With a view to attracting international investment, while making his speech during the World Economic Forum recently, PM Modi announced that this was the “best time to invest in India”.
In the aforementioned context, I had tweeted: “Best way to attract international investment into India is not merely by saying that it is the best time to invest but to demonstrate that it is indeed the best time. Same ‘noises’ were made under ‘Make in India’ campaign”. Did Make in India happen?
Make in India was launched in 2014 with a lot of fanfare. While launching the Make in India initiative, the Prime Minister, Narendra Modi said, “I want to tell the people of the whole world: Come, make in India. Come and manufacture in India. Go and sell in any country of the world, but manufacture here. We have the skill, talent, discipline and the desire to do something. We want to give the world an opportunity that comes to make in India.” This iterates the whole gist of the program.
Did the “whole world” come to manufacture in India?
The main aim of this initiative was to make India a global manufacturing hub by encouraging both multinational as well as domestic companies to manufacture their products within the country. It was declared that in 2013, India’s growth rate had fallen to its lowest level in a decade, thus putting it into the category of “Fragile Five” nations.
Did India become global manufacturing hub?
The main objectives of the campaign were to:
1. To transform India into a global design and manufacturing hub.
2. To introduce new initiatives for the promotion of foreign direct investment
3. To implement intellectual property rights.
4. To develop the nation’s manufacturing sector.
5. To boost the confidence of investors and manufacturers to build and invest in India.
6. To improve India’s rank on the Ease of Doing Business index.
7. To eliminate the hassles of laws and regulations in the bureaucratic process of business.
8. To promote job creation and innovation in the limits of the country.
9. To make government transparent and accountable in its working.
10. To encourage the avenues of skill development.
11. To improve the global competitiveness of the Indian manufacturing sector.
To promote the sustainability of growth:
1. To increase growth in the manufacturing sector to 12-14% per annum over the medium term.
2. To raise the contribution of the manufacturing sector to 25% of the Gross Domestic Product (GDP) from its current 16%.
3. To create 100 million additional jobs by 2022 in the manufacturing sector.
4. To increase domestic value addition and technological depth in the manufacturing sector.
“Make in India” campaign was launched world-wide at the expense of millions of Rupees. However, there is no formal evaluation available in public domain about the outcomes of this initiative that was launched with so much fanfare.
What needs to be examined is whether the objectives were actually achieved from the available data.
One of the primary objectives of the campaign was to increase growth in the manufacturing sector to 12-14% over the medium term. COVID did have an impact but well before its arrival, the numbers were dismal. In fact, the actual manufacturing growth rate has been much below the targeted one
2016: 2.8%
2017: 4.4%
2018: 4.6%
2019: 3.9%
(Source: Statista 2021)
Poor growth in manufacturing sector got reflected in the overall GDP growth as well:
2016-17: 8.2%
2017-18: 7.2%
2018-19: 6.1%
2019-20: 4.2%
(Source: GoI Data)
It is evident from the above that this particular objective of “Make in India” was missed by a long margin.
There was also an objective of creating 100 million additional jobs by 2022. COVID has made this task extremely difficult. However, even before COVID arrived, the country was facing the worst unemployment crisis ever. Ministry of Labour and Employment used to release the official employment data periodically but it was stopped in 2016 perhaps because it was revealing the ground reality. There have been doubts raised about CMIE data but that is what we have. The CMIE Data shows that for graduates in the age group of 20-24 years, unemployment was 42% in 2017. It rose to 55.1% in 2018 and to 63.4% in 2019. The World Bank data is also pretty damning. Youth Unemployment data has been released by the World Bank for 2019 for 181 countries. India is placed even below the Congo Republic at 23%. Countries like Thailand (4.2%), Philippines (6.7%), China (11.0%) and Indonesia (13.4%) are well ahead.
So, where did “Make in India” go wrong?
First and the foremost is the faulty approach adopted under the Make in India initiative. The primary focus on road-shows proved its undoing. People travelled all over the world conveying to investors to come to India and invest. There were grand announcements and lion became the symbol of Make in India. It was visible in all the Indian embassies abroad. I saw one in Warsaw during my visit to Poland in my capacity as Secretary, Coal.
Climbing ease-of-doing business ladder became the primary objective and all effort was made to “please” the mandarins of the World Bank. It worked well in the beginning as India did apparently climb the ladder and everyone went to town. Whether the business actually became easy is a million-dollar question. The whole process was a dubious one and recently, the World Bank has itself “dumped” this charade of comparing countries on the basis of ease-of-doing business.
There was no effort to engage intensively with the investors in India to ascertain why wasn’t investment happening here and what could possibly be the way forward. The road-show approach never revealed the ground reality as the investors didn’t have the courage to reveal the “truth” in public glare.
No concurrent evaluation of the scheme was done to ascertain what was going wrong to bring about a course correction. In fact, there was apparently never an admission that anything was going wrong. It was all hunky dory.
There were factors beyond “Make in India” that disrupted it. A well-intentioned but poorly implemented demonetization devastated the economy. Similarly, Goods and Services Tax was long overdue and eminently required but launching it without necessary preparatory work, virtually destroyed the small and medium sector. COVID arrived much later but devastated the economy that was yet to recover from earlier blows.
It is evident that the “Make in India” approach did not work. We have to first admit that and then find a new way of moving forward. There are huge lessons to be learnt from sectors like national highways that did very well irrespective of COVID.
Anil Swarup has served as the head of the Project Monitoring Group, which is currently under the Prime Minister’s Offic. He has also served as Secretary, Ministry of Coal and Secretary, Ministry of School Education.