Entrepreneurship
Management
Topic:
Make In India
Submitted by:
Abhishek Bhattacharya :BBA015142
Gufran Patwe :BBA015122
Vishal Sharma :BBA015171
Submitted to : Sonia Justin
Date: 15th February 2017
Table of Contents
Introduction
The Make in India was an Economic growth strategy initiated by the honourable Prime Minister of India Mr. Narendra Modi in September 2014. This initiative was devised to revolutionise the Indian economy and transform it into one of the globes leading designing and manufacturing hub. To numerous economists around the world, the Make in India is seen as a prospective panacea to the stagnating Indian economy in the early 2010’s. By 2013, the heavily promoted emerging markets stance had burst, and India’s growth rate fell to its all time lowest level in a decade. The promise of the BRICS Nations (Brazil, Russia, India, China and South Africa) was fading, and India was starting to be known as one of the ‘Fragile Five’. Global investors could not figure out whether India the world’s largest democracy was a threat or an opportunity. India’s 1.2 billion citizens had one question in mind, whether it was the size of India that was too large to succeed or too huge to fail. India was on the brink of severe economic failure.
The Make in India was launched against the backdrop of this intense difficulty , and quickly became a way to voice out support for India’s various stakeholders and partners. It was an extremely strong and exciting call to action towards India’s citizens and business leaders, and an invitation to potential partners and investors all around the globe. Make in India is not just any inspiring slogan, it represents a major overhaul of out-dated processes and policies that were being adopted. It presents a complete change in the Government’s ideology.
The Opportunities for India
India is perceived as a young, fast growing and opportunistic nation. There are various factors factors which point towards potential growth prospects and concrete foundation for the Make in India strategies. Certain opportunities for India are as follows:-
Population of about 1.31 billion of which 767 million falls in the age group of 15-64, it is also set to become the youngest country by 2025 with an average age of 29 years.
2nd largest Internet users which is about 462 million people using the internet.
India has demonstrated the capability to reach 100% literacy levels by 2025.
According to a BCG report, there is considerable upward mobility among all sections, more than 150 million will be added to the middle class by 2025 which would create a huge market base of US$3.6 trillion.
3rd largest economy in the world with size of the US$ 8.6 trillion by purchasing power parity (PPP) and is expected to US$ 20 trillion in size by 2025.
Fastest growing major economy in the world with a rate of 7.6% in 2015-16.
India would gain an instant investment opportunity of 1 trillion USD.
India enjoys a highly positive rating from all major credit rating sources all around the world and has a total foreign exchange reserves of US$ 371 billion as on 30th Sep 16.
2nd largest Railway Network in the world, used by 23 million travellers every day
2nd largest Road Network in the world stretching 3.3 million km
12 major ports, 200 notified minor and intermediate ports
All the factors make India a potential market and also lays a path for the nation to be the global manufacturing hub in the coming years. Manufacturing goods in India is seen as one of the primary objectives of the Indian government.
There are several steps taken by the government to systematically create the perfect stage for the setup. The government has primarily targeted to boost the infrastructure facilities available in India.
Increasing the economic growth at a tremendous rate and improving the quality of life for the Indian citizens by enabling both an industrial and urban infrastructure development.
Industrialisation and Urbanisation
Industrial Corridors and 21 new nodal Industrial Cities to be developed:
Delhi-Mumbai Industrial Corridor (DMIC)
Chennai-Bengaluru Industrial Corridor (CBIC)
Bengaluru-Mumbai Economic Corridor (BMEC)
Vizag-Chennai Industrial Corridor (VCIC)
Amritsar Kolkata Industrial Corridor (AKIC)
These 21 new nodal cities will have advantages such as; Huge land parcels, communities that are efficiently planned, ICT verified infrastructure, viable living conditions, high ranged connectivity- Road, Rail etc.
Delhi-Mumbai Industrial Corridor will be a humungous infra-structure project which would be worth USD 100 billion with the help with financial and technical knowledge from Japan, it would cover a total length of 1,483 km. Dedicated Freight Corridor (DFC) of 1504 km as the backbone, DMIC will intersect 7 states namely Delhi, Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra
Increase in the number of Roads by 2020 and the construction of 15,000 km new roads by 2017 is the target acquired by the Indian government.
