PM Modi’s ‘Make in India’ campaign aims to make India an attractive manufacturing destination for domestic and international companies. As the Government ropes in foreign investments to boost the economy, let’s take a look at how the initiative has contributed to some of India’s key sectors.
India’s electronics market is one of the largest in the world (evaluated at US$ 69.6 billion in 2012) and is estimated to be worth US$400 billion by 2022. Almost half of India’s population is under the age of 24 and this tech savvy youth population is demanding mobile phones, flat panel display TVs, tablets, desktops, digital cameras, etc. at a rapid rate. To cater to this demand, manufacturers would prefer to produce electronics locally to take advantage of low manufacturing costs and avoid transport costs and strict import regulations.
Ever since the Government launched Make in India, it has received investment proposals worth $17 billion for this sector of which 80% have come in just the past two months. Taiwanese firm, Foxconn, which produces devices for Apple, Blackberry, Amazon and Motorola is becoming one of the most aggressive foreign investors in India. The company even signed a $5 billion deal to set up research and manufacturing facilities in western India. It even began producing iPhone SE in a factory near Bengaluru. Other players like Samsung, Micromax and Acer have also begun assembling their electronics in India.
Contributing 7.1% to the country’s GDP, the Indian automobile industry is one of the largest in the world. Owing to a growing middle-class population and with major players now entering the market, India is likely to become a leader in the automobile market in the world by 2020.
Seeing this potential, American automobile giant General Motors has planned to invest $1 billion in India by 2020 to increase its production capacity at its Maharashtra plant. German auto mobile-maker Mercedes Benz already sources and manufactures several of its key components (eg: engine, gearbox, axle, dashboard, seats and tyres) locally. It has now increased the level of localization by 60%. It’s rival BMW too, signed deals with several Indian auto-component companies to take its localization level to 50%.
India’s current requirements of defense are met largely by imports. However, the government has now allowed the private sector to partner with foreign defense equipment manufacturers and have relaxed certain foreign investment norms like raising the FDI limit in this sector from 26% to 49%. With this new potential, major companies are already planning to manufacture guns, ships and military aircraft worth billions in India. Even the government has allocated a large amount of funding to boost this sector.
French aerospace company, Airbus Helicopters, has partnered with Mahindra Defense to produce military helicopters in India. Russia’s Kalashnikov Concern, makers of AK-47 assault rifles, is in discussions with Indian companies to manufacture certain weapons here and is open to sharing technology.
American conglomerate, Boeing, is the biggest global company to commit to the ‘Make in India’ program, partnering with Tata to make aircraft parts in India