• 13 June 2024

Make in India : A Closer Look at its Advantages and Disadvantages

Sep 4, 2023

The “Make in India” campaign, launched by the Government of India, represents a visionary initiative aimed at transforming the nation into a global manufacturing powerhouse. Furthermore, with a focus on fostering innovation, job creation, and economic growth, this campaign invites domestic and international businesses to invest in India, produce locally, and contribute to the nation’s self-reliance and global competitiveness. In this introduction, we will explore the key objectives, impact, and significance of the “Make in India” campaign, as it continues to shape the nation’s economic landscape and redefine its role on the world stage.

Make in India Campaign

Need for Make in India Campaign

  • In 2013, India experienced a sharp decline in its growth rate, reaching its lowest point in a decade. This downturn led to India being classified among the ‘Fragile Five Countries.’
  • The term ‘Fragile Five’ was coined by Morgan Stanley in 2013 to describe nations overly reliant on Foreign Direct Investment (FDI) to fuel their economic growth.
  • Additionally, it’s important to note that the ‘Fragile Five’ countries encompassed Turkey, India, Brazil, Indonesia, and South Africa.
  • Generally, India’s manufacturing sector encountered various challenges. Moreover, these challenges included a generally low GDP contribution, inefficient work practices, and moreover, limited research and development capabilities.
  • Additionally, these challenges negatively impacted India’s global industrial reputation, necessitating the implementation of development measures to revitalize the manufacturing sector.

Objectives

The objectives of the Make in India Campaign are:

  • Generally, the aim is to increase the manufacturing sector’s growth rate to 12-14% annually.
  • Additionally, the goal is to create 100 million additional manufacturing jobs by 2022.
  • Moreover, there’s a target to increase the manufacturing sector’s contribution to GDP from 16% to 25% by 2025.
  • Furthermore, the objective is to attract foreign investment for industrialization and surpass China’s industry base.
  • Additionally, the focus is on promoting export-led growth and enhancing the country’s global manufacturing and investment status.

Some key initiatives taken under the campaign

The Make in India campaign, launched by the Government of India, aimed to boost manufacturing and promote investment in various sectors. Here are some key initiatives taken under the campaign:

Ease of Doing Business

The government initiated significant reforms to improve the ease of doing business in India, making it more attractive for both domestic and foreign investors.

National Investment and Manufacturing Zones (NIMZs)

Additionally, NIMZs were proposed to provide world-class infrastructure and facilities to attract investment in manufacturing sectors.

Invest India

The government set up Invest India, a national investment promotion and facilitation agency, to assist investors in navigating the investment landscape.

Industrial Corridors

The development of industrial corridors, such as the Delhi-Mumbai Industrial Corridor (DMIC) and Chennai-Bengaluru Industrial Corridor (CBIC), aimed to boost manufacturing and create jobs.

Defence Manufacturing

Additionally, special focus was given to the defense sector to encourage domestic production and reduce dependency on imports.

Digital India

The Digital India initiative aimed to improve the digital infrastructure and promote the electronics manufacturing sector.

Start-up India

Additionally, to encourage entrepreneurship and innovation, the Start-up India initiative was launched, providing support and incentives to start-ups.

Skill India

The Skill India campaign was launched to enhance the skillsets of the workforce, making them more employable in the manufacturing sector.

Smart Cities

Moreover, the development of smart cities aimed to create urban centers with modern infrastructure and manufacturing hubs.

Pharmaceuticals and Biotechnology

Furthermore, initiatives were undertaken to promote the pharmaceutical and biotechnology sectors, including the development of pharmaceutical and biotechnology zones.

Renewable Energy

The government promoted the manufacturing of renewable energy equipment, such as solar panels and wind turbines, to support clean energy initiatives.

Textiles and Garments

Special packages and incentives were offered to boost the textile and garment manufacturing sector.

Food Processing

Additionally, initiatives were taken to promote food processing industries and reduce post-harvest losses.

Automobile and Auto Components

Additionally, the automotive sector received special attention to encourage manufacturing and innovation in vehicle production and auto components.

Key Stats

  • The campaign attracted investments from companies like General Motors, Kia, SAIC Motor, PSA, and Tesla in the automobile and electric vehicle sectors.
  • India’s ranking in the Ease of Doing Business Index improved from 130th in 2016 to 63rd in 2019.
  • India emerged as the top destination globally for foreign direct investment (FDI) in 2015, with US$60.1 billion FDI.
  • Additionally, it’s worth noting that most sectors allow for 100% Foreign Direct Investment (FDI), although certain exceptions apply to sectors such as the space industry (74%), defense industry (49%), and media (26%).
  • Over ₹15.2 lakh crore (US$190 billion) worth of investment commitments and inquiries were received during the “Make in India Week” event in 2016.
  • Investment commitments worth ₹16.40 lakh crore (US$210 billion) were received between September 2014 and February 2016.
  • Investment inquiries worth ₹1.5 lakh crore (US$19 billion) were generated during the same period.