Railway projects such as the setting up of new stations, development of rolling stock, bullet trains, and connectivity with port mines etc. have been initiated.
The eastern dedicated freight corridor which would 1840 km long and the western dedicated freight corridor which would be 1504 km long, the construction is already under place, many other projects are under the planning stage currently.
Sagar Mala project has been initiated by the Govt. of India to develop India’s Ports waterways, so that port-led development can be amplified and coastlines can be advanced leading it to contributing into India’s growth, which would provide an outlay of USD 11billion
Smart Cities Mission which has an outlay of USD 8.59 billion has been progressing, 19 smart cities have already been developed.
Aviation industry has been targeting of transforming into the 3rd largest by the start 2030, which would help in catering International and domestic traffic.
New Design, Innovation and R&D
Investing in modernisation and the research & development is a source of huge payoffs in terms of GDP and a countries competitiveness in the global economy.
3rd largest technology driven start-up globally and tech Startups in India are expected to rise from 11,500 in 2022 from 4,304 in 2014.
The ‘Start-up India’ initiative was launched with the aim of fostering entrepreneurship and to encourage innovation.
3. Intellectual Property Rights Policy which was launched in May 2016 has many conspicuous features:
Strong TRIPS compliant policy framework, Ease of Access using World-class IT enabled patent offices
Internationally acclaimed systems for International Searching and Preliminary Examination of patent applications
Augmentation of Manpower: 721 additional technically competent Patent Examiners will be appointed
The time taken for examination of patents to come down to 18 months from 7 years from March, 2018
The time taken for examination and verification of trademarks is going to be only 1 month, instead of the 3 months that were used before.
Government Policy Reforms
There have been various reforms in the policies obtained by the Indian government to help the Make in India initiative to work smoothly.
Ease of Doing Business
Improvement in business processes and techniques would open up new rays of opportunities and help develop confidence among entrepreneurs as a result of which India has moved up 12 places in the World Bank’s Doing Business ranking 2016 which was released in October, 2015.
Incorporation of a company reduced to 1 day instead of 10 days.
Power connection to be provided in a mandated time of 15 days instead of 180 days.
No. of documents for exports and imports reduced from 11 to 3
Validity of industrial license extended to 7 years from 3 years
Bankruptcy Code 2015 – New bankruptcy law, providing for simple and time-bound insolvency process to be operational by 2017
Goods and Services Tax – Single tax framework by April, 2017
Permanent Residency Status for foreign investors for 10 years
Other Reforms
Online portals for Employees State Insurance Corporation (ESIC) and Employees Provident Fund Organization (EPFO) for:
Real time registration
Payments through 56 accredited banks
Online application process for environmental and forest clearances
2. Department of Commerce, Government of India has launched Indian Trade Portal. Important feature of this portal is to be a single point for relevant information on measures other than tariff called the non-tariff measures like standards, technical regulations, conformity assessment procedures, sanitary and Phytosanitary measures which may affect trade adversely.
3. An Investor Facilitation Cell has been created in ‘Invest India’ to guide, assist and handhold investors during the entire life-cycle of the business.
4. The Department of Industrial Policy and Promotion has also set up Japan Plus and Korea Plus. They are special management teams to facilitate and fast track investment proposals from Japan and South Korea respectively.
There have also been several initiatives take by the Indian government to reform the system in which FDI flows into India. Foreign direct Investment (FDI) is one of the most important factors which contributes towards a nations growth. This reform have been done across various sectors all of which have FDI playing a major part and showing high growth prospects.
Some of the major sectors which have been reform for better and smooth flow of FDI are mentioned below.
Major FDI Reforms
FDI stimulates country’s economic development and creates more conducive environment for the industry to grow:-
Defence: Up to 49% under automatic route and above 49% through Government route.
Civil Aviation: 100% FDI under automatic route in Greenfield Projects and 74% FDI in Brownfield Projects under automatic route beyond 74% for Brownfield Projects is under government route.
