bharat Express, codenamed Train 18,
broke down on its maiden return journey from Varanasi. Later on, officials confirmed that it was due to skidding wheels after the train ran over a cattle (thankfully no controversy on that!).
Rahul Gandhi cited the incident to attack the Prime Minister Modi directly, suggesting that Make in India needs a serious rethink. Piyush Goyal countered that it was a shame that Rahul chose to attack the ‘hard work and ingenuity’ of Indian engineers, technicians and labourers.
Technical snags and political brownie points aside, it’s been over four years since the Make in India programme was launched on September 14, 2014, one of early ones amongst several big ticket initiatives of the Modi government. It was touted to be a major path-breaking reform aimed at transforming India into a global manufacturing hub. In retrospect of high expectations from the programme – ‘DKODING Newsline’ brings the performance report card of ‘Make in India’ :
A PROMISE OF HOLISTIC TRANSFORMATION:
Led by the Department of Industrial Policy & Promotion, the Make in India initiative aimed to increase the contribution of the manufacturing sector to 25% of GDP from its level of 16% in 2014. It sought to encourage both multinationals and domestic firms to invest in manufacturing and increase growth rates to 12-14% per annum.
‘Make in India’ imbibes several initiatives – promotion of FDI, implementation of IPRs and development of manufacturing with a focus on 25 sectors – automotive, defence, IT & BPM, food processing, biotech, electronic systems, etc. The Prime Minister Modi called on the Indian industry to ensure that manufacturing had ‘zero defect, zero effect’, implying high quality and minimum impact on the environment.
The initiative also incorporated plans for job creation, innovation, skill development and intellectual property. For promoting FDI, the government sought to improve India’s ranking on the World Bank’s ‘Ease of Doing Business’ Index.
Another crucial area was the development of industrial corridors, smart cities, state of the art technology and high-speed communication.
In a nutshell, ‘Make In India’ was a mere attempt by the government to seek an image change from just being a regulator to a facilitator but in vain – Deepak Kaistha | DKODING Newsline
THE NUMBERS TELL A DIFFERENT STORY:
In effect, the record of the current government has been
bad in terms of bringing investments. Investments have rather shown a decline to an average of Rs 16.6 trillion under Modi’s Goverment vis-a-vis UPA 1 and UPA 2. Moreover, World Bank report also states that the share of manufacturing in India’s GDP came down to 15% in 2017 from 17.4% in 2006.
Source: DKODING Intelligence
FDI has been a major success story, as it reached a peak of US$ 61 billion in 2017-18. But surprisingly, share of manufacturing in FDI was 28% under the Modi government, while it was 44% on an average under Manmohan Singh’s UPA 2. Growth rate in IIP has remained low and fluctuating – growth rate in eight core sectors (coal, crude oil, steel, cement etc.) stood at 4.9%, 3%, 4.8% and 4.2% in 2014-15, 2015-16, 2016-17 and 2017-18 respectively.
Export growth has not been impressive either. After declining for three years, it only recovered in 2017, and stands at 1.7% of global manufacturing exports, slightly higher than 1.6% in 2014.
Source: DKODING Intelligence
Job creation comes up as another major failure of ‘Make in India’ – (a political bounty for the opposition in the upcoming elections). Last year, the government admitted that it does not keep a central record of employment under ‘Make in India’. But the negative growth in job creation has been an unmissable embarrassment for the Modi personally. The leaked draft of NSSO survey said: “unemployment in 2017-18 was at a 45-year high of 6.1%. CMIE has further estimated that India
lost 11 million jobs in 2018. This has been attributed to the dual impact of demonetisation and GST”
The government aimed to skill 40 crore Indians under its Skill India programme by 2022. But a survey in November 2019 revealed that around 70% of youth in India do not even know about the government’s skill development programmes. Only around 2.5 crore Indians have received training so far, and the government is planning a major revamp to save itself from yet another enbarrassment.
- India’s overall ranking on the World Bank’s Ease of Doing Business Index from 142 in 2014 to 77 in 2018. However, that seems to have reflected largely in India’s FDI numbers rather than in actual manufacturing and exports.
- Private investment appetite and consumer demand continue to be weak. Over time, investment could pick up as the GST regime stabilises, the demonetisation shock becomes a distant memory.
low shareof manufacturing in investments clearly indicates weak interest in the sector from investments standpoint.