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GS Paper 2: Government Policies and Interventions GS Paper 3: Indian Economy, Planning, Mobilisation of resources, growth, development and employment. |
Why in the News?
The ‘Make in India’ initiative, launched on September 25, 2014, has reached its 10-year milestone, marking a significant step in India’s journey towards becoming a global manufacturing powerhouse.
What is the ‘Make in India’ Initiative?
- Overview: This initiative was introduced to encourage investment, stimulate innovation, enhance skill development, safeguard intellectual property, and establish world-class manufacturing infrastructure.
- Goals:
- Boost the manufacturing sector’s growth rate to 12-14% annually.
- Generate 100 million new manufacturing jobs by 2022 (extended to 2025).
- Raise the manufacturing sector’s GDP contribution to 25% by 2025.
- Key Pillars:
- New Processes: Emphasizing the importance of ‘ease of doing business’ to foster entrepreneurship, with measures to enhance the business environment for both startups and established companies.
- New Infrastructure: Focus on building industrial corridors and smart cities, promoting innovation, and streamlining registration systems alongside intellectual property rights (IPR) improvements.
- New Sectors: Opened up Foreign Direct Investment (FDI) in various sectors like Defence Production, Insurance, Medical Devices, Construction, and Railway Infrastructure.
- New Mindset: The government shifted from being a regulator to a facilitator, working in partnership with industries to drive economic development.
- Make in India 2.0: The ongoing second phase targets 27 sectors and aims to cement India’s place as a key player in global manufacturing.
Made in China 2025
This initiative seeks to transition China from a low-cost manufacturing base to a producer of high-value goods and services. Its key objectives include:
- Increasing domestic sourcing of core materials from 40% in 2020 to 70% by 2025.
- Achieving technological breakthroughs in sectors such as semiconductors, aerospace, and robotics.
- Reducing resource consumption and enhancing global competitiveness.
Major Initiatives Under Make in India
- Production Linked Incentive (PLI) Schemes: These schemes aim to boost domestic manufacturing and exports across 14 sectors.
- Progress (as of July 2024): Rs 1.23 lakh crore in investments, generating around 8 lakh jobs.
- PM GatiShakti: Aimed at achieving a USD 5 trillion economy by 2025 by improving multimodal and last-mile connectivity through seven key sectors: Railways, Roads, Ports, Waterways, Airports, Mass Transport, and Logistics Infrastructure.
- Semiconductor Ecosystem: The Semicon India Programme, launched in 2021, seeks to develop a sustainable semiconductor and display ecosystem.
- National Logistics Policy (NLP): Focused on upgrading India’s logistics sector through technology, process improvement, and skilled manpower. It aims to lower logistics costs and position India within the top 25 in the Logistics Performance Index (LPI) by 2030.
- Industrialization and Urbanization: The National Industrial Corridor Development Programme aims to create Smart Cities and advanced industrial hubs.
- Startup India: Launched to nurture entrepreneurship and transform India into a country of job creators.
- As of September 2024: India boasts the world’s third-largest startup ecosystem, with over 148,000 DPIIT-recognized startups, generating more than 15.5 lakh jobs.
- Tax Reforms: The Goods and Services Tax (GST) represented a major overhaul of India’s tax system.
- Unified Payments Interface (UPI): UPI processes 46% of global real-time payments, reflecting its role in digital finance.
- From April to July 2024: UPI facilitated transactions worth Rs 81 lakh crore, showcasing its reliability and growing consumer trust.
Major Achievements of Make in India
- Global Vaccine Supply: India became a top supplier of Covid-19 vaccines, producing nearly 60% of the world’s supply through indigenous efforts.
- Vande Bharat Trains: These semi-high-speed trains, developed under the ‘Make in India‘ initiative, have transformed domestic rail travel, with 102 services operational across the country.
- Defence Production: The launch of INS Vikrant, India’s first homegrown aircraft carrier, highlights progress in self-reliance in defence.
- 2023-24: Defence production exceeded Rs. 1.27 lakh crore, with exports to over 90 countries.
- Electronics Sector Expansion: The electronics industry grew to USD 155 billion in FY23, with mobile phones representing 43% of this production, making India the world’s second-largest mobile manufacturer.
- Exports:
- Merchandise: Totalled USD 437.06 billion in FY 2023-24.
- Defence Footwear: ‘Made in Bihar’ boots are now part of the Russian Army’s equipment.
- Kashmir Willow Bats: Gained global recognition, showcasing India’s craftsmanship.
- Amul: Launched its dairy products in the U.S., expanding the reach of Indian dairy.
- Textiles: The sector has generated around 14.5 crore jobs, significantly boosting employment.
- Toy Manufacturing: India produces 400 million toys annually, with 10 new designs developed every second.
Challenges Faced by Make in India
- Global Manufacturing Index: India ranked 5th in the 2023 Global Manufacturing Index, lagging behind leading nations like China and the USA.
- Manufacturing Contribution to GDP: In FY 2022-23, the manufacturing sector contributed 17% to India’s GDP, far from the 25% target for 2025.
- Skill Gaps: The India Skills Report 2024 highlights that 60% of the workforce lacks the skills needed for manufacturing jobs, limiting sector growth.
- Supply Chain Issues: The pandemic exposed vulnerabilities in global supply chains, impacting India’s manufacturing sector. There is a need to develop local supply chains.
- Investment Shortfall: The target of attracting USD 100 billion in manufacturing investment by 2025 remains unmet, with only USD 23 billion achieved by 2023.
- Innovation and R&D: India’s R&D expenditure is only 0.7% of GDP, significantly below the global average of 1.8%.
Way Forward
- Regulatory Simplification: Streamline bureaucratic procedures and labour laws to foster a more business-friendly environment.
- For instance, the four labour codes passed in 2019 and 2020 are yet to be implemented.
- Infrastructure Investment: Enhance transportation and logistics networks to improve manufacturing efficiency.
- Skill Development: Roll out focused training programs to bridge the skills gap in the workforce, emulating countries like South Korea, where 90% of the population is skilled.
- Incentivize R&D: Boost investment in research and development, offering tax incentives to encourage innovation.
- Strengthen Local Supply Chains: Reduce reliance on imports by building resilient domestic supply chains.
- Foreign Relations: Develop stronger trade ties to attract foreign investment and facilitate technology transfers.
- The 2023-24 Economic Survey suggests India could benefit from FDI inflows from China.
- Monitoring Progress: Create a framework to regularly assess the impact of the initiative, identifying areas for improvement.
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