Make In India initiative | Representative image | Photo courtesy: Special arrangement
The Make in India initiative, a flagship program launched by the Government of India in September 2014, aimed to transform India into a global manufacturing hub and promote domestic manufacturing across various sectors. As the initiative approaches nearly a decade since its launch, it has yet to be able to make a significant impact.
Dr Ajay Sahai, Director General & CEO of Federation of Indian Exports Organisation (FIEO) speaks to Pragynesh.
Bhardwaj adds, “For Make in India to succeed, we must substantially change our public procurement policy both in the state and the central government. They have kept exaggerated value additions like 25 to 40 per cent. The MSMEs face several challenges in meeting the value addition requirements. Only MNCs have the competency to achieve this. The requirements should be realistic and reflective of the capabilities and limitations of MSMEs. The Make in India policy has to be flexible so that different sectors can benefit from it. For MSMEs, it is challenging and cumbersome. Only large companies can lobby with government departments and get the value addition requirements changed. We need to sit and rework the policy".
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The idea behind the Make in India initiative was to transform India into a global manufacturing hub. The focus was on attracting both domestic and foreign investment in the manufacturing sector and promoting the production of goods within India, and also drive economic growth by increasing the share of manufacturing in India’s GDP. However, despite its goals and efforts, the policy has faced several challenges that have significantly hindered its ability to increase manufacturing in India.
According to Amit Basole, Head of the Centre for Sustainable Employment and Associate Professor of Economics at Azim Premji University, a significant obstacle to evaluating Make in India is the lack of available data. This absence of data presents a significant challenge because it hinders our ability to assess the initiative’s effectiveness, identify areas of success or failure, and develop solutions to existing problems. In addition to evaluating the overall effectiveness of Make in India, the absence of data also hampers our ability to identify specific sectors or regions that have benefitted the most or faced the most challenges. This information is crucial for policymakers and stakeholders to allocate resources effectively, target interventions, and address any imbalances that may exist within the initiative.
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Basole points out that while there is an annual survey of industries in the manufacturing sector, the data it provides typically has a lag of a few years. This delay in obtaining relevant information makes it difficult to analyse the real-time impact of Make in India on the manufacturing sector. In order to ensure the initiative’s success, it is crucial to continually monitor and evaluate policies, making adjustments as necessary. However, without timely data, it becomes challenging to adopt evidence-based policymaking and accurately measure the outcomes of such initiatives.
“To ensure the success of the Make in India policy, it is essential to subsidise and promote domestic manufacturing. However, this must be done in conjunction with other initiatives. A significant focus should be placed on investing in local infrastructure. Additionally, addressing issues such as credit accessibility is crucial, as small firms are often excluded from obtaining the necessary funding. Another critical challenge to tackle is the quality of the workforce. Many graduates entering the job market are not adequately prepared, requiring companies to invest additional time training them. To make the Make in India policy truly effective, there is a considerable amount of work that needs to be done,” affirms Basole.
The Make in India initiative aimed to simplify regulations and attract investment, but there have been concerns about the actual implementation on the ground. Bureaucratic hurdles, complex regulatory processes, and inconsistent enforcement have acted as obstacles that hindered the ease of doing business in India. The policy also faced challenges in addressing skill gaps and ensuring the availability of a skilled labour force. Along with this, the complex tax system in India has only compounded the problem, not to mention the other issues like the pandemic and the global economic factors that have influenced the outcomes of the Make in India initiative.