Make in India Archives - Lokmarg

China Could Help Make the ‘Make in India’ Dream Come True

By Sanjoy Narayan 14th May 2023

China could help the ‘Make in India’ dream come true

It is easy to slam the Indian government’s policies and initiatives, particularly those related to the economy and development. The Modi government’s “Make in India” initiative is one that has been the target of several brickbats. Make in India was launched by the Indian government in September 2014, barely four months after the Bharatiya Janata Party (BJP) came to power and Narendra Modi took over as Prime Minister, and it was among the earliest of the major economic policies announced by his government.

Make in India aims at encouraging companies to manufacture their products in India. The initiative is based on four pillars that have been identified to give a boost to entrepreneurship in India, not only in manufacturing but also other sectors: new processes, new infrastructure, new sectors, and a new mindset. The idea was to offer India as a base for manufacturing to both, foreign and domestic enterprises, by simplifying procedures, incentivising investments, and easing regulations.

To be fair, the Make in India model has been successful in attracting foreign direct investment (FDI). If you exclude the extraordinary circumstances during the pandemic period, FDI inflow has increased by 23% post-Covid (during March 2020 to March 2022 it was reported at $171.84 billion) in comparison to FDI inflow reported pre-Covid (during February, 2018 to February, 2020 it was $141.10 billion).

Yet, it doesn’t take Indian manufacturing to anywhere near the world’s largest factory, In 2022 alone, FDI flows to China reached around $189.1 billion. There is, however, a silver lining for India in what is happening in China.

China is still the world’s largest manufacturer of a wide range of products, both consumer as well as industrial. Its surge to the top began in 2001 when its economy opened up and it joined the World Trade Organisation and multinationals made a beeline to invest in the country. But of late, things are changing and companies are looking at alternative bases for their manufacture. First, as China’s economy grows, labour costs have been rising. Second, there has been pressure from the Chinese government, which controls and regulates almost everything in the economy, to seek technology transfers to Chinese companies so that they could compete with Western MNCs. Third, there have been consequences of the Trump regime’s sanctions against China and the Covid-related lockdowns in the country. And, fourth, there has been significant decline in China’s relations with the West.

Now, Western foreign direct investors are trying to find alternative bases for their manufacturing activities. And, among other destinations such as Malaysia, Vietnam, Thailand, and Mexico, India is also increasingly finding favour.

Apple, the maker of the iconic iPhone, recently announced that it would significantly increase its production in India, including manufacture of its latest models. Other companies are intending to do the same.

There are still hurdles to cross. In comparison to China, India’s global supply chain linkages are still underdeveloped; infrastructure is still hobbled with bottlenecks: and regulations, although simplified, can still be overwhelming for investors.

By all indications, though, the Indian government is working on these. Investments in new ports and airports, railroads, and power generation are underway and efforts are on to simplify the red tape hurdles that investors often encounter.

Apple could also herald a change for the better. Foreign investors often display lemming-like behaviour. So, if Apple expands its manufacturing base in India, it could set an example for others to follow. At least the Indian government hopes that it would.

Congress dashes BJP’s southern dreams

The Congress party, which has had a poor track record of winning state elections in nearly a decade, roughly after the BJP came to power in 2014, pulled off a victory in the southern state of Karnataka, unseating the incumbent BJP-led government and securing an overwhelming majority.

Before winning Karnataka, the Congress ruled in only three– Chhattisgarh, Himachal Pradesh and Rajasthan—out of India’s 28 states. Now Karnataka adds to that tally.

While the Congress has called its victory a triumph over the “divisive politics” of the BJP, its win has several implications.

First, the BJP’s hopes of making an inroad into the southern states where its influence and sway is marginal have now suffered a setback. Second, the Congress’ victory could signal that it could still pose a challenge for the BJP in the coming parliamentary elections scheduled for 2024. Third, it implies that the Modi magic may be wearing thin—the BJP campaigned in Karnataka mainly by peddling Modi’s persona and image (he himself addressed nine rallies in the state). And fourth, it shows that money, power, and organisational strength, all attributes in which the BJP tops the Congress, may not be enough when it comes to winning the favour of the electorate.

Shinde (and confusion) continue in Maharashtra

If you are a bit confused about what’s going on in Maharashtra, I can assure you that you will stay confused after reading the following paragraphs.