3. Broadcasting: New sectoral caps and entry routes are as under:
Broadcasting Carriage Services & down-linking of news channels: 100% FDI
Cable Networks: 100% FDI and in News channels: 49% FDI
Banking: FDI up to 74% with 49% under automatic route rest through government route.
4.Railways: 100% FDI under automatic route permitted in construction, operation and maintenance of Rail Infrastructure projects
5. Construction: 100% FDI through automatic route and Removal of minimum floor area & minimum capital requirement.
6. Pharmaceuticals: The extant FDI policy on pharmaceutical sector provides for 100% FDI under automatic route in Greenfield pharma and FDI up to 74% under automatic route and 100% under government approval in Brownfield pharma.
7. Plantation: Certain plantation activities namely; coffee, rubber, cardamom, palm oil tree and olive oil tree plantations has opened for 100% foreign investment under automatic route.
8. Telecom: FDI up to 100% with 49% under automatic route.
9. Insurance & Pension: FDI Policy has been reviewed to increase the sectoral cap of foreign investment from 26% to 49% with foreign investment up to 26% to be under automatic route.
10. Medical Devices: 100% FDI under automatic route for manufacturing of medical devices has been permitted.
11. E-Commerce: 100% FDI in B2B e-commerce, Single brand retail trading entity permitted for B2C e-commerce and e-commerce food retailing.
12. Retail: 100% FDI and 49% under automatic route is allowed. In case of ‘state-of-art’ and ‘cutting-edge technology’ sourcing norms can be relaxed subject to Government approval.100% FDI is now permitted under automatic route in Duty Free Shops located and operated in the Customs bonded areas.
Benefits of Make in India
It will generate a lot of employment opportunities. It is expected that 10 million jobs would be created.
Employment will increase people’s purchasing power which ultimately helps in poverty eradication and expansion of consumer base for companies.
The model of “look east and link west” policy will strengthen the industrial linkages as well as bilateral ties with many countries.
Government has decided to formulate an auto response mechanism and issues pertaining to procedural clearings will be resolved at different levels in a given time frame, which is a positive step in making industrial friendly environment.
Foreign investment will bring technical expertise and innovative skills along with the much needed foreign capital.
This campaign will make India a key part of global value chain and unfolds numerous opportunities for other countries as well.
Challenges to Make in India
The biggest challenge is to restore the broken trust between industry and government, which was hampered by the policy paralysis.
India has a myriad of infrastructural bottlenecks and to overcome these it needs to invest $ 1 trillion during 12th five year plan. Generating such a huge capital will be a daunting task.
Another contentious issue is of environmental clearance, which has been surfaced in many projects especially related to mining sector.
Uncertainty in tax regime (highlighted by Vodafone case) and delay in implementation of GST is also a matter of concern for industries.
India along with poor infrastructure lacks a proper logistical network for the supply chain of components and materials required in manufacturing industries.
Manufacturing sector demands highly skilled labour whereas India lacks highly skilled labour force.
Complex processes have proved to be hurdles in getting procedural and regulatory clearances especially for new entrepreneurs. This also reflects in World Bank’s “Ease of Doing Business” report which ranked India at 134 out of 189 countries in 2013.
Land acquisition for establishing manufacturing industries will prove to be a tedious task for successful unfolding of this campaign.
Conclusion
By introducing Make in India, the Indian government is targeting India to be the ‘new global manufacturing hub’, the current position that is occupied by manufacturing China. This move by the Indian government would help eradicating poverty by creating numerous employment opportunities. The Indian economy and GDP would rise due to higher rates of employment and the fact that, Make in India would help to bring in foreign investment in India, which would lead to large scale skilled immigration to India. The Indian government through Make in India wants to develop India into a super power, Make in India would transform rural areas in India to urban cities and towns. Make in India has already started to attract tons of multinational companies, after the initiation of Make in India, India has become the top destination for Foreign Direct Investment.
The Make in India campaign has also inspired the Make in Maharashtra movement, and is expected to inspire other states as well. Make in India has already helped India moved from the rank of the 130th easiest place to do business to the 118th position worldwide.
Bibliography
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“Make in India.” Wikipedia. Wikimedia Foundation, 13 Feb. 2017. Web. 6 Feb. 2017.