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“Made in India” – Making India a manufacturing hub

“Come make in India. Be it plastics or cars or satellites or agricultural products, come make in India. Sell in any country of the world but manufacture here. We have got skill, talent, discipline, and determination to do something.”  This is an excerpt from Narendra Modi’s maiden Independence Day speech from the ramparts of Red fort.

Is it an ephemeral euphoria or the herald of new India? Is it the genesis of the new world leader or just another political gimmick? Considering paltry record of efficacy of implementation and enactment of Indian policies, does it become nugatory to rely on grandiose statements?

The sluggish pace of manufacturing sector’s growth has always left us at the mercy of imports. As per the World Bank, India’s724c-indian global hub manufacturing sector contributed 13% to its economic output in 2013 which is way below than even the neighboring countries as Pakistan and Bangladesh. Consider the past NDA regime (1999-2003), imports grew by 3%, exports grew by 4% and manufacturing jobs increased by 1% on average or UPA rule, (2004-2011), imports grew by 24% on average, exports grew by 21% and manufacturing jobs increased by 7% on average, thus we can infer that the picture in both the regimes goes unaltered considering the time varying factors.

Now the conundrum is, this open invitation from the lectern, urging the world powers to make India, a manufacturing hub is a reverie of Modi’s mind or an accomplishable vision?
Modi’s 13 year tenure as Gujarat chief minister is a promulgating feat, when national GDP was lingering at 7.2 percent, the state’s GDP growth averaged at 8.9 percent.  As the chief minister he earned the credibility as a man who can bring change, of which India is at dire need. This announcement of urging world to make India a manufacturing hub came at a time when the global manufacturers are looking for an alter native to china. So, the world momentum is swinging, will we be able to grab the opportunity and bring the ball in our court?

 The moot point, comes out is how can we lure the world to realize the dream of made in India. Rolling the red carpet without ushers is pointless. One retrospective change involved in Vodafone case or the foray involved in land acquisition in India is enough to repel the bunch.

Availability of abundance of labor but with low labor productivity, availability of land but acquisition is not a dime a dozen and everything is stagnant except laws, retrospective change may occur. This is the picture of situation in India today, so a languid change will not sustain the requirements of foreign manufacturers.

 We need to tweak the ecosystem, making it pro investment and pro industry growth. Modest changes in labor law and aim to harness the demographic dividend through the announcement of the launch of a national Multi-Skill programme called “Skill India.” the government has been able to capture the sentiments but the time has come to enact and enforce the announcements of reformative budget 2014. Gap in labor productivity between large and small size groups of India is 8:1 which is large and clearly enunciates that investment in upgrading the skills is very low in small size groups which are abundant in the country. India’s rigid and very comprehensive labor laws have acted as the barrier. India may suffer the consequences of strong worker protective laws as it deter the giant foreign manufacturers to flock to India and make something. Land acquisition in India is a war in itself.

India has to come up with plausible and credible pro corporate industry laws, rather than beating around the bush through announcements and should avoid tug of war on such issues with opposition such as the recent uncongenial manner of dealing with issue of raising the FDI cap in insurance sector.

Another issue of paramount concern is avoiding the defective production. Modi has said that manufacturing industry must also be responsible for zero defect and zero effect on environment. Defective production is clearly wastage of resources as well as gives a bad name to the country.  To raise the bar of quality of production is also an issue of equal prominence. This is the factor which can pave the way for India as global quality manufacturer of goods. But considering the dismal performance of manufacturing sector growth, the issue of quality and zero defects takes a back seat.  Need of the hour is increasing the manufacturing sector growth by all our means.

Encouraging others to come to manufacture in India is appreciable but India should keenly work in retaining the Indian manufacturers too. If for an Indian company, land acquisition is a pipedream involving legal disputes and public foray (Tata –Singur Case), how can we take foreign manufacturers in confidence? With the current trend we can’t cut the mustard, India has to build an ecosystem where the three Ls i.e. labor, law and land are skilled, stable and peacefully acquirable.

India has to emphasize in making the “make in India” a piece of cake for one and all then only we can be assured of real change rather than becoming just a piece of reverie.

By: Preeti Kumari

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