When Prime Minister Narendra Modi launched his ambitious ‘Make in India’ campaign in September 2014, pledging to lower barriers in doing business and promote foreign investment, he was hoping to transform Asia’s third-largest economy into a manufacturing powerhouse like China.
Almost two years since the launch, the campaign has been gaining significant traction. A week-long ‘Make in India’ fair held in Mumbai in February 2016 witnessed $222 billion (Rs 15.2 lakh crore) in investment pledges by foreign companies.
While all the pledges have not turned into reality, some tangible investments have been made. Taiwanese electronics maker Foxconn, which manufactures Apple products, is committed to building a manufacturing plant in the state of Maharashtra, with $5 billion being pumped into the Indian economy over the next five years.
In his recent visit to India, Tim Cook announced plans to set up a startup accelerator in Bengaluru “India is home to one of the most vibrant and entrepreneurial iOS development communities in the world,” said Tim Cook, Apple’s CEO, he added, “With the opening of this new facility in Bengaluru, we’re giving developers access to tools which will help them create innovative apps for customers around the world.” Apple also opened a development office in Hyderabad. “Apple is focused on making the best products and services in the world and we are thrilled to open this new office in Hyderabad which will focus on maps development,” added Cook.
Moreover, the American computer technology company Oracle Corporation has signed on to invest $400 million to set up nine business incubation centres. Companies like Xiaomi, Huawei have already set up manufacturing units in India and Lenovo has announced that it has started manufacturing Motorola smartphones in a plant near Chennai.
US-based transportation network company Uber could double its current committed investment of $1 billion in India if it sees more than five times the return, according to media reports.
US-based automobiles company General Motors will invest $1 billion in the next few years to turn operations in India into a new global auto manufacturing and export hub while Noida-based mobile company Lava is looking to double its production capacity in India at an investment of Rs 2,615 crore. Dutch technology company Phillips has pledged to invest $60 million while South Korean steel producer Posco is looking to invest $3 billion.
Following Modi’s visit to Airbus Group’s facilities in Toulouse, France, the European plane maker is looking to invest $40 million (Rs 260 crore) in the first phase of setting up a pilot and maintenance training centre close to Delhi. The centre is likely to be operational by the end of 2017. That apart, Airbus has offered to build the C295W military transport aircraft in India together with Tata Group as a replacement of the Indian Air Force’s ageing Avro fleet.
Sectors in focus
According to the Department of Industrial Policy and Promotion, between October 2014 and April 2015, India received $19.84 billion of FDI, as against $13.4 billion in the same period last year — an increase of 48 per cent.
Various sectors such as media and entertainment, mining, oil and gas, railways, textiles and others will be beneficiaries from the Make in India initiative. India is now holistic towards the growth of start-ups and is increasingly breeding new companies and investment options from foreign investors. According to latest reports, Chinese investments in India grew six-fold in 2015 to USD 870 million from the previous year. During Chinese President Xi Jinping's visit to India, China has committed USD 20 billion investments in India.
The automobile sector, however, has slowed down in terms of foreign investment with companies like Mercedes and Toyota reportedly putting on hold any investments due to ban on sale of larger diesel vehicles in Delhi-NCR.
With 100 percent FDI and other reforms the Modi government will try to woo investors from around the globe only to strengthen India’s economic presence on a world stage.
The government has said that it has, so far, received Rs 1,10 lakh crore worth of proposals from various companies that are interested in manufacturing electronics in India.
Improving ease of doing business
Furthermore, as part of the Make in India initiative, the government has set up an expert committee on improving the ease of doing business. The committee is advising it on how to do away with or limit unnecessary rules, norms and paperwork to encourage both foreign and domestic investments.
At the inauguration of the Make in India week, Modi said “We launched the Make in India campaign to create employment and self-employment opportunities for our youth. We are working aggressively towards making India a Global Manufacturing Hub. India has become the fastest growing large economy in the world. We will end this fiscal year with well over seven per cent growth in GDP.”
With the government doing a good job of creating a brand name with the ‘Make in India’ movement, the success of this campaign hinges on domestic structural and economic reform, which may be achieved in the long-term.