Prime Minister Shri Narendra Modi, along with other key ministers, today unveiled the Make in India campaign. Under the campaign the government aims to increase the growth rate in the manufacturing sector in India to 10% y-o-y (-0.1% in FY14) and raise its share to 25% in the overall GDP (around 15%). Key highlights of the campaign are,
- Hold investors hands, especially foreign investors
- Involve 25 government departments to streamline approval processes
- Provide time bound clearances through a single online portal
- Set up an eight member panel, called Team Invest India, to respond to investor queries within 48 hours, clarify policies to investors and suggest reforms to the Central and state governments
- Address issues in a comprehensive manner including amending labour laws, skill development, ease FDI policies and develop infrastructure
- Identified 25 sectors such as defence, pharmaceuticals, food processing, auto and auto components, electronics, where India can be a world leader
From a broader perspective, the Make in India campaign again highlights that the Modi government will focus on streamlining governance in India and building investor confidence to increase investments and boost growth in India. While big reforms such as implementation of nationwide Good and Services Tax will happen overtime, small changes at the micro level can provide the immediate impetus to put the economy back on high growth trajectory, in our view.
That said the success of such campaigns also depends on other factors such as availability of quality physical infrastructure and skilled manpower. Thus, while the Make in India campaign is a step in the right direction, it will have to be followed up by more tangible measures such as building ports, highways, increasing power generation and so on, to make India a manufacturing hub. This is where we become skeptical about the Government’s Tall Promises.