{"id":54311,"date":"2020-01-20T16:36:00","date_gmt":"2020-01-20T11:06:00","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=54311"},"modified":"2020-02-26T16:38:16","modified_gmt":"2020-02-26T11:08:16","slug":"7-pm-why-make-in-india-has-failed20th-january-2020","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-why-make-in-india-has-failed20th-january-2020\/","title":{"rendered":"7 PM |Why \u2018Make in India\u2019 has failed|20th January 2020"},"content":{"rendered":"\n<p><strong>Context:\n<\/strong>\u2018Make\nin India\u2019 initiative <\/p>\n\n\n\n<p><strong>Make\nin India:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The Make in India initiative was\nlaunched by Prime Minister in September 2014 as part of a wider set of\nnation-building initiatives. <\/li><li>Devised to transform India into a global\ndesign and manufacturing hub, Make in India was a response to a critical\nsituation.&nbsp;<\/li><li>The campaign aims to facilitate\ninvestment, foster innovation, enhance skill development, protect intellectual\nproperty, and build best-in-class manufacturing infrastructure in India.<\/li><li>It is being led by the Department of\nIndustrial Policy and Promotion (DIPP), Ministry of Commerce and Industry,\nGovernment of India.&nbsp;<\/li><li>The Make in India programme is very\nimportant for the&nbsp;economic growth of India&nbsp;as it aims at utilising\nthe existing Indian talent base, creating additional employment opportunities\nand empowering secondary and tertiary sector. <\/li><li>The programme also aims at improving\nIndia\u2019s rank on the Ease of Doing Business index by eliminating the unnecessary\nlaws and regulations, making bureaucratic processes easier, making the\ngovernment more transparent, responsive and accountable.<\/li><li>The focus of Make in India programme is\non 25 sectors. These include: automobiles, aviation, chemicals, IT &amp; BPM,\npharmaceuticals, construction, defence manufacturing, electrical machinery,\nfood processing, textiles and garments, ports, leather, media and\nentertainment, wellness, mining, tourism and hospitality, railways, automobile\ncomponents, renewable energy, biotechnology, space, thermal power, roads and\nhighways and electronics systems.<\/li><li><strong>Objectives:<\/strong><\/li><li>The\nprimary objective of this initiative is to attract investments from across the\nglobe and strengthen India\u2019s manufacturing sector. <\/li><li>To\nincrease the manufacturing sector\u2019s growth rate to 12-14% per annum in order to\nincrease the sector\u2019s share in the economy<\/li><li>To\ncreate 100 million additional manufacturing jobs in the economy by 2022<\/li><li>To\nensure that the manufacturing sector\u2019s contribution to GDP is increased to 25%\nby 2022 (revised to 2025) from the current 16%. <\/li><li>The\npolicy approach was to create a conducive environment for investments, develop\nmodern and efficient infrastructure, and open up new sectors for foreign\ncapital.<\/li><\/ul>\n\n\n\n<p><strong>The\nPlan to make the campaign success:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>To start a movement, you need a strategy\nthat inspires, empowers and enables in equal measure. Make in India needed a\ndifferent kind of campaign: instead of the typical statistics-laden newspaper\nadvertisements, this exercise required messaging that was informative,\nwell-packaged and most importantly, credible. <\/li><li>It had to:<\/li><li>inspire\nconfidence in India\u2019s capabilities amongst potential partners abroad, the\nIndian business community and citizens at large; <\/li><li>provide\na framework for a vast amount of technical information on 25 industry sectors; <\/li><li>reach\nout to a vast local and global audience via social media and constantly keep\nthem updated about opportunities, reforms, etc.<\/li><\/ul>\n\n\n\n<p><strong>Is\nit Successful?<\/strong><\/p>\n\n\n\n<p>As the policy\nchanges were intended to usher growth in three key variables of the\nmanufacturing sector are investments, output, and employment growth, an\nexamination of these will help us gauge the success of the policy.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Investment:\n<\/strong><\/li><li>The\nlast five years witnessed slow growth of investment in the economy. <\/li><li>Gross\nfixed capital formation of the private sector, a measure of aggregate\ninvestment, declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-14 (Economic\nSurvey 2018-19). <\/li><li>Interestingly,\nthough the public sector\u2019s share remained more or less the same during this\nperiod, the private sector\u2019s share declined from 24.2% to 21.5%. <\/li><li>Part\nof this problem can be attributed to the decline in the savings rate in the\neconomy. Household savings have declined, while the private corporate sector\u2019s\nsavings have increased. <\/li><li>Thus\nwe find a scenario where the private sector\u2019s savings have increased, but\ninvestments have decreased, despite policy measures to provide a good\ninvestment climate.