Business Strategy

Make In India – To Revive the Manufacturing Sector of India

Make In India – To Revive the Manufacturing Sector of India
Make In India – To Revive the Manufacturing Sector of India

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Prime Minister Narendra Modi wants India’s companies to embrace their homeland as a manufacturing base. His policy initiative called “Make in India” is a step towards enticing Indian companies to promote manufacturing on the Indian soil rather than going to other countries for the same. This pitch first came in from one of the most influential Prime Ministers of all time in the country on the independence-day speech.

Also Read: Modi’s ‘Make In India’ Campaign To Roll Out Red Carpet Invitation To Industrialists

Manufacturing In China

Within a month from the day when Cyrus Mistry admittedly was inspired by the Prime Minister and his ideas, Tata Motors set up their first Jaguar Land Rover manufacturing unit in China. The main reason being that even after paying triple the wages than they have to in India, manufacturing is still cheaper in China.

Even though India, being the economy with the largest number of working age population, provides cheaper man power than any of its competitors, the archaic rules and the preference of service sector over manufacturing one demoralise the manufacturers to set up their units in the country.

In about seven decades since India achieved independence from the British in 1947, there has been hardly any visible change in the contribution of manufacturing sector to the economy while service sector has been ever growing. It has surpassed farming and today contributes 65 per cent of the total economy.

India suffered under red tape and licence raj till 1991 while China was emerging as the world’s factor with manufacturing accounting for more than thirty three percent of its economy. English-language skills and a cheap availability to resources of information technology and human resources have allowed India to earn back some of its business of selected multinationals since then.

The main idea behind the “make in India” initiative is that in order to emerge as a better economy is by strengthening its manufacturing industry. With one of the cheapest availability of human resources, the country can attract a huge number of foreign investors if the other aspects of manufacturing are cheaper too.

One of the major reasons why India lags behind in the manufacturing industry is that the archaic rule and lengthy process involved much more time and financial resources than China, despite the cheap man power.

Modi has been keen to get rid of these archaic rules and procedures and make it easier for the companies to carry out their business in the country. Many lengthy procedures have been simplified, including moving the application process for industrial licenses online. Investors planning to set up a factory can leave queries on the Make in India website and they will be answered in 72 hours.

Still India is way behind in comparison to China in becoming the preferred nation for manufacturers, both Indian and international. There are miles to be covered before that milestone of overtaking China could be achieved.

Taxation & Ease Of Doing Business

It takes about 12 clearances and more than a month to get a company registered in the industrial hub of Noida in the National Capital Region, according to the World Bank. The government also needs to focus on simplifying and getting rid of the maze of taxation that the companies have to go through to set up an industry in the country. In some components it has been observed that these taxes are more than the cost of finished products. In order to improve its manufacturing industry, the government needs to let go of these taxes and realise that they have to win the race they were the last in starting.

All Is Not Well In China Either

Both countries have their own serious problems: India has poor infrastructural facilities and an average economy while China is buried under a heap of bad bank loans which need to be accounted for. A new index shows that the traditional cost advantage in China is now dented since the economy had to appreciate its currency by more than twenty five per cent since 2007 and hence, the export’s cost competitiveness is getting eroded. It is no longer the largest trade surplus economy in the world, according to the IMF. The perks of manufacturing in

Ageing Population Of China

India don’t only include winning a global level competition but is also the key to increase job opportunities for the ever increasing population of the country. According to the Ministry of Finance, the working population of India would include 1.2 billion people till 2020.

On the brighter side, as India becomes more productive, it will be in a better position to compete with China. By 2020, India will have an average age of 29 years old, eight years younger than China.

Also Read: Innovating For Middle India

Hence, though right now India is way behind China in any index related to manufacturing in the two economies, there is still hope for India to overtake China one day. With the dynamic efforts by Narendra Modi and his government, the dream might just come true.

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