In Depth: Achievements of Make in India | 17 Oct 2024

Why in News?

Recently, the Make in India initiative, launched on 25^th September 2014, completed its 10-year journey, emerging as a strategic response to revive the Indian economy, which was grappling with slow growth at the time.

What is the Make in India Initiative?

• Aim & Objective:
  • Its primary goal was to transform India into a global manufacturing hub by attracting investment, encouraging innovation, and developing world-class infrastructure.
  • It aimed to bolster India's industrial capacity while promoting the 'Vocal for Local' concept to reduce dependence on foreign products.
  • In addition, the initiative sought to create employment opportunities for India's youthful workforce, fostering economic growth and self-reliance.
• Make in India 2.0:
  • The ongoing "Make in India 2.0" phase, encompassing 27 sectors, continues to propel the program forward, consolidating India’s role as a significant player in the global manufacturing arena.
• Targeted Sectors Under the Initiative:
  • The initiative targets a broad range of sectors, which have been divided into two major categories: manufacturing and service sectors.

• Four Pillars of the Initiative:
  • New Processes: This pillar aims to enhance the ease of doing business in India by simplifying regulations and reducing bureaucratic hurdles.
    • The government has introduced reforms to make the business environment more conducive for both startups and established enterprises.
  • New Infrastructure: The initiative emphasises the development of industrial corridors, smart cities, and state-of-the-art technology infrastructure.
    • These developments aim to support innovation, simplify registration processes, and ensure a robust intellectual property rights framework.
  • New Sectors: Foreign Direct Investment (FDI) regulations were liberalised to open up several sectors, including defense, insurance, medical devices, and railways.
    • This approach has fostered international investments, driving economic growth.
  • New Mindset: The government has shifted its role from being a regulator to a facilitator, collaborating with industries to promote economic development. This change in mindset seeks to create a more business-friendly environment.

What are the Major Programs and Schemes under Make in India?

• Production-Linked Incentive (PLI) Schemes: With an allocation of Rs. 1.97 lakh crore (approximately USD 26 billion), the PLI schemes aim to boost manufacturing across 14 key sectors, including mobile phones, medical devices, and automobiles.
  • By July 2024, 755 applications had been approved, resulting in investments worth Rs. 1.23 lakh crore and generating employment for 8 lakh people.
• PM GatiShakti: Launched in October 2021, PM GatiShakti focuses on holistic infrastructure development, integrating multimodal connectivity across sectors such as railways, roads, ports, airports, and mass transport.
  • It aims to support India's goal of becoming a USD 5 trillion economy by 2025.
• Semicon India Program: Approved in 2021 with a budget of Rs. 76,000 crore, the Semicon India program aims to establish a sustainable semiconductor and display manufacturing ecosystem.
  • Significant projects include Micron's Rs. 22,000 crore investment in semiconductor manufacturing.
• National Logistics Policy (NLP): Launched in September 2022, the NLP aims to improve India's logistics network, reduce costs, and enhance the country’s Logistics Performance Index ranking. The policy complements PM GatiShakti's infrastructure initiatives.
• Industrialisation & Urbanisation: The National Industrial Corridor Development Programme plays a crucial role in advancing industrialisation and urbanisation in India. This program integrates industrial corridors with urban planning, promoting the development of smart cities and industrial hubs.
  • Recent approvals include 12 projects worth Rs. 28,602 crore, aiming to position India as a global manufacturing destination.
• Startup India Initiative: Launched in 2016, the Startup India initiative has created a robust ecosystem that supports entrepreneurship, leading to the establishment of over 148,931 startups and generating 15.5 lakh direct jobs.
• Tax Reforms: The introduction of the Goods and Services Tax (GST) in 2017, unified India's tax structure, simplified compliance, and enhanced manufacturing competitiveness.
• Unified Payments Interface (UPI): India's UPI has emerged as a global leader in digital payments, handling 46% of the world's real-time payment transactions.
  • From April to July 2024, UPI recorded transactions worth Rs. 81 lakh crore, significantly supporting the growth of the digital economy.
• Ease of Doing Business: India also made a notable leap in the Ease of Doing Business ranking, moving from 142^nd in 2014 to 63^rd in 2019, reflecting efforts to simplify regulations and reduce bureaucratic barriers, boosting investor confidence.
• Record FDI to Boost Make in India: The Make in India initiative has seen significant success, driven by record FDI inflows and improvements in ease of doing business.
  • FDI grew from USD 45.14 billion in 2014-15 to USD 84.83 billion in 2021-22, with a total of USD 667.41 billion attracted between April 2014 and March 2024. In FY 2023-24, FDI reached USD 70.95 billion, highlighting India's appeal as a global investment destination.