<\/li><li><strong>Output\nGrowth:<\/strong><\/li><li>The\nmonthly index of industrial production pertaining to manufacturing has\nregistered double-digit growth rates only on two occasions during the period\nApril 2012 to November 2019. <\/li><li>In\nfact, data show that for a majority of the months, it was 3% or below and even\nnegative for some months. Thus, negative growth implies contraction of the\nsector.<\/li><li><strong>Employment\nGrowth: <\/strong>Employment,\nespecially industrial employment, has not grown to keep pace with the rate of\nnew entries into the labour market<\/li><\/ul>\n\n\n\n<p>Thus,\non all three counts, \u2018Make in India\u2019 has failed.<\/p>\n\n\n\n<p><strong>Reasons\nof the Failure:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>It set out too ambitious growth rates\nfor the manufacturing sector to achieve. An annual growth rate of 12-14% is\nwell beyond the capacity of the industrial sector. <\/li><li>The initiative brought in too many\nsectors into its fold. This led to a loss of policy focus. Further, it was seen\nas a policy devoid of any understanding of the comparative advantages of the\ndomestic economy. <\/li><li>The policy relied too much on foreign\ncapital for investment. Thus in the uncertainties of the global economy and\never-rising trade protectionism, the initiative was spectacularly ill-timed.<\/li><li>Other Reasons:<\/li><li><strong>Low Productivity<\/strong>:&nbsp;Productivity\nof Indian factories is low and workers have insufficient skills. McKinsey\nreport&nbsp;states that Indian workers in the manufacturing sector are, on\naverage, almost four and five times less productive than their counterparts in\nThailand and China.<\/li><li><strong>Complicated Labour Laws<\/strong>:&nbsp;One\nof the major reasons behind small companies is the complicated labour\nregulations&nbsp;for plants with more than 100 employees. Government approval\nis required under the&nbsp;Industrial Disputes Act of 1947&nbsp;before laying\noff any employees and&nbsp;the Contract Labour Act of 1970&nbsp;requires\ngovernment and employee approval for simple changes in an employee\u2019s job\ndescription or duties.<\/li><\/ul>\n\n\n\n<p><strong>Conclusion:<\/strong><\/p>\n\n\n\n<p>Make in India\nand reforms that followed have led to an improvement in \u2018Ease of Doing\nBusiness\u2019 ranking. However, investments are yet to arrive. The \u2018Make in India\u2019\nprogramme may have the potential to transform India into a manufacturing hub\nbut if we are to achieve that potential, the government would have to move\nbeyond rhetoric to actual implementation of the announced policies.<strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/opinion\/op-ed\/why-make-in-india-has-failed\/article30601269.ece\">https:\/\/www.thehindu.com\/opinion\/op-ed\/why-make-in-india-has-failed\/article30601269.ece<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: \u2018Make in India\u2019 initiative Make in India: The Make in India initiative was launched by Prime Minister in September 2014 as part of a wider set of nation-building initiatives. Devised to transform India into a global design and manufacturing hub, Make in India was a response to a critical situation.&nbsp; The campaign aims to&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-why-make-in-india-has-failed20th-january-2020\/\">Continue reading <span class=\"screen-reader-text\">7 PM |Why \u2018Make in India\u2019 has failed|20th January 2020<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,955],"tags":[],"class_list":["post-54311","post","type-post","status-publish","format-standard","hentry","category-7-pm","category-7-pm-brief-infograph","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1700400485},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/54311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=54311"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/54311\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=54311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=54311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=54311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}