After a split in 2022 created two factions of the Shiv Sena party in Maharashtra, a crisis followed when the Election Commission awarded the use of the title Shiv Sena and its recognisable election symbol of the bow and arrow to the faction led by the party’s rebel leader and current Maharashtra chief minister, Eknath Shinde, who had assumed office after Uddhav Thackeray, the son of the founder of the party, the late Bal Thackeray, had resigned. The controversy was about whether the state’s governor should have invited the BJP (in alliance with the Shinde faction) to form a government.

This was contested and last week the Supreme Court ruled that it could not order the restoration of the Thackeray government after he had resigned as chief minister of the state because he had done so without facing a floor test. The court, however, strongly criticised the then Maharashtra governor, Bhagat Singh Koshyari, for deciding to help the Shinde faction and in concluding that Thackeray had lost the support of the majority of his party’s MPs.

So, Shinde, who became chief minister because the governor had erred, remains chief minister: Thackeray gets some sort of moral win (although nothing material that would change things for him and his faction), and the status quo continues.

As promised, surely you are still as confused as you were before reading this item.

The mess in Pakistan gets messier

Pakistan’s former prime minister, the celebrity cricketer-turned-politician, Imran Khan, 70, was arrested last week on corruption charges. The allegations were that he had benefited from receiving land as a bribe for political favours when he was prime minister during 2018-2022 and that he had also illegally sold official gifts that he had received when he travelled abroad on official trips. Then, after a couple of days, on an appeal to the courts, he was released on bail. The charges still stand although he cannot be rearrested on the same charges for two weeks, according to the bail order.

Meanwhile, as political crisis grows in Pakistan, the country hurtling into severe economic crises. Economic growth has been sputtering, and inflation has soared. Excessive external borrowings by the country over the years has raised the spectre of default, causing the currency to fall and making imports more expensive in relative terms.

million over the past year. There are fears that Pakistan could default on debt.

Mass shootings in the US: please do the math

Gun rights in the United States refer to the legal protections and privileges afforded to individuals regarding the possession, use, and ownership of firearms. These rights are primarily derived from the Second Amendment to the United States Constitution, which states: “A well-regulated militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”

A judicial interpretation of that right that prevails states that “is that the Second Amendment protects an individual’s right to possess firearms for self-defence within their home”.

What it means is that in the US, which considers itself as one of the most developed and forward-looking nation (disclaimer: it is their view, not mine), it is easier for an individual to get guns and keep them than it is in most other places in the world.

Now for some statistics: In the less than five months of 2023 that have elapsed, there have been 185 incidents of mass shootings in which 254 people have been killed, and 708 injured. Most of these have been unprovoked attacks aimed at innocent humans.

Please do the math: in less than 140 days, there have been 185 shootings and more than 250 innocent people have been killed. You won’t be at fault if you think the American Dream is really a nightmare.

Army To Buy 307 ATAGS Howitzers

By LokMarg 1st March 2023

In a major stride towards the ‘Make-in-India’ in the defence sector, the Ministry of Defence has received a proposal from Indian Army to buy 307 Advanced Towed Artillery Gun Systems (ATAGS) for deployment along the borders with China and Pakistan.

The proposal worth over USD 1 billion has been received from the Indian Army and is under discussion. It is expected to be cleared soon and sent for clearance by the Cabinet Committee on Security, defence officials told ANI.
This would be the first order for the indigenous howitzer which can strike targets at around 50 kms and is believed to be the best gun in its class, they said.

The forces have been conducting trials of the gun in different altitudes and terrain. They have been upgraded as per the suggestions made by the users, the officials said.

The technology and know-how of raw howitzer have been shared with two private firms Tata Advanced Systems and Bharat Forge group by Defence Research and Development Organisation (DRDO) and they would be supplying the system to the forces including over 320 high mobility vehicles.

The trials of the 155mm/52 calibre Advanced Towed Artillery Gun System (ATAGS) were completed at the Pokhran Field Firing Range (PFFR) between April 26 and May 2.

The ATAGS is an indigenous towed artillery gun system project undertaken in mission mode by the DRDO as a part of the artillery modernisation programme of the Indian Army, the statement added.

Armament Research and Development Establishment (ARDE) Pune is the nodal laboratory of the DRDO for the design & development of ATAGS, along with other DRDO laboratories.

The development has been done with two industry partners, Tata Advanced Systems Ltd and Bharat Forge Ltd, along with the active participation of other industries.

