Lt Gen S L Narasimhan (Retd) Does An In-Depth Alalysis Of The Make In India Vs Made In China 2025 Program

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In the last part of the trilogy on Make in India and Made in China 2025 we will look into Make in India first and then compare make in India and Made in China 2025.

In 2013, India’s growth rate had fallen to 5% which was the lowest since the hey days of India Shining. India was considered as one of the “Fragile Five” countries, the other four being Brazil, Indonesia, South Africa and Turkey. There was a dilemma in investors’ mind as to whether India is the right place to invest in. The United Progressive Alliance government that was in power seemed to be out of focus on the economy. It is at this juncture that the present National Democratic Alliance government came to power. The fact that this government came to power with a majority needs to be borne in mind. India also had the dubious title of world’s largest importer of defence equipment and weapons. The manufacturing sector was stagnating. See graph below.

 

There was a dire need to kick start the manufacturing sector.

Therefore, on 25 September 2014, the Prime Minister announced the Make in India Programme. This programme was an effort to bring all the stake holders together to give a boost to indigenisation. By this programme it was intended to bring a paradigm shift in the processes and policies associated with manufacturing. More than anything it was intended to bring about a radical change in the mind-set.

What is Make in India? Make in India programme started with a threefold aim. First was to give the confidence to investors abroad, Indian businesses and its citizens. Secondly, it aimed to create a vast technical data base in 25 identified sectors of the industry. Thirdly, launch a social media

campaign to reach the global and domestic industry to apprise them of the favourable industrial climate in India.

The 25 sectors that were identified were Automobile, Automobile Components, Aviation, Bio Technology, Chemicals, Construction, Defence Manufacturing, Electrical Machinery, Electronics Systems, Food Processing, Information Technology and Business Process Mamagement, Leather, Media and entertainment, Mining, Oil and Gas, Pharmaceuticals, Ports and Shipping, Railways, Renewable Energy, Roads and Highways, Space, Textiles and Garments, Thermal Power, Tourism and Hospitality and Wellness.

The Department of Industrial Policy & Promotion (DIPP), interacted with specialists and created an interface with mobile phone screens as the main target and created soft and hard copy versions of brochures for all these 25 sectors. The department also facilitated in the coming together of the ministries and entrepreneurs to formulate a plan to bring manufacturing to 25% of the Gross Domestic Product from 17.18% in 2014. Thus, Make in India Programme brought in a collaborative public private partnership.

What has Make in India programme done? It has induced foreign direct investment by opening up some of the critical sectors like railways, defence, insurance and medical devices for the same. Because of this, India became the highest in Foreign Direct Investment surpassing China last year. Under this programme, a special Investment Facilitation Cell has been created to increase the ease with which businesses can be established in India. Special management teams like Japan Plus, Korea Plus have been established to facilitate faster investments from these countries. Indian missions abroad have been entrusted with the task of disseminating information to promote investments in India. However, a lot more needs to be done. India ranks 130th in the Ease of Doing Business Index compared to China which is positioned at 84 in the 2017 Index.

Infrastructure development is one of the major aspects of this programme. Six industrial corridors are being developed. They are Delhi-Mumbai Industrial Corridor (DMIC), Chennai-Bengaluru Industrial Corridor (CBIC), Bengaluru-Mumbai Economic Corridor (BMEC), Vizag-Chennai Industrial Corridor (VCIC) and Amritsar Kolkata Industrial Corridor (AKIC). Under the Sagar Mala programme, ports, inland waterways and other infrastructure to promote shipping is being undertaken. Road network is expected to be doubled by 2020. Indian Railways is to set up new railway stations, modernise rolling stock, create high speed railways and dedicate freight corridors. Special Purpose Vehicles to convert 19 cities into Smart Cities has been set up and are progressing. Aviation industry aims to become the third largest in the world by 2030.

Intellectual Property Rights Policy was launched in May 2016 with features to reduce drastically the time taken for granting patents and trademarks. Tech start-ups are expected to go up 250% in the five years from 2015 to 2020. Skill development is one of the major areas of concentration for Make in India programme. India has a young population.

“By 2020, India’s average age will l be just 29 years, in comparison with 37 in China and the United States, 45 in Western Europe and 48 in Japan. This demographic trend will confer a significant competitive advantage upon India. About a quarter of the global increase in the working age population (ages 15-64) between 2010 and 2040 is projected to occur in India, during which time this segment is set to rise by 5 percent to 69 percent of its total population. Roughly a million people are expected to enter the labour market every month, peaking at 653 million people in 2031. As a result the IMF projects that  India’s demographic dividend has the potential to produce an additional 2 percent per capita GDP growth each year for the next twenty years”, says Danielle Rajendram in an article for The Diplomat in 2013.

However, all is not rosy in the defence manufacturing sector. The private players have been asking for a level playing field with the Defence Public Sector Undertakings (DPSUs) for ages now. Still, whether it is Make in India or not they are not getting that. We need to separate the Defence Production Department from decision making on awarding the projects. The dual hat that the defence production department wears of looking after the interests of DPSUs and deciding on awarding contracts makes it suffer from a conflict of interest. This is detrimental to the building of the defence production capability as the private players are not even sure of getting an order and they have to invest hundreds of crores of rupees to compete for the order.

In spite of all the efforts to make the Make in India programme succeed, the ease of business index has not come down much. It indicates that the changes in the procedures and processes have not had the desired effect. There is a need to check on the implementation of the changes that have been put into effect with all the good intention.

Finally, let us do a comparison of Make in India and Made in China 2025. The comparison of both the programmes is given in the table below:

 

The title of the programmes themselves indicate the major difference. Make in India implies that indigenisation of the manufacturing is the main aim whereas Made in China 2025 implies that manufacturing in China for the rest of the world.  In the earlier article, the author has referred to Industries 4.0.  Made in China 2025 is a project that is aiming to reach the fourth edition of manufacturing to absorb the cutting edge technologies and make China a world leader in manufacturing. Make in India is more inward looking and aims to build India’s capacities and capabilities.

With a prayer for the success of Make in India, it is sign off time for this trilogy.

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