NEW DELHI: Rolling out the red carpet to industrialists and folding up the red-tape, Indias Prime Minister Narendra Modi on Thursday, 25 September, launched the Make in India campaign at a mega event in New Delhi that was also addressed by several bigwigs of India Inc.
Carrying forward the idea he first mooted in his Independence Day speech last month, the Make in India programme will lay emphasis on 25 sectors with focus on job creation and skill enhancement. Modi invited both domestic and international investors to help make India a manufacturing hub that will boost jobs and growth. Describing the idea of Make in India- as a lions step, Modi said FDI for people of India, is First Develop India.
The government’s push for manufacturing comes at a time when many big companies are seeking an alternative to China as costs and risks there rise. The objective is also to ensure solid growth and employment creation. During 2005-12, India added only 15 million jobs, a quarter of the figure added in the previous six years.
The programme lays emphasis on 25 sectors with focus on job creation and skill enhancement. These include: automobiles, chemicals, IT, pharmaceuticals, textiles, ports, aviation, leather, tourism and hospitality, wellness, railways, auto components, design manufacturing, renewable energy, mining, bio-technology, pharmaceuticals and electronics among others.
As part of the plan, foreign investment caps in construction will be eased to enable greater participation in the NDA government’s 100 smart cities project and affordable housing. FDI caps in railways and defence production have already been eased to 100% and 49%, respectively.
How does the government plan to ease doing of business in India?
# Global investors have been unsparing in their criticism about complex rules and bureaucratic red tape that delay investment decisions.
# India ranks a lowly 134 out of 189 countries in the World Banks ease of doing business index in 2014. It slipped three places from its 2013 rank.
# The government has set up an investor facilitation cell Invest India, which will act as the first reference point for guiding foreign investors on all aspects of regulatory and policy issues and to assist them in obtaining regulatory clearances.
# All central government services are being integrated with an e-Biz single window online portal.
# States have been advised to introduce self-certification.
# The ministry of home affairs have been asked to give all security clearances to investment proposals within 3 months.
# A dedicated cell has been created to answer queries from business entities through a newly created web portal (http://www.makeinindia.com). The portal will go live on September 25.
# While an exhaustive set of FAQs on this portal will help investors find instant answers to their general queries, the back-end support team of the cell would answer specific queries within 72 hours.
# A pro-active approach will be deployed to track visitors for their geographical location, interest and real time user behaviour.
# Subsequent visits will be customised for the visitor based on the information collected.
# Visitors registered on the website or raising queries will be followed up with relevant information and newsletter.
# The investor facilitation cell will provide assistance to foreign investors from the time of their arrival in the country to the time of their departure.
# The initiative will also target top companies across sectors in identified countries.
# A vast number of defence items have been de-licensed.
# The validity of industrial license has been extended to three years.
# With a view to providing flexibility in working hours and increased intake of apprentices for on the job training, the government has decided to amend a number of labour laws.
# The government plans to introduce a single labour law for small industries by December.
# An advisory has been sent to all departments/state governments to simplify and rationalise regulatory environment which includes online filing of all returns in a unified form.
# There would be no inspection without the approval of the head of the department, etc.
At the well-attended event, several bigwigs of Indian industry including Tata Sons chairman Cyrus Mistry, Reliance Industries chairman Mukesh Ambani, Wipro Chairman Azim Premji, ITC chairman YC Deveshwar, Chairman of the Aditya Birla Group- Kumar Mangalam Birla and Chanda Kochhar (CEO, ICICI Bank) addressed the gathering.
Interestingly, the Chinese government has launched a “Made in China” campaign with a host of tax concessions coinciding with Prime Minister Narendra Modi’s “Make in India” pitch. TOI reports that China will encourage high-tech imports, research and development (R&D) to upgrade ‘Made in China’, a decision by the Chinese central government said. Under the new campaign China will use tax breaks to encourage enterprises to upgrade their equipment and increase R&D efforts to improve the manufacturing industry. China’s new move aims to prompt technical improvement of companies, especially innovation of small and medium-sized enterprises, which in the last three decades propelled it to become world’s second largest economy and made it a powerhouse of the manufacturing industry.
The cabinet asked government organs to implement the new measures as soon as possible to arm “Made in China” with advanced technology and equipment, encouraging more competitive products with high added value, the report said. China’s manufacturing sector, a key driver of its economic growth, is regarded highly competitive in the global market.
As Indias Make in India pitch comes just ahead of PM Narendra Modis maiden visit to the United States, questions are being raised on how this could actually translate into action. Wall Street Journal reports that FDI from the US, has tapered in recent years as Indias economic growth has slowed and companies have been disappointed by New Delhis inability to modernise the countrys infrastructure and pass crucial economic reforms.
FDI from the U.S.- which is the fifth largest investor in India- fell to around $800 million in the year ended March from a peak of close to $2 billion in 2010.
The slowing down of investment in the recent past was due to deflating investor confidence in the Indian economy caused by multiple factors including slow decision making on the policy front, regulatory challenges in different sectors (and) retroactive changes in tax law, said Vikas Vasal a partner at KPMG India.
American companies have tended to invest in the technology services, financial and automobile industries in India. While companies including Ford Motor Co., FedEx Corp. and Citigroup Inc. have made big bets on the South Asian nation, analysts say if India wants more investment in more sectors, it needs to become more open.
During Mr. Modis U.S. visit he will meet President Barack Obama and he will also be meeting with some of Americas top executivesincluding the CEOs of Google Inc., Citigroup and PepsiCo Inc.hoping to drum up interest in India.
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