The reliability of both guns has been proven by firing multiple rounds in various zones, including burst, intense & sustained modes. High accuracy and consistency in range and line with maximum range have been established, the DRDO had said recently. (ANI)

Highest Annual FDI Inflow Of $ 84.84 BN In 2021-22: Govt

By LokMarg 7th December 2022

Centre’s reforms resulted in a consistent increase in Foreign direct investment (FDI) inflow which has grown from USD 45.15 billion in 2014-2015 to USD 84.84 billion in 2021-22, the Minister of State for Commerce and Industry, Som Parkash said in reply to Parliament on Wednesday.

‘Make in India’ is an initiative launched on September 25, 2014, to facilitate investment, foster innovation, build best-in-class infrastructure, and make India a hub for manufacturing, design, and innovation. It is one of the unique ‘Vocal for Local’ initiatives that promoted India’s manufacturing domain to the world, the Minister said.
According to the Ministry of Commerce and Industry, the ‘Make in India initiative has significant achievements and presently focuses on 27 sectors under Make in India 2.0. The Department for Promotion of Industry and Internal Trade (DPIIT) coordinates action plans for 15 manufacturing sectors, while the Department of Commerce coordinates 12 service sector plans. Investment outreach activities are done through Ministries, State governments, and Indian Missions abroad for enhancing International cooperation and promoting both domestic and foreign investment in the country.

In addition to ongoing schemes of various Departments and Ministries, the government has taken various steps to boost domestic and foreign investments in India. These include the introduction of Goods and Services Tax, reduction in Corporate tax rate, interventions to improve ease of doing business, FDI policy reforms, measures for reduction in compliance burden, policy measures to boost domestic manufacturing through public procurement orders, Phased Manufacturing Programme (PMP), to name a few, MoS Som Parkash said.

The reforms taken by Government have resulted in increased FDI inflows in the country. FDI inflows in India stood at USD 45.15 billion in 2014-2015 and have continuously increased since then, and India registered its highest-ever annual FDI inflow of USD 84.84 billion (provisional figures) in the financial year 2021-22, he said.

He said the series of measures taken by the Government to improve the economic situation includes the introduction of the Production Linked Incentive (PLI) scheme in various Ministries, investment opportunities under the National Infrastructure Pipeline (NIP) and National Monetisation Pipeline (NMP), India Industrial Land Bank (IILB), Industrial Park Rating System (IPRS), the soft launch of the National Single Window System (NSWS), etc. An institutional mechanism to fast-track investments has been put in place, in the form of Project Development Cells (PDCs) in all concerned Ministries/ Departments of the Government of India along with an Empowered Group of Secretaries (EGoS).

Keeping in view India’s vision of becoming ‘Atmanirbhar’ and enhancing India’s manufacturing capabilities and exports, an outlay of Rs 1.97 lakh crore (over USD 26 billion) has been announced in Union Budget 2021-22 for PLI schemes for 14 key sectors of manufacturing, starting from fiscal year (FY) 2021-22, the Minister informed. (ANI)

Why India Needs A Robust Research Base

By Kunal Bose 12th November 2021

An IIT Kharagpur graduate who through all semesters did exceedingly well finally left his mentor and teacher disappointed when instead of doing PhD and spending his life in research and furthering the frontiers of knowledge, he took up a job with a leading foreign owned FMCG group. Over the years, he became a senior vice president of there and was in contention for the office of chairman. He didn’t wait for the outcome of the final roulette. Instead he accepted directorship of Tata Sons, the holding company of all Tata enterprises from automobile to steel to information technology. A great success story in the corporate universe by any yardstick. But his late mentor would never hide his disappointment that the world of academia lost a potentially great researcher to the pull of corporate security and financial rewards.

What happened to this man some five decades ago is still a common occurrence in India. But this is not a unique Indian phenomenon. In developed economies too, many who would do well in pure science research are lured away by the corporate world. There, however, the problem is less acute. Senapathy Kris Gopalakrishnan, cofounder of Infosys and its CEO and managing director from 2007 to 2011, says the problem would not be manifest to the prevailing extent in India had the research ecosystem allowed people to take risks that will not lead to career ruination.

He himself asks the question and then gives the reply: “What is it that allows you to take risks and safely fail without it destroying your entire life? A lot of people tend to pick what is safe because that is more likely to be successful. There’s is a carefully chalked out path for research in academia and when it comes to innovation, we don’t try to be transformative, we try to be incremental. That’s because we are trained to be risk averse, and we recognise that consequences of failure can be very high.”

