MAKE IN INDIA
The Industrial revolution which started in 18th century which converted mainly Agrarian , rural societies of America and Europe and industrialized and urbanized them. Manufacturing at large scale , complex and efficient manner made those nation’s economy prosper . There is a chain of transformation throughout the world which is from Agrarian economy to Manufacturing based economy to Services based economy . But in case of India’s our GDP composition sector wise , Services(56.9 %),Manufacturing (25.8 %) and agriculture(17.4 %) . So we actually skipped manufacturing and directly went to services based economy which is untenable in the long run. So the present NDA government is giving all the right signals by the slogan “Make In India” , they actually want to boost the manufacturing sector growth and higher contribution to overall GDP.

The most important attributes which help in development of manufacturing sector :

* Infrastructure : Manufacturing sector is totally dependent on the level of infrastructure support their in the country .

Limitation : 1) But presently the level of infrastructure is poor , shortcoming while transporting raw materials and finished products to their respective destination , power shortage for running the plants . 2) The banks in India are not big enough compared to the banks of developed economies or other emergent economies to fund large infrastructure projects

Steps Taken/Proposed : 1) Government are looking forward to fund the infrastructure projects through PPP model . 2) The MD of SBI , Arundhati Bhattacharya actually said we should go forward and merge some of the banks and have larger banks to fund the infrastructure projects. 3) In the budget 28th Feb,2015 , the Finance minister Arun Jaitley allocated 70000 crores in Infrastructure sector , Tax free bonds to incentivize projects in rail road and irrigation and also proposes to set up 5 ultra mega power project , each of 4000MW.

* Labour laws : The present labour laws in India is not that manufacturing friendly and it needs modification and alignment with international standard so that we bring in more international manufacturers

Limitation : 1) We have around 250 labour rules at the central and state level which makes it very complex to function with . 2) The industrial Disputes Act(1947) has compulsory provisions on prior government approval in cases of layoffs , retrenchment and closure of industrial establishments employing more than 100 workers . This is obstructing businesses to introduce new technologies that may require workers retrenchment. 3) The contract Labour Act(1970) states that if job content or the nature of work of an employee need to be changed , 21 days notice must be given .In practise the changes also require the consent of the employees . This is obstructing up scaling or downscaling of production and dynamic movement of human resource in the labour market. 4) Trade Union Act (1926) allows outsiders to be office bearers of trade union.This can bring lockouts or strikes from external sources.

Steps Taken/Proposed :

1) The NDA government’s cabinet has proposed amendments to Factories Act(1948), includes doubling the provision of overtime from 50 hrs a quarter to 100 hrs in some cases , and from 75 hrs to 125 hrs in work of public interest . 2) Amendments to the Labour Laws Act(1988) will let companies hire more employees without having to fill burdensome requirement. 3) The State government of Rajasthan encouraged by the Central Finance Minister has made numerous labour reforms. 4) The Modi Government announced two key labour reforms(16th ,2014) , the ‘unified labour and industrial portal’ and ‘labour inspection scheme’.

* Complex taxation system : The present Indian taxation system is very complex with there are many indirect taxes taken at different level of production.

Steps Taken/Proposed :

1) The GST(Goods and Services Tax), applicable from 1st April,2016 which are going to replace all the indirect taxes into a single point tax , will simplify the process and help manufacturing prosper.

* Skill level of the resources :
For manufacturing to prosper we need to improve the skills of our workers which will make the manufacturing more efficient , of higher quality and cost competitive.

Steps Taken/Proposed : 1) The government has increased the number IIT’s and IIM’sto improve the numbers of engineers , management students to improve the standard of manufacturing in India. 2) Build new ITI’s to improve practical skills among resources. 3) Government and business should collaborate with universities to develop cutting edge technologies which can be used to improve manufacturing to larger extend

* Land Acquisition Laws : The Land acquisition bill passed by UPA 2013 has some serious shortcomings .

Limitation 1) Developers require 80 percent consent of the people whose land is acquired for private projects and 70 percent of the consent for public project . This type of rule is practically untenable and can lead to serious obstruction to install the project. It resulted in clashes in states like Haryana and Uttar Pradesh between farmers and state authorities. 2) The proposal is compensation of upto 4 times market price of land in rural areas and 2 times the value in Urban area. It will lead to increase in property purchase cost by at least 40 to 60 percentage making industrial projects financially unviable .
Steps Taken/Proposed :

1) The present NDA government is going to take steps to make the bill more practically sustainable. 2) The government has amended section 10(A) of the act to Remove consent clause(for 5 sectors like national security, defence, rural infrastructure including electrification, industrial corridors and housing for poor’s including PPP) and social impact assessment.

* Objective of Indian business house should change : Rather than only producing for domestic market , should look forward to make world class products which can be exported and consumed by developed countries of Europe and USA. For that innovative methods should be developed through heavy investment in R & D . * No Standardization in allocation of resources : The allocation of resources ranging from coal to bandwidth there is a considerable amount of Adhocism attached , clearly leading to crony capitalism . There are times when licenses are cancelled and it let to a situation where businesses has to import coal at higher rate , where abundant coal is available in India. * Restrain in Environmental clearance: The laws on environmental clearance should be well structured and practical.

So from the above discussion what was absolutely clear is that to develop an internationally competent manufacturing sector you need developed infrastructure, skilled labours for execution, labour laws and tax laws which help you compete in the global level and considerable investment in R & D so that we develop innovative techniques to generate competitive advantage in the global platform . So it is needs a great commitment on the part of the government (to pass competitive laws and financial reforms) and the private sector to maximize from the opportunity bestowed on them.

As of now the present government has made all the right gestures and signals , it is now to see how it ends up and do we really end up in a manufacturing hub which has overall Current account surplus like countries Germany , Russia , China , Singapore and Malaysia .