In 2015, the gross domestic product in India (the world’s ninth-largest economy) was at around $2.3 trillion. Yet, manufacturing represented only 16 per cent of the country’s GDP as compared to services sector’s nearly 52 per cent. Clearly, India has a long way to go to strengthen its manufacturing sector in order to become competitive as a global and regional export hub. Through his ambitious “Make in India” program, Prime Minister Narendra Modi just wants to do that – transforming India into a global manufacturing powerhouse fit to compete with its neighbor China. The timing of Modi’s signature initiative is absolutely right as a lot of big companies are looking for an alternative to China due to its increasing cost, and peak labour shortages. By heavy infrastructure building and focusing on export-oriented manufacturing, Modi is looking at China like economic model, which paves for sustained rapid economic expansion. Though sceptical observers may call it a dud, there are high hopes among the industry and public at large that the world will take is seriously. The programme is focusing at:
Here is what the programme has achieved so far:
GE, Alstom To Supply Diesel, Electric Locomotives For Indian Railways
The NDA government has awarded a $2.6 bn contract to General Electric to develop and supply Indian Railways with 1,000 diesel locomotives over 11 years. GE and Alstom of France, have signed deals worth $5.6 billion (around Rs 37,100 crore) to manufacture locomotives for the Indian Railways.
Alstom will supply 800 electric locomotives. As part of the contract, the company will build a diesel manufacturing facility in Marhowra in Bihar, as well as maintenance sheds at Bhatinda in Punjab and Gandhidham in Gujarat. The deal is likely to encourage modernisation efforts of the India Railways and provide skill development opportunities for local talent. Last year, the Union government had allowed 100 per cent FDI in the railway sector.
“This project is proof of India’s position as a growth destination for Asia and a symbol of GE’s commitment and support of ‘Make in India’ initiative,” said Jeff Immelt, chairperson and CEO, GE. Take a look at #MakeInIndia brand coaches for Indian Railways:
These coaches have jerk-less seats.
The inside gives a high-class look and feel.
They have green toilet system.
Major smartphone makers want to be in India
Foxconn, the company best-known as the manufacturer of iPhones and iPads, announced a $5 billion investment in Maharashtra over the next five years. Foxconn’s investment is a vote of confidence by the company in manufacturing in India.
Foxconn chairman Terry Gou has said that his company will bring its suppliers with it, meaning the ecosystem will be created all over again, first in Maharashtra and then everywhere else the company puts down a factory. In the recent past, global players such as Xiaomi and Motorola, along with Lenovo, have commenced assembling smartphones in the country through contract manufacturing with Foxconn (Xiaomi and Motorola) and Flextronics (Lenovo).
Taiwanese original design manufacturer (ODM) Wistron Corp., which focuses on information and communications technology (ICT) products, and Optiemus Infracom Ltd, a distribution and management services provider for mobile brands, have said that they would set up a manufacturing facility for telecom products in India. Overall, India is expected to soon supplant the U.S. as the world’s second-largest smartphone market after China.
SoftBank, Bharti, Foxconn to set up $20 billion solar and wind venture
Japan’s SoftBank, Sunil Bharti Mittal-led Bharti Enterprises and Taiwan’s Foxconn Technology have formed a JV to set up a 20 gigawatt (GW) of solar and wind energy projects in India at an investment of about $20 billion. This is perhaps one of the biggest investment pledges to date in the country’s renewable energy sector. SoftBank, which owns one of Japan’s biggest mobile carriers and is the largest shareholder in Chinese e-commerce firm Alibaba.
“Prime Minister Narendra Modi invited me to India during his visit to Japan earlier. We endorse and support the PM’s vision for 100 GW of clean energy by 2022. India has two times more sunshine than Japan and cost of constructing solar park is half that of Japan. That makes India four times more efficient in solar and wind energy than Japan,” Softbank chairman and CEO Masayoshi Son had said.
Dassault may manufacture Rafale fighter aircraft in India
India and France are set to sign the deal for 36 Rafale fighter aircraft on the eve of French President François Hollande’s visit to India for the Republic Day celebrations. For these aircraft, an inter-governmental memorandum of understanding (MoU) was signed early this year during PM Narendra Modi’s visit to Paris. Air Chief Marshal Arup Raha had said that Rafale was one of the replacements for the MiGs being phased out.
In a boost for ‘Make in India’, ET reports that Dassault may manufacture Rafale fighter aircraft in India
. France’s Dassault Aviation will soon initiate moves to identify Indian partners, notably private sector firms, to eventually make its Rafale aircraft in the country. This deal is likely to bring in big business for the private sector.
Reports suggest that the local firms being considered are Tata Advanced Systems Limited, Dynamatics, Taneja Aerospace, L&T and Reliance Defence Systems.
The Rafale fighters are jointly produced by a bunch of French firms led by Dassault and including Thales and Snecma. The Indian Air Force currently has 33 combat squadrons against a sanctioned strength of 39.5, which is sought to be raised to 42.
Helping to generate large scale employment
Undoubtedly, Indian youth will benefit from large scale employment as a result of heavy investment by companies in India. This comes especially at a time when rising labour costs in China is threatening to dislodge its advantage and surely a country like India stands to gain.
Promotes ‘Reverse Talent Flow’
The ‘Make in India’ is likely to witness a ‘Reverse Talent Flow’ whereby Indian companies would offer best growth opportunities for retaining the best brains. At the same time, the Foreign Multinational Companies setting up manufacturing projects in India will also send quality talent to this market.
To reduce dependence on China, government likely to incentivise companies to produce bulk drugs
The Modi government is working on a package to incentivise both state-run and private companies
to produce ingredients that are used in making medicines, the ET reports. India imports about 85 per cent of its bulk drugs from China.
The government is mulling revival of two sick public sector units involved in production of active pharmaceutical ingredients (APIs) or bulk drugs, besides inviting private companies to set up manufacturing units.
Boeing, Tata Advanced Systems form JV
In a leg up for Modi government’s ‘Make in India’ campaign, aviation major Boeing and the Hyderabad-based Tata Advanced Systems Ltd (TASL) have joined hands to manufacture aerostructures, starting with those for the AH-64 Apache helicopter, in India.
Sony Corp plans to resume manufacturing televisions in India
Japanese tech giant Sony Corp plans to resume manufacturing televisions in India after over a decade. For this, the company has reached an agreement with Taiwan-based contract manufacturer Foxconn to manufacture its Bravia line of televisions at the latter’s facility near Chennai. At the same time, Technicolor group brand Thomson has re-entered the Indian consumer electronic market with the launch of Thomson LED TVs. Its licensee in India, Resolute Electronics, will invest Rs 300 crore over the next three years in a manufacturing facility at Medchal near Hyderabad to make LED TVs and large home appliances for the Indian market.
Volvo To Roll Out Hybrid Buses in India
Swedish auto major Volvo Buses is looking to introduce hybrid buses in India. Volvo will roll out this pilot hybrid city bus project in Navi Mumbai starting from 2016.
The official Twitter account of #MakeinIndia programme
Clearly, there are reasons to believe that the Make in India programme has scored some early wins. However, to make India a more attractive investment destination, the NDA government needs to improve the country’s infrastructure, skill gap in workers and radically improve the conditions for doing business.