‘Make in India’, at present is ‘work in progress’

June 29, 2016 11:45 am

Draught conditions not only affect the agrarian businesses, but also adversely impact the manufacturing industry and shortfall of water supply also affects the generation of steady electricity and power supply which hampers manufacturing.Vikas Khanvelkar, Managing Director, DesignTech Systems Ltd
  The ambitious campaign ‘Make in India’ was launched by Prime Minister in 2014 seemed extremely promising. The idea behind the thought was to encourage more Foreign Direct Investments (FDIs) in India while also helping the indigenous manufacturing industry to emerge stronger than before. The campaign is aimed at making India the manufacturing hub. India up until last year was majorly perceived as prime services exporter by the foreign industry. India was also looked at as a ‘consumer nation’. All the MNCs that are into product development, would get their products manufactured in China and India with the world’s highest middle class population with increasing disposable income was looked at as a nation of consumers and the foreign companies would hence market and sale their products heavily in India. The money in turn left the country and all the parties who profited out of it were not present in India. With this campaign the government wanted an image makeover for India, making it also an ideal destination for manufacturing which would be a big thrust to Indian economy, increase employment and also add to the GDP. However, it is important to understand that, only the launch of campaign will not guarantee its success. The supportive policy creations and law formations, and constitutional decisions also play a crucial role in making the campaign successful. For e.g. on one hand government wants to increase FDI, while on the other hand they have not been able to implement or introduce ‘ease of doing business’ policies. With complicated and ambiguous taxation structure, the foreign companies would hesitate investing in India. GST would go a long way in simplifying that. But delay in implementing GST would certainly affect the success of ‘Make in India’ campaign.
Infrastructure is not yet completely in place to support heavy industries. Draught conditions not only affect the agrarian businesses, but also adversely impact the manufacturing industry and shortfall of water supply also affects the generation of steady electricity and power supply which hampers manufacturing. This severely impacts manufacturing industry. The government is investing tremendously in building necessary infrastructure and looking for ways to harvest alternative energy such as solar energy and establish steady power supply; however the real positive impact of the same will be felt once there is strong infrastructure in place.
Defence sector is the one with highest spending capacity and they invest heavily and consistently in upgrading military technology and equipment. Most of this is purchased from other nations. 30 per cent offset policy makes the foreign suppliers to make 30 per cent in India. But large portion of this offset remains unused as Indian companies are not able to handle the demanding requirements of the foreign supplier.
Another sector, which also witnesses heavy capital investment is railways. Building robust rail network and wagons indigenously would also provide the much-needed boost to the manufacturing sector.
The automotive sector in India is a big part of manufacturing industry. However, the vehicles cost have gone up and interest costs were higher and this resulted in slow down of the market. The recent interest cuts should help in correcting this situation partially. That will give momentum to auto OEM as well as components manufacturing.
The manufacturing sector in India is yet to see big gains from ‘Make in India’ campaign. But government is moving slowly but steadily in the right direction.
Tax benefits, a boost to promote new businessesTax benefits and exemptions for the new start-ups is a great boost to promote new businesses. This is something companies can make the most of. Easier company formation procedures are good news for the newly formed companies and businesses. ‘Skill India’ campaign which aims at creating trained manpower in various domains and industries is also a huge advantage as companies can now benefit from the availability of trained manpower for conducting specialised jobs and work. Indian MSME and start-up companies can leverage these factors to look out for global foot print and aggressively go after export markets to grow the manufacturing volumes in India.
Various factors make India preferred destinationIn addition to provide one of the largest captive market and very large percentage of younger population, India also has a huge pool of trained manpower, engineers and workers ready to work at competitive wages and salaries. Availability of trained manpower is the backbone for any industry, and then be it be manufacturing, services, or hospitality. Unlike China, India is a democratic country with a stable government having strong laws and regulations pertaining to conducting business which gives confidence to the investing company. With higher FDI permits and economy further opening up to the overseas based multi nationals, the foreign companies are looking at India as a preferred destination to set up their businesses. Government focusing on building infrastructure, trying to simplify the norms and regulations for conducting businesses, launching special economic zones to the manufacturing industry while making land available to them at lucrative prices, the overseas companies can see that government is serious about providing them the conducive environment in which they can flourish and grow their businesses. Moreover, India is the fastest growing economy with a stable GDP growth each year of about 7 – 8 per cent annually. Attractive exchange rate i.e. lower value of Indian rupee against dollar, higher PPP (Purchase Power Parity) index, makes investing in India a smart decision for the overseas companies. These factors are making India a preferred destination for global investors.
Major roadblocksInability to implement policies that will further the ‘ease of doing business in India’ such as GST is a major roadblock. Lack of robust infrastructure is the second big drawback. Attracting higher FDI is great, but this campaign will really succeed when we see more growth in indigenous manufacturing sector. The indigenous industry is not showing any strong or visible signs of recovery.
DesignTech’s initiative in line with ‘Make in India’DesignTech Systems offers product design and development services. It helps Indian companies to be globally competitive and innovative by providing products and services to reduce its product design cycle times and by helping them carry out optimum design through value engineering. This will help Indian companies succeed and make the ‘Make in India’ campaign succeed. The company had set-up its booth at Hannover Messe, Germany last year to promote its services offerings. This is the same show that the Indian Prime Minister inaugurated last year in May. It also promoted its services through various trade magazines in Germany. DesignTech has been participating in many trade shows in United States for the past 5 years. It has even formed DesignTech Systems LLC in USA and is planning to launch full-fledged operations based out of its office in the States. It has also tied up with a consultancy firm in Germany that will be assisting it to promote and propagate its product engineering services in Germany. DesignTech is setting up Centres of excellence along with Siemens PLM in Andhra Pradesh and Gujarat for creating skilled manpower for helping the industry and students.