- February 17, 2019
- Posted by: Vishnu Krishna
- Category: Manufacturing
It’s been a little over 4 years and a half since the Indian Prime Minister Narendra Modi formally launched the Make in India campaign. As India heads into the next General Election, the jury is out on whether the ‘Make in India’ campaign was successful or not. Politicians, Statisticians, Entrepreneurs, Office goers, Students and virtually everyone else has an opinion on this. Mostly the opinions are not based on hard facts, rather more on sporadic good or bad personal experiences and political preferences.
Make in India – Success or Failure
I feel the truth on the effectiveness lies somewhere between hard facts and emotional arguments.
There is ample data in the public domain to suggest that manufacturing activities and foreign direct investment (FDI) have picked up steadily since 2014 (despite the speed breaker of demonetisation in November 2016 & GST introduction in July 2017). Take, for example, the mobile handsets industry sector. By March 2019, India shall be producing 290 million sets per year and climbing. More than 120 new manufacturing units were set up in past four years. In 2014, India was locally producing only 22% of its domestic requirements. In comparison to that, today it is close to meeting its requirements almost completely through domestic production. Last year, India overtook USA to be the second largest smartphone market after China.
However, while the mobile industry sector is an extremely successful example, several other sectors have found it very difficult to grow. Heavy industries like steel and mining, continue to lag behind. So, why this disparity?
Here’s the brutal truth.
While the Government has done to recover well from the disastrous introduction of GST by cutting red tapism, catching global attention, making the interface between business and bureaucracy friendlier & more accountable (on the Government side), it has clearly not invested enough in human capital and labour reforms. India’s literacy rate still trails China’s by a big difference. Just 2% of Indian blue-collared workforce have qualified for certificates documenting their mastery of professional skills compared with about 70% of workers in Europe and 80%-90% in East Asian countries like Japan and South Korea. Three-quarters of India’s manufacturing output comes from small and medium scale enterprises (SMEs) which feel largely sidelined. On the labour front – we still remain the India of the 70s, 80s and 90s.
Clearly, a lot more needs to be done. Said that, in a vibrant (read complex) and diverse economy like India any national level programme takes years (if not decades) to bear fruit that too after a successful and uniform implementation. In that sense, 5 years term of a ‘Pro Make in India Government’ is nothing more than a blip on the radar. To observe the effects at least 3 maybe 4 terms of government in terms of political cycle is necessary for implementation.
So while political pundits argue on Make in India’s success or failure – it must be understood that we are at a very early stage. The changing course will only deviate us from our ultimate goal of being an economic superpower.
Make in India should be allowed to happen. This is the responsibility of every educated, tax-paying citizen of this country.