But times are changing, though not when it comes to undertaking highly time-consuming fundamental research. Let’s consider why are we seeing so many start-ups in the country and some of them becoming unicorns (a unicorn is a privately owned company with a valuation of over $1 billion) over a period of time? From Flipkart, a start-up that Walmart bought by paying $16 billion in 2018 May to hotel aggregator Oyo that is ready to make an IPO to raise over Rs8 billion, many new entrepreneurs have successfully promoted businesses making innovative use of internet and IT.

No doubt what has aided start-ups are family encouragement and funds availability first from venture capitalists (VCs) and then when incubation period is over from hosts of domestic and foreign investors. The media as it is its wont will highlight stories of successful start-ups. There are failures too, not meaning, however, the end of road for start-up founders. Gopalakrishnan wants the same to happen in the “academic and the research environment allowing one to take highly risky, ambitious projects and then try and succeed. Some of these are very long-term, so there’s a commitment required for maybe 10-20, sometimes 30 years.”

What family indulgence and VCs are doing to start-ups, patronage of the government and industry, both in the public and private sectors could do to bring about a fundamental change in the texture of research in India. Take our IT industry of whose rapidly growing turnover, exports and profits we remain boastful. The world is evolving from knowledge economy to the age of artificial intelligence and virtuality. Worth of our IT companies should be judged by their prowess in consulting and capacity to develop software for a variety of applications. As one observer rightly points out, “Indian IT groups are stuck as bottom-feeders, a breed of techno-coolies with no high-end development to claim credit.” The industry may, however, seek solace that TCS, Infosys, HCL Technologies, Wipro and Tech Mahindra find place in Thomson Reuters’ list of “Top 100 Global Tech Leaders.”

The Indian groups in the list are certainly not in the same league as Microsoft, Apple, IBM and Accenture and none of them regrettably is doing enough to get to the coveted position. Even then that Indians working in the West are among the best IT visionaries in the world are borne out by the likes of Satya Nadella, Sundar Pichai and Arvind Krishna guiding Microsoft, Google and IBM, respectively to future growth through robust investment in research and talent and encouraging researchers to take risks without being afraid of failures.

So given the kind of environment that creates a Satya or a Sundar, Indians working in India will be able to take the IT industry to a plane that will be in alignment with the best in the world. No doubt the realisation is donning on the industry here that its R&D needs reinforcing. But look at Infosys annual report – both in financial years ending 2020 and 2021, its allocation for R&D was just 0.6 per cent of revenue. Chairman Nandan M. Nilekani and CEO & MD Salil Parekh must address the issue forthwith. Leaders of other iconic Indian IT groups should also do the same.

Companies whether in IT or in any other industry will not have to do all research work by themselves. Many of them are already assigning projects to IITs and research institutions and reaping benefits of such partnerships when research results are successfully commercialised. What a phenomenal collaboration the world saw recently when AstraZeneca and Oxford University worked together for development and distribution of the “recombinant adenovirus vaccine aimed at preventing COVID-19 infection from SARS-CoV-2.”

A few years ago, India too has seen a major breakthrough in developing an early variety and very high sucrose content sugarcane first grown in Uttar Pradesh. The large scale cultivation of the new variety of sugarcane CO-0238 since its introduction in 2012-13 has made significant contribution to the country breaking cyclicality in sugar production to become an ever export surplus producer. Developed at the Indian Council of Scientific Research’s Sugarcane Breeding Centre at Coimbatore, the high-yielding seed is getting progressively introduced in many other sugarcane growing states. This remains a shining example of what an Indian research organisation is capable of doing when there is an ideal collaboration with the industry (in the present instance sugar factories represented by Indian Sugar Mills Association.)

Nobody will question the capacity of Indian scientists to deliver. The challenge is in making available sufficient resources and the right kind of infrastructure. Gopalakrishnan says: “We need to also think about mission-mode programmes with clear goals, ambitious targets and larger teams working on a problem.” The problem is inadequacy of funds for carrying out research work. Just about 0.7 per cent of the country’s GDP is spent on research and most of that coming from the government with a share of 0.6 per cent. Gopalakrishnan would like this to go up to 3per cent of GDP, contributed equally by the government and private sector.

That being said, he says: “We need more people getting into science and scientific research. This has to start from school. We need to create curiosity in children to taken on careers in research, etcetera. Second, we need to ensure that we have enough students getting into PhD programmes. We need to have some mission for the nation to look at certain areas where we direct scientific infrastructure…” The two important goals that the country wants to pursue vigorously are “Aatmanirbhar Bharat” and “Make in India” for the domestic and world markets. To make a success of these, the country first needs a robust research base.