[Kurukshetra 2023 September] Make In India-Challenges Opportunities and Outcomes-Explained Pointwise
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‘Make in India’ launched on 25 September 2014 is one of the game-changing economic
initiatives of the Government of India. This timely and appropriate international marketing slogan is aimed at encouraging companies and individuals across the globe to facilitate, foster innovation, build world-class infrastructure and build a hub for manufacturing, design, and innovation in India.

What is the scope and Sectoral Coverage of Make In India?

Make in India is an initiative by the Government of India to create and encourage companies to develop, manufacture and assemble products made in India and incentivize dedicated investments into manufacturing.

Scope and Objectives

Make In India
Source-Kurukshetra

Sectoral Coverage

A total of 27 economic sectors were identified to give a big push during the entire life cycle of business activities within the respective sector.

Manufacturing Sector(15 sectors)Aerospace and Defence, Automotive and Auto
Components, Pharmaceuticals and Medical Devices,
Bio-Technology, Capital Goods, Textile and Apparels,
Chemicals and Petrochemicals, Electronics System Design and Manufacturing (ESDM), Leather & Footwear,Food Processing, Gems and Jewellery, Shipping, Railways, Construction, New and Renewable Energy.
Service Sector(12 sectors)Information Technology & Information Technology enabled Services (IT & ITeS), Tourism and Hospitality Services, Medical Value Travel, Transport and Logistics Services, Accounting and Finance Services, Audio Visual Services, Legal Services, Communication Services, Construction and Related Engineering Services, Environmental Services, Financial
Services, Education Services.

Pillars

New ProcessesThe Government of India introduced several reform measures aligned with positive parameters of
the World Bank’s ‘Ease of Doing Business (EoDB)’
with a view to enhance India’s ranking on business
facilitation through process reforms.
New InfrastructureMake in India intends to develop well-equipped industrial corridors, smart cities, world class infrastructure with state-of-the-art technology, and high-speed communication network amenities.
New SectorsMake in India identified 25 sectors. Investment gaps were removed in certain sectors, restrictions for expansion were either removed or relaxed for some other sectors, considering their growth potential and their share in national economic development.
New MindsetAttempts were made to transform
the Government’s outlook towards the industrial
growth by making it a partner in the economic
development of the country along with the
development of the corporate sector.

Reforms 

  • Guaranteeing basic production inputs – power, minerals and water at competitive prices.
  • Making modern transport, logistic, and communication infrastructure accessible.
  • Ensuring accessibility to domestic and international markets.
  • Developing entrepreneurship and improving the capacity of entrepreneurs.
  • Extending support for bringing in EoDB through access to venture capital, strong industrial delicensing and deregulating environment, etc.

What are the advantages of Make in India?

Make in India has the following advantages-

Promotes export oriented Growth- The export oriented growth model of the program will positively impact the balance of payments position and support in accumulating foreign exchange reserves. A positive balance of payments will address volatility in the global economy, especially in the post-COVID economic scenario.

India’s growth as global manufacturing hub- The holistic developmental approach under this initiative will help in achieving higher credit ratings for the country, and making India a global manufacturing hub so as to attract more and more investors to invest in India.

Increase in employment opportunities- A massive increase in employment will enhance the purchasing power of the citizen, will expand the consumer base for companies and address the problem of poverty.

Address the problem of Brain Drain- Emphasis on improved education and training
infrastructure as part of ‘Make in India’ program will ensure a skilled workforce for each of the focused sectors will help reduce brain drain.

What has been the impact of ‘make in India’?

The ‘Make in India’ initiative has had a positive impact on the economy. The following are some of the major achievements of the last 8 years:

Increase in Ease of Doing Business (EoDB) rankings- EoDB parameters have gone in favour of India during the last eight years. The industrial environment has become positive and progressive. The country’s rank in the World Bank’s EoDB ranking was 142 in 2014. As per the latest report, the World Bank has accorded India a rank 63 in 2022, indicating a rank improvement of 79 positions.

Increased FDI flows in India- FDI inflows in India which stood at US $ 45.15 billion in 2014-15 have increased continuously since then. The highest ever annual FDI inflow of 84.84 billion US$ was recorded in the financial year 2022.

Growth of Indian Agricultural Sector- Indian agriculture sector has been growing at an average annual growth rate of 4.6 per cent during 2014-15 and 2021-22. India has emerged as the net exporter of agri-products. In 2020-21, exports of agriculture and allied products from India grew by 18% over 2019-20, and agricultural exports reached a high of US $ 50.2 bn in 2021-22.

Increase in employment and GVA in manufacturing sector- As per the Eco survey 2021-22 there has been positive GVA in the manufacturing sector. The total employment in this sector has increased from 57 million in the year 2017-18 to 62.4 million in the year 2019-20, inspite of the disruptions caused by COVID-19.

Resilience of service sector- There is a resilient performance of service trade, where the total services exports grew by 48.4 billion US $ in 2021-22 over 2020-21 from 206.1 US$ billion to 254.5 US $ billion.

What are the Challenges in ‘Make in India’?

Complex Labour Laws- The biggest challenge is the labour laws and reforms in the country. The Global Rights Index (2016), published annually by the International Trade Union Confederation (ITUC), ranked India as one of the 10 worst countries for working people. Large-scale exclusions of workers from labour law, violence and arrests are the reasons for India’s poor performance.

Complex Taxation System- The complex taxation system, a huge amount of paperwork and corruption have posed challenges to Make in India.

Stringent land acquisition laws- Stringent land acquisition laws and inflexible labour regulations have made it difficult for India to attract investors in the manufacturing sector. India’s benchmark land acquisition law must be amended to make it easier to buy land for defence and development projects in the fast-growing economy, while also ensuring the rights of farmers.

Availability of Power for Industry- India is running short of power with a deficit of 5.1%. The Comptroller and Auditor General (CAG) has also recently claimed a loss of $37 billion due to lack of transparency in the allocation of the coal blocks. Greater availability of power is needed to realise the dream of the scheme.

Low Productivity- The 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.

Read More- Make in India 2.0

What Should be the way forward?

More Labour reforms- India must introduce labour reforms at earliest like raising minimum wages, providing better social security for the labour.

Simplification of Tax system- The complex taxation system, a huge amount of paperwork and corruption is a main cause of worries among the investors. An overly complex GST, which has dampened investor sentiment and created compliance burdens on SMEs need to be simplified.

Land reforms- India’s benchmark land acquisition law can be amended to make it easier to buy land for defence and development projects in the fast-growing economy, while also ensuring the rights of farmers.

Skill training- Encouraging youth to join government missions like Skill India initiative, Yuva Kaushal Kendra mission to make them available for industrial needs.

Co-operative federalism- To make the  a success, a common consensus among the states is needed. There is a need to bring the less performing states at par with the better performing ones through collaborative efforts.

Read More- Make in India The Hindu

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