What are the Key Achievements under the Make in India Initiative?

• Healthcare: India became a major exporter of Covid-19 vaccines, supplying 60% of the global vaccine requirements.
• Railways: The indigenous Vande Bharat trains have demonstrated India's local manufacturing capabilities.
• Defense Production: The launch of INS Vikrant, India's first domestically built aircraft carrier, marked a significant milestone in defense self-reliance.
• Electronics Manufacturing: India has become the second-largest mobile phone manufacturer, with the electronics market reaching USD 155 billion in FY 2023.
• Merchandise Exports: India's merchandise exports stood at USD 437.06 billion in FY 2023-24, showcasing its increasing role in global trade.
• Textiles and Employment: The sector has created approximately 14.5 crore jobs, contributing substantially to employment generation.
• Toy and Sports Goods Manufacturing: India produces 400 million toys annually and exports popular items like Kashmir willow cricket bats.

What are the Challenges Related to Make in India Initiative?

• Infrastructure Gaps: Despite improvements, India's infrastructure, including roads, railways, and ports, still lags behind developed countries, affecting the smooth movement of goods.
  • According to the Economic Survey 2022-23, the logistics cost in India is around 14%-18% of GDP, compared to 8-10% in developed economies like Germany or the US.
• Regulatory and Bureaucratic Hurdles: While India has made strides in ease of doing business, regulatory and bureaucratic obstacles persist. Complex approval processes and red tapism can delay project execution.
  • Land acquisition remains a cumbersome process due to outdated laws and lengthy legal procedures.
• Skill Gaps in the Workforce: There is a mismatch between the skills available in the workforce and the skills required in manufacturing industries.
  • High-tech industries like electronics and biotechnology require specialised skills, but India has a shortage of skilled technicians and engineers. For instance, despite being a major IT hub, India has struggled to expand its manufacturing capacity in advanced electronics due to a lack of skilled labor.
• Dependence on Imports for Key Inputs: India continues to rely heavily on imports for critical components and raw materials, which limits the growth of domestic manufacturing.
  • The electronics industry, including mobile phone manufacturing, depends on importing semiconductor chips and other key components from countries like China and Taiwan. This dependence undermines the goal of self-reliance.

Way Forward

• Enhancing Infrastructure Development: Increase public and private investment in transportation, logistics, and utility infrastructure to reduce costs and improve efficiency. This includes upgrading roads, railways, ports, and power supply.
  • Encourage Public-Private Partnerships (PPPs) to accelerate infrastructure projects, leveraging private sector expertise and funding.
• Streamlining Regulatory Processes: Simplify business regulations and approvals to reduce bureaucratic delays. Implement a single-window clearance system for faster approvals.
  • Promote e-governance and digital platforms to enhance transparency and efficiency in regulatory processes.
• Skill Development Initiatives: Launch skill development programs tailored to the specific needs of industries. Collaborate with industry players to identify skills gaps and create relevant training modules.
  • Strengthen vocational education and training programs to prepare the workforce for manufacturing jobs, focusing on emerging technologies.
• Promoting Local Sourcing and Supply Chain Development: Implement policies that incentivize the use of local suppliers and manufacturers, reducing dependence on imports for critical components.
  • Build integrated supply chain ecosystems that support domestic manufacturing, including logistics, component production, and distribution networks.