Make in India week attracts Rs 15.20 lakh Crore investments

K.R. Sudhaman

The Make in India Lion at last roared, nearly two years after Prime Minister Narendra Modi launched the campaign to make the country a global manufacturing hub.
 
With advanced economies facing extended recession, India is perpahs the only large and emerging economy which provided opportunity for fresh investment. The Make in India week that concluded in Mumbai on February 18, 2016 therefore attracted huge investment commitments with foreign investors queuing up to tap this opportunity.
According to Mr Amitabh Kant, Secretary in the Department of Industrial policy and promotion, the Make in India Week resulted in an investment commitment of Rs 15.20 lakh crore, half of which will be in Maharashtra, which hosted the event in Mumbai.
The Make in India week showcased India’s manufacturing prowess and for the first time manufacturing, design and innovation have been brought to centre stage so that India rapidly moved towards the cherished goal of taking the share of manufacturing in India's GDP to 25 per cent from the present 16 per cent in the next five to seven years.
At the concluding Press Conference, Mr Kant described the event has a “phenomenal hit”. Maharashtra Chief Minister Devendra Fadnavis said his state was successful in attracting investment worth Rs 8 lakh crores across various sectors.
More than 8 lakh people visited the Make In India Expo and other events, of which 49,743 were registered delegates. 102 countries were represented in the mega expo.Government delegations from 49 nations and business delegations from 68 countries took part. .A total of 150 events were organized under the Make In India Week banner while more than 25,000 people particiipated.
These statistics indicated the tremendous response the event had. Union Ministers, Chief Ministers, Policymakers, Industrialists, Academicians spoke on wide ranging issues concerning business and society. 215 exhibitors show cased their strengths and opportunities in 11 sectors covering Aerospace & Defence, Automobiles, Chemicals & Petrochemicals, Construction Machinery, Food Processing, Infrastructure, IT & Electronics, Industrial Equipment & Machinery, MSME, pharmaceuticals and textiles.
Seventeen Indian states and 3 countries – Germany, Sweden and Poland had their pavilions in the Make In India Centre. Make In India Week also provided platform for nearly 8,200 Business-to-Business, Business-to-Government and Government –to-Government meetings.

The list of companies which have evinced interest and committed to invest in India, is quite impressive and long. They included, Sterlite Group company, BAE Systems, ORACLE, Trivitron healthcare, Vestas (Denmark) , Raymond Industries, Mahindra & Mahindra, Tar Kovacs Systems (France), Tar Kovacs , Ascendas, Mercedes, Rashtriya Chemicals and Fertilizers, Godrej Industries.
The Make in India Week also provided opportunity to announce new government initiatives and policies like the Rs 2,200 crore Electronics Development Fund, National Capital Goods Policy and e toll policy covering 360 toll plazas on the National Highways across the country. Several state specific policies too were unveiled by Maharashtra, Odisha and a few other states.
In electronics alone, the government received Rs 1.20 lakh crore in proposals from companies interested in manufacturing electronics in India. Prime Minsiter Narendra Modi deserves credit for showcasing Make in India as the next big manufacturing revolution among the emerging markets. Efforts to hard sell the India story to foreigners, appears to have paid off going by the response the Mumbai mega show had from foreign investors.

But the past experience suggests that investment commitments have hardly translated into real investments in the country. The big question here is: can the Modi government convert the commitments to actual investments to give a leg up to the country’s manufacturing sector?

India badly needs fresh investments at this stage to kickstart the economy, which is on a revival mode. India is expected to grow at around 7.5 per cent at a a time when all other economies are slowing down. China has slowed down drastically to less than 7 per cent. India is now the fastest growing economy but it is yet to grow to its potential of 9-10 per cent annually.

A closer look at the numbers indicate that in the first nine months of FY16, total private investments in the country declined to Rs 3.5 lakh crore compared with Rs 4 lakh crore in the corresponding period last year, while investments by the government declined to Rs 1.9 lakh crore as against from Rs 3.98 lakh crore. This Make in India week has therefore provided an opportunity to reverse this trend.
India always faced the problem of commitments not turning to actual promises. But even if two-thids of the the over Rs 15 lakh crore commitment translate into investment in the country in the next 5 years or so, one could claim the mega event to be a success. For that government has to fast track reforms.

Stepping up public investment, particularly in infrastructure is critical. Early rollout of game changing indirect tax reforms, Goods and Services Tax, is crucial. This would help in pushing India's growth rate by 1.5-2 per cent.
One of the major turn-offs for the investors coming to India has been the myriad tax laws, poor infrastructure, availability of power and water and complex labour laws.

The government will have to work hard to reverse this in the coming months. As a follow up to the Make in India Week, the government will have to act fast to fix them. The success of Make in India, will depend upon how successfully state governments are taken on board.
One outcome of the event is that it has established the fact that Indian Automotive industry is one of the largest in the world and this sector saw huge enquiries. India has also emerged as a leading global hub for small cars with around 31 per cent of the global small cars sold, being manufactured in India. Auto and Auto components sectors together are the highest contributors to industrial and manufacturing GDP, 25 per cent and 45+ per cent respectively. Rightly this sector attracted huge investment commitments at the Mumbai mega show.

The government is committed to change the perception that India is difficult place to do business. It has to make the country one of the easiest and simplest places to do business. India has certainly moved ahead on ease of doing business in recent months but a lot more needs to be done in the coming months.
There is need to scrap a lot of rules, regulations, procedures, paper work both at the centre and states. The states have to carry out reforms in about 340 areas. Dismantling government from areas where it is nor required is a challenge and this is not going to be easy but the government is lately working hard to change the mindset so that India do not miss the bus once more to become a global manufacturing hub. The Make in India week was a step in this direction and it has sowed the seeds for the economy to leapfrog in manufacturing.

(K R Sudhaman is currently Editor of SMEpost.com. He had been Economic Editor in Press Trust of India, Financial Chronicle and TickerNews)