Make in India campaign launched‘Make in India’ campaign launched
India’s Modi Government has announced a historic programme to facilitate inward investments and build the country's manufacturing infrastructure.
India’s Prime Minister, Narendra Modi, launched the ‘Make in India’ campaign in September, which announced to the world that doing business in India is going to become easier, efficient and transparent. In his Independence Day speech in August, Modi invited global businesses to, “Come, make in India! Sell in any country of the world but manufacture here.”
A global manufacturing destination
Manufacturing accounts for only 15% of India’s gross domestic product (GDP) and the Government wants to raise that to 25% by 2022. It is committed to transforming India into a global manufacturing hub, while ensuring that manufactured goods have ‘zero defect’ and ‘zero effect’ on the environment.
With ‘Make in India’, the Government aims to eliminate unnecessary regulations, shorten bureaucratic processes, upgrade infrastructure, open up sectors to foreign direct investment (FDI), and most importantly, be seen as a true business partner. The Government has identified 25 sectors in which India could become a world leader and listed investment opportunities on a new web portal, www.makeinindia.com.
Red carpet, not red tape
India is laying out the red carpet for foreign investors. Invest India, the Government’s official agency, will act as the first point of reference for investors and a dedicated investor facilitation cell will answer queries within 72 hours. Measures have been taken to reduce red tape, with online applications for industrial licenses, through eBiz, a website to facilitate all Government-to-business services.
The FDI cap for defence has been raised from 26% to 49%. Up to 100% FDI through the automatic route (not requiring prior approval from the Government or Reserve Bank of India) is now permitted in railway infrastructure and FDI in construction is also being liberalised. The Government is committed to improving manufacturing infrastructure and has signed several agreements with foreign governments to assist in the process.
The Government aims to create a skilled, labour-intensive manufacturing sector with a 12-14% growth rate, on an annual basis. With 65% of the population below 35 years of age and some 12 million joining the workforce each year, job creation and employability are crucial. Modi announced a programme, ‘Skilled India’, to make the working-age population employable in the manufacturing sector. Archaic labour laws are also being amended.
Financial inclusion is an important priority of the Modi Government, whose Jan-Dhan Yojana aims to provide every Indian with a zero-balance bank account. This scheme even caught the attention of Bill Gates, the co-chair of the Bill & Melinda Gates Foundation, who has offered to help in monitoring its progress.
A visible impact
There has been a remarkable shift in domestic as well as foreign investor sentiment. FDI equity inflows were up 52% at US$10.7bn during April-July 2014. Investments (equity and debt) by foreign portfolio investors shot up to US$20.5bn in the first five months of FY 2014-15, compared to US$8.6bn in the whole of FY 2013-14.
Real GDP growth accelerated to 5.7% in Q1 2014-15 and manufacturing sector growth, as measured by the Index of Industrial Production, rose to 2.3% during April-July 2014.
International engagements on the rise
In September 2014, Japan committed US$35bn of investment and financing to India, and China has committed to investing US$20bn over the next five years.
Besides India’s ‘Look East’ policy, Modi added that it was essential to ‘Link West’ in an increasingly globalised world. During his visit to the US, Modi met with 17 business heads of leading organisations, including Boeing, IBM, Goldman Sachs, Google, MasterCard and PepsiCo.
It is clear that India’s inherent advantages and the new Government’s initiatives make it an attractive investment destination like never before, and this optimism is being echoed across the world.
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