Growth in FDI

  • FDI Inflows: FDI inflows in India reached a record high of $83.6 billion in the year 2021-22.
  • FDI Sources: FDI inflows came from 101 countries and investments were made across 31 Union Territories and States in India.
  • Number of Sectors: Additionally, it’s important to note that Make in India encompasses achievements across 27 sectors, including strategic areas in both manufacturing and services.
  • Production Linked Incentive (PLI) Scheme: Moreover, it’s worth mentioning that the PLI Scheme was launched across 14 key manufacturing sectors in 2020-21.
  • Export Growth: The export of toys increased significantly, with exports reaching $326 million in FY21-22, marking a 61% increase over FY18-19.
  • Reduction in Toy Imports: Moreover, toy imports witnessed a substantial 70% decrease, totaling $110 million in FY21-22, a significant drop from the $371 million recorded in 2018-19.
  • Ease of Doing Business: India significantly improved its ranking on the Ease of Doing Business Index, making a remarkable leap from 130th place in 2016 to 63rd place in 2019. Moreover, this positive shift reflects the nation’s commitment to creating a more business-friendly environment.
  • Gatishakti Program: Additionally, the Prime Minister’s Gatishakti program has the objective of enhancing logistical efficiency and reducing logistics costs in business operations.
  • One-District-One-Product (ODOP) Initiative: The ODOP initiative focuses on promoting and producing indigenous products from each district in India.
  • Toy Industry Growth: The Indian toy industry registered remarkable growth in less than two years, with a 70% reduction in toy imports and a 63% growth in toy exports.
  • Quality Control: Initiatives such as an increase in Basic Custom Duty, Quality Control Orders, and mandatory sample testing of imported toys were implemented to improve toy quality and safety.

FDI Inflows

FDI Inflows in FY 2023

  • India achieved a record-high FDI inflow of US$83.57 billion in FY 2021-2022.
  • However, FY 2023 witnessed a decrease in FDI inflows due to global uncertainties.
  • Moreover, the total FDI inflow for FY 2023 stood at US$70.97 billion.

Top FDI Recipient Sectors in FY 2023

  • Moreover, the computer software and hardware sector garnered the most substantial FDI inflow, amounting to US$9.39 billion.
  • Moreover, the services sector also received substantial investments, amounting to US$8.70 billion.
  • Additionally, investors showed a notable preference for sectors such as trading, drugs and pharmaceuticals, the automobile industry, chemicals, and construction (infrastructure) activities when considering foreign direct investment (FDI).

Top Investor Countries in FY 2023

  • Singapore emerged as the leading source of inward FDI in India, contributing US$17.20 billion. Additionally, it was followed by Mauritius, the United States (US), the United Arab Emirates (UAE), and the Netherlands in terms of significant FDI inflows.
  • Furthermore, other notable investor countries encompassed Mauritius, the United States (US), the United Arab Emirates (UAE), and the Netherlands. Moreover, the UK, Japan, Cyprus, Cayman Islands, and Germany also made significant FDI equity inflows.
  • The United Kingdom (UK), Japan, Cyprus, Cayman Islands, and Germany also made significant FDI equity inflows.

Leading Indian States Attracting FDI in FY 2023

  • Moreover, Maharashtra solidified its status as the leading recipient of FDI, garnering a total of US$14.80 billion.
  • Additionally, Karnataka followed closely with US$10.42 billion in FDI inflows.
  • Delhi and Gujarat also attracted notable amounts of FDI, with US$7.53 billion and US$4.71 billion, respectively.
Sector FDI Inflows (in USD billions)
Computer software and hardware 9.39
Services sector 8.70
Trading 4.79
Drugs and pharmaceuticals 2.05
Automobile industry 1.90
Chemicals 1.85
Construction (infrastructure) activities 1.70
Investor Country FDI Inflows (in USD billions)
Singapore 17.20
Mauritius 6.13
United States 6.04
United Arab Emirates 3.35
Netherlands 2.49
Indian States FDI Inflows (in USD billions)
Maharashtra 14.80
Karnataka 10.42
Delhi 7.53
Gujarat 4.71

Failures

  • Slow Growth of Investment:
    • Furthermore, gross fixed capital formation in the private sector witnessed a decline, dropping from 31.3% of GDP in 2013-14 to 28.6% in 2017-18.
  • Slow Output Growth:
    • Moreover, the manufacturing sector’s industrial production exhibited limited growth, with double-digit growth rates being a rare occurrence between April 2012 and November 2019.
    • Additionally, industrial production remained at 3% or below in many months, and in some cases, it even turned negative.
  • Employment Challenges:
    • Furthermore, the unemployment rate stood at 6.1% in 2017-18.
    • However, in 2018, millions of people lost their jobs, as indicated by data from the Centre for Monitoring Indian Economy (CMIE).
  • FDI in Manufacturing:
    • Moreover, FDI in the manufacturing sector experienced periods of sluggishness, affecting the campaign’s goal of attracting foreign investments.

Also, read https://thelogicalpie.com/navigating-indias-digital-domain-exploring-internet-usage-trends-amongst-the-masses/society/

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