A Decade of ‘Make in India’ initiative
- The ‘Make in India’ initiative, launched on September 25, 2014, to make India a global manufacturing hub, has completed a decade.
‘Make in India ‘initiative:
- The campaign was launched to facilitate investment, promote innovation and skill development, protect intellectual property and create the best manufacturing infrastructure.
Objective:
- Increase the growth rate of the manufacturing sector to 12-14% per annum.
- Creation of 100 million additional manufacturing jobs by 2022 (revised date 2025).
- Increase the contribution of the manufacturing sector to 25% of GDP by 2025.
Pillars of ‘Make in India’:
The new processes:
- Under this, measures were implemented to improve the business environment for startups and established enterprises with ‘ease of doing business’ being considered important for entrepreneurship.
New Infrastructure:
- The Government gave priority to the development of industrial corridors and smart cities to create world class infrastructure.
- It also promoted innovation and research through streamlined registration systems and improved Intellectual Property Rights (IPR) infrastructure.
The new area:
- Foreign direct investment (FDI) was facilitated in various sectors including defence production, insurance, medical devices, manufacturing and railway infrastructure.
New mindset:
- Under this, the government played the role of a facilitator rather than a regulator and promoted partnerships with industries to accelerate the economic growth of the country.
Make in India 2.0:
- The ongoing “Make in India 2.0” phase (comprising 27 sectors) is strengthening India’s role as a key player in the global manufacturing sector with the furtherance of this programme.
Made in China 2025:
- The initiative aims to transform China’s economy from a low-cost manufacturing base to a producer of high-value products and services.
The objectives of this programme are:
- Increase the share of domestically sourced staples from 40% in 2020 to 70% in 2025.
- Achieving technological breakthroughs in 10 key areas, including semiconductors, aerospace and robotics.
- Reduce energy and resource consumption.
- Develop globally competitive firms and industrial hubs.
Key steps taken to enable Make in India:
Production Linked Incentive (PLI) Schemes:
- The PLI schemes are aimed at boosting domestic manufacturing and exports by covering 14 key sectors.
- Progress till July 2024: About 8 lakh jobs created with total investment reaching Rs. 1.23 lakh crore.
PM GatiShakti:
- It was launched with an aim to achieve a US $5 trillion economy by the year 2025.
- The initiative focuses on setting up multimodal and last-mile connectivity infrastructure to boost economic growth.
- The initiative is based on seven primary drivers: Railways, roads, ports, waterways, airports, mass transport and logistics infrastructure.
Semiconductor ecosystem development:
- The Semicon India programme was approved in 2021 to develop a sustainable semiconductor and display ecosystem.
National Logistics Policy (NLP):
- It was launched to boost India’s logistics sector through advanced technology, better processes and skilled manpower.
- The goals are to reduce logistics costs, improve India’s Logistics Performance Index (LPI) ranking to top 25 by 2030, and develop a data-driven decision support system.
Industrialization and Urbanization:
- The National Industrial Corridor Development Programme is India’s flagship infrastructure initiative aimed at developing “smart cities” and advanced industrial hubs.
Startup India:
- It was launched to support entrepreneurs, build a strong startup ecosystem and transform India into a job-creating nation instead of jobseekers.
- As of September 2024, India has the third largest startup ecosystem globally with 148,931 DPIIT recognized startups, through which more than 15.5 lakh direct jobs have been created.
Tax Reforms:
- The Goods and Services Tax (GST) is an important reform in India’s tax system.
Unified Payment Interface:
- UPI has a share of 46% in real-time payments globally, highlighting its key role in digital finance.
- About Rs 81 lakh crore worth of transactions were facilitated by UPI from April to July 2024, which reflects its growing consumer confidence.
Key achievements under Make in India:
Global Supply of Vaccination:
- India played the role of a leading exporter by supplying nearly 60% of vaccines globally with achieving record COVID-19 vaccination coverage with the help of indigenous vaccines.
Vande Bharat trains:
- It is India’s first indigenous semi-high-speed train which is an example of ‘Make in India’ initiative.
- At present, 102 services (51 trains) are demonstrating the progress in rail technology with enhanced connectivity.
Achievements of Defence Production:
- The commissioning of India’s first indigenously built aircraft carrier INS Vikrant is a symbol of progress towards self-reliance in defence.
- Exports to more than 90 countries with defence production reaching Rs. 1.27 lakh crore in 2023-24.
Growth in Electronics Sector:
- India’s electronics sector has expanded to US $155 billion by FY23 with production almost doubling from FY17. Mobile phones account for 43% of this production, making India the second largest mobile manufacturer globally.
Exports:
- Merchandise: In FY 2023-24, their exports reached US $437.06 billion.
- Shoes for the defense sector: ‘Made in Bihar ‘shoes have been inducted into the Russian Army.
- Kashmir willow bats: These bats have gained international popularity, reflecting India’s craftsmanship and influence in cricket.
- Amul expands internationally: Amul has launched its dairy products in the US, underlining the global importance of Indian dairy.
- Employment in the textile industry: About 14.5 crore jobs have been created in the textile sector.
- The production of toys: About 400 million toys are produced in India every year and 10 new toys are manufactured every second.
Challenges related to Make in India programme:
Global Manufacturing Index:
- As of 2023, India has been ranked 5th in the Global Manufacturing Index (behind countries like China and USA), highlighting the need for competitiveness.
Manufacturing’s contribution to GDP:
- Manufacturing sector contributed only about 17% to India’s GDP in FY 2022-23, highlighting the need for policies that stimulate growth in the sector.
- However, substantial improvements are required to reach the target of 25% contribution by 2025.
Lack of skill development:
- The India Skills Report, 2024 reveals that nearly 60% of India’s workforce lacks relevant skills for manufacturing employment, hampering the potential growth of the sector.
Challenges in the supply chain:
- The COVID-19 pandemic has exposed the vulnerabilities of global supply chains, impacting India’s manufacturing landscape.
- A shift towards localisation of supply chains is necessary but it is still underdeveloped.
The investment objectives:
- The government has set a target of attracting US $100 billion investment in the manufacturing sector by 2025.
- By 2023, only US $23 billion of investment has been achieved, highlighting the gap between the goal and reality.
Innovation and R & D:
- India’s R & D expenditure to GDP ratio is 0.7%, which is much lower than that of major economies and well below the global average (1.8%).
Solution:
The simplification of regulations:
- Bureaucratic procedures and labour laws should be simplified to create a business-friendly environment.
- For example, in India, the four labour codes passed in 2019 and 2020 have not yet been implemented.
Investments in infrastructure:
- Transport networks and logistics systems should be upgraded to improve manufacturing efficiency.
Skill Development Programmes:
- Targeted skill development initiatives should be implemented to address the skill gaps in the workforce.
- In countries like South Korea, where 90% of the population is skilled, India must take initiatives as per the requirement of the industry.
Encouraging investment in R & D:
- Innovation should be promoted by increasing investment in R & D including tax incentives.
Promoting Local Supply Chains:
- Domestic supply chains should be strengthened to reduce dependence on imports and increase adaptation.
Promoting trade relations with foreign countries:
- Trade relations should be promoted to attract foreign investment and facilitate technology transfer.
- The Economic Survey for 2023-24 shows that India can benefit from investments from China by attracting FDI from China.
Monitoring and Evaluation:
- Establish a framework for monitoring the impact of the initiatives taken along with identifying the related constraints and areas of improvement.
