Make in India: Rising star

In a sphere dominated by fierce competitiveness from Chinese manufacturing, the Make in India initiative is stepping up with the aim of bucking the global trend. Reece Webb explores how this initiative could cement Indian manufacturing and entrepreneurship.

In 1998, ‘India 2020: A Vision for the New Millennium’ hit bookshelves where Dr. A.P.J. Abdul Kalam and Y.S. Rajan offered an optimistic blueprint for India to rank among the top five economic powers by 2020. Today we find ourselves able to draw conclusions on the book’s ambitious predictions. While India may not yet be a top five economy by gross domestic product (GDP), Business Insider places the Indian economy inches behind the target in sixth place, with a nominal GDP of USD2.9 trillion.

This is no mean feat by any margin but is it sustainable? The Indian economy has slowed in the past year. What was once the world’s fastest growing economy has fallen behind China’s growth rate for the first time in almost two years. That may make disappointing reading for investors and entrepreneurs in India, but that is not to say that India is not looking to correct course. The country is taking steps to exploit every avenue to make India a thriving environment for its local manufacturers and entrepreneurs and that trend shows no signs of slowing down.

In fact, the push to encourage manufacturing in India is gathering pace. On May 13, 2020, India found itself in a precarious position. Facing the impact of the coronavirus outbreak and the slowing of global economies as a result, India’s prime minister Narendra Modi called on the nation to work towards complete self-sufficiency with a special economic package to combat the Covid-19 pandemic.

The announcement from Modi marks the ongoing march towards Indian promotion of self-sufficiency and internal investment backed by numerous government organisations.

The directive from the government has brought back to the forefront ‘Make in India’, an initiative launched by Modi in September 2014 as part of a wider set of nation-building initiatives to turn India into a global design and manufacturing hub.

The Make in India initiative partnered with the Indian Department for Promotion of Industry and Internal Trade (DPIIT) and hosts national workshops on sector specific industries, engaging with the World Bank Group to identify areas of improvement in line with the World Bank’s methodology of ‘doing business.’

It is arguable that India has achieved some success in this matter, making a leap on the World Bank’s Ease of Doing Business rankings from 2020 by jumping 14 places from its 2019 ranking. India is now ranked 63rd out of 190 countries for ease of doing business and has improved in seven out of 10 parameters including ‘resolving insolvency’, ‘registering property’, ‘dealing with construction permits’, ‘paying taxes’ and ‘trading across borders’.

Make it easy

Ease of doing business and attracting foreign investment is a key focus of the initiative. This had led to establishing the Investor Facilitation Cell (IFC) to help investors in seeking regulatory approvals with ‘hand-holding services’ through the pre-investment phase, execution phase and provision of after care support.

Foreign Direct Investment (FDI), an investment in the form of a controlling ownership in a business in one country by an entity based in another country, has been a key focus for the DPIIT, with the department claiming that FDI has been on an upward trajectory since 2013- 2014. FDI equity inflows grew by 60.2% between April 2009-March 2014 and April 2014-March 2019, with FDI inflows growing by 63.9% between April 2009 – March 2014 and April 2014 – March 2019.

AVIXA has been front and centre in pushing the initiative’s goals as Gaurab Majumdar, who at the time of publication in June 2020 was the regional director, India & Middle East for AVIXA explains: “Before joining AVIXA, I was with the agency of Ministry of Commerce & Industry, Government of India. I have a natural interest in connecting AVIXA with the government’s initiative particularly ‘Digital India’.

“Starting from 2014, AVIXA with support from national and regional associations and chambers of commerce and cooperation from central and state government is creating awareness of ‘importance of AV technology in ‘digital transformation’. This is AVIXA’s strategy integrating with the government’s digitalisation policy. AVIXA has taken initiative to collaborate with government agencies in developing the AV-ICT workforce in India for bridging the skill gap. During the Covid-19 challenges, AVIXA members in India helped government to communicate, connect, inform citizens and work with stakeholders through various AV technologies.”

AVIXA has made efforts to support the government of India and its initiatives through conversations, encouraging the adoption of global AV standards through the Bureau of Indian Standards (BIS), calling for the recognition of global AV certification through the Quality Council of India and helping to create a ‘Make in India’ awareness program for global AV manufacturers.

Majumdar adds: “AVIXA members in India are drawn mostly from AV system integrators, design consultants, dealers and distributors of international AV manufactures. There are some Indian manufacturers in the AV technology domain who are positive about the ‘Make in India’ program and are participating now at InfoComm shows outside India. We have also seen a trend, where AV SIs are venturing into local assembling and manufacturing.

This trend will see an increase. “InfoComm Mumbai has seen enormous increase in participation of international exhibitors in the last five years. Those AV manufacturing companies have interest in doing business in India and participate at InfoComm to find partners and customers. They are increasing every year as they see the ease of doing business in India. Such examples show that there is definite ease of doing business in India.”

Ease of doing business and attracting foreign investment in a simple way has been of the utmost importance for the government’s various initiatives. Nowhere can this ‘ease of business’ focus be seen better than with India’s efforts to provide a level playing field across the country with its Goods and Service Tax (GST) which aims to provide a ‘one nation, one tax’ system to improve India’s competitiveness in global markets.

The reception to Make in India has been mixed albeit with positive overtones. In a time of great disruption in trade and business from Covid-19, the spotlight is firmly on government initiatives to restart industrial machines and provide the edge for local manufacturers. Land prices are infamously high in India; however the government is taking steps to ensure that the cogs of industry begin to turn again. Some Indian businesses see the long-term potential for schemes like Make in India if the right conditions for the international market are met.

Sunil Kehra, managing director, Aero Digital World, says: “When you are making a partnership with partners from other countries there are benefits such as cheaper land prices and easier machinery imports. Government is looking at introducing a halving of the rate of interest and they have made some new industrial hubs like China by making special economic zones (SEZs).”

Introduced in India in the early 2000s, a special economic zone is an area of a country where business and trade laws differ from the rest of the country. India has closely followed China’s successful SEZ model to encourage domestic and foreign investment as well as aiming to boost Indian exports. Kehra adds: “We don’t have to pay any duties or GST. If we are exporting, then we don’t have to pay. The import taxes are usually at 20% and we import at 10%. When you talk about buying at volume, this is a big difference. “The government has provided lots of schemes, but this complete procedure (to make India self-sufficient) will take at least a year at a minimum. The government is very clear that they want products to be made in India after the Covid-19 pandemic and they know that it can’t be possible to make absolutely everything in India, but they want us to make it start.”

Vineet Singh, director, HMPL Consulting, believes that while the initiatives are a welcome addition to the industry, there is still progress to be made. Singh comments: “While the current government has always encouraged and incentivised these programs, I think that it will be tricky until we become capable to handle manufacturing for local consumption first. We find that for the smaller chip level companies that are needed across many industries, it’s often cheaper to import from other countries.

“We need to ask: ‘How conducive is the market to invite firms to invest?’ We do have encouraging initiatives, there are corporations that are looking to invest into India and move out of China, but we still have to wait and see how it pans out on the ground, whether it transforms into an active manufacturing base or not. It’s a process that’s already started and I’m positive that at a moment in time we will get there.

“We do have many government programmes which are well received and appreciated across the industries. There are people in the AV industry who are investing into manufacturing locally. There are many standards that are accepted globally, so standards will have to be looked into and how they are recognised globally is going to be key.”

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