SIX YEARS HAVE PASSED SINCE THE MODI REGIME USHERED IN A NEW ERA OF INDUSTRY CENTRIC REFORMS. HOW HAVE THEY PANNED OUT? HERE'S HOW.
After sweeping the polls and ramping up a majority in the parliament, the NDA government unveiled an ambitious “Make In India” Policy in the wee hours of 2014. In the presence of India’s business tycoons, the much-hyped and heralded policy was launched with aplomb. Simply put, the main aims of the policy was to attract foreign investment and channel it to India’s burgeoning manufacturing industry to:
build world-class infrastructure
generate employment
increase exports
build resilient supply chains centered around India
emulate China’s export-led economic miracle
With such lofty ambitions, the plan was set in motion. A sector-wise plan was formulated to provide data as well as insight to prospective investors. The following 25 sectors were identified for boosting manufacturing:
A STATISTICAL NIGHTMARE
Make In India had 3 main objectives. Let’s take a look at how have they progressed:
1. Increase % share of the manufacturing industry in GDP
One of the major aims of MII was to enhance the share of the manufacturing sector in the nation’s GDP in lieu of developed nations like the USA & Germany who have a share of more than 35%. However, despite government initiatives, the share was the lowest in decades in 2019! The industrial and manufacturing sector’s share is down 250 basis points (bps) over the past five years accounting for 29.3 percent of the country’s GDP three years ago and 30 percent in 2014. This makes our country the least industrialized in Asia only ahead of Nepal & Pakistan. Also, the growth rate of industries has been decreasing.
2. To create 100 million additional jobs in the manufacturing sector by 2022
A benchmark for success in any industrial policy is how many jobs is it able to create. One such benchmark was set by the government itself. However, the numbers portray a very negative picture here as well. Honestly, no concrete figures are available on the internet despite extensive searching. The Hindu reports that “Regarding employment growth, we have witnessed questions being raised over the government’s delay in releasing data as well as its attempts to revise existing data collection mechanisms. The crux of the debate has been that employment, especially industrial employment, has not grown to keep pace with the rate of new entries into the labor market.”.
3. Increase the growth rate of the manufacturing sector to 12%-14% per annum
Another aim was to improve the annual growth rate. On observing the chart above (source RBI), we notice that initially, the growth rate enhanced but after 2015, it plummeted.
A GLIMMER OF HOPE
Make In India has not been an abject failure. The steps were in the right direction. In order to solve a problem, the first step is to acknowledge it. And the current government knows the importance of a burgeoning manufacturing sector to a developing economy. Plus, India’s performance in the mobile sector has been praiseworthy. The work of mobile phone assembly is a scarce Make-in-India success story. India had two mobile manufacturing units in 2014. By 2019, there were over 200. The number of mobile handsets produced shot up from 60 to 290 million in the same period; the value of handsets produced jumped 10 times to $30 billion. India, thus far, resorted to a strategy of import substitution with mobile phone assemblers largely catering to the low-end domestic market,
THE ROAD AHEAD
Indians have traditionally been flawless planners but poor executioners. Since the times of PC Mahalanobis to Manmohan Singh., the plans laid have been pretty spot-on as per global trends & local requirements. However, rampant corruption, red-tapism & ministerial control have impeded the progress of these plans. The Make In India program too was an initiative with the right intentions in mind. The poor manufacturing base & structural economic issues as discussed before have been the major reasons.
For India to emerge as an actual economic giant rather than a work in progress, it will have to critically enhance its manufacturing capabilities. A good industrial base is the backbone of any economy. It is said that the establishment of one factory does not only create employment for its workers but for also the surrounding eateries, vendors, municipal workers as well as the travel co-coordinator. Past colonial empires like the United Kingdom, current hegemon the United States and future superpowers like China are all heavily industrialized. To brighten up its economic prospects, India too will have to take a step in the right direction.
Make In India is now a failed attempt of a nation on the rise. It is the present, Aatmanirbhar Bharat which will determine whether India becomes a David or a Goliath. It has the demographics. It has geography. It has democracy. It has remnants of a rich bygone era. It has the will to trudge away from the difficult. It has the power to sustain & survive despite its diversity & contradictions. But does India have the ability to transform into a superpower & lead the Asian century?
Only time will tell.
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