Although the week-long Make in India event managed to create a buzz to boost manufacturing in India, a lot is still to be done to take the share of manufacturing from the current 17 per cent to 25 per cent of the gross domestic product, say chief executive officers (CEOs).
On Thursday, the last day of the Make in India week held in Mumbai, the central government announced it received investment commitments worth Rs 15.2 lakh crore or $222 billion during the week, But, a quick perusal of investment commitments shows many of these had been announced earlier.
Make in India only a first step, say CEOs Take, for instance, the Digital India conference held by the Narendra Modi government held in July last year. During the event, Anil Agarwal-owned Sterlite had announced Rs 40,000 crore of investments in liquid crystal display (LCD) unit in India. This week, Vedanta announced an Rs 68,000-crore LCD unit in Maharashtra. Similarly, many companies only reiterated their capital expenditure plans as fresh investments during the Make in India week.
The week was held in the backdrop of falling stock markets, rising bad loans of banks, and record low capacity utilisation of Indian factories.
CEOs say even though the investment commitments will take at least two years to fructify, the event has showed the commitment of Modi’s government to take the country forward. “Make in India is a step in the right direction and all the measures are to stimulate the demand for goods and services in the economy. That means, the government must invest in infrastructure that is the prime move forward,” said Ravi Uppal, CEO and managing director of Jindal Steel & Power.
Apart from Modi, finance minister Arun Jaitley, defence minister Manohar Parrikar, power minister Piyush Goyal, road and transport minister Nitin Gadkari, and Maharashtra chief minister Devendra Fadnavis made a plea to investors to start investing in the country – taking into account India’s huge potential. Goyal said the country offers investment potential worth $1 trillion (Rs 68 lakh crore) in power sector by 2030, while Gadkari asked investors to take advantage of $250 billion to construct 50,000 km of roads.
Indian industry has always complained of creaky infrastructure in the country, which has stalled growth. “Infrastructure has not been able to match the pace of growth in the country. What we lacked is thinking big enough for the growth that we could achieve,” said Ratan Tata, former chairman of Tata group.
The good news from the event was that Maharashtra government would award contracts to build the trans-harbour sea link between Mumbai and Navi Mumbai by October this year. The project will cost Rs 17,750 crore and, of this, almost Rs 15,000 crore will be lent by Japan government at very low interest. But, the entire positive atmosphere created by the Modi government was sullied by an income-tax notice to Vodafone — which is fighting a battle with the Indian government over retrospective tax. “The timing of the notice shows the Modi government is not getting support from its own officials,” said a tax advisor.
No wonder that Vodafone reacted angrily saying the government and the tax department are not in sync with each other.
Global defence companies promised to set up units in India if the government gives them orders for defence equipment. The Modi government wants defence imports to fall to 40 per cent from the current 65 per cent and has asked Indian companies including the Tatas, Mahindras, Bharat Forge to set up units in India so that it can pass on the orders to local firms. This, the government says, will help in local job creation and save precious foreign exchange.
Corporate India expects the Budget to be presented by Jaitley on February 29 will include tax and banking reforms, which would help local manufacturing. Says Banmali Agrawala, GE south Asia president and CEO: “The economy needs faster reforms, which would make the entire Make in India initiative more impactful. However, India will have to balance the economic development and social and political side of that.”
Aditya Birla group chairman Kumar Mangalam Birla said: “There is no secret sauce of manufacturing that we are not aware of… It is just like making an elephant dance. It just cannot happen in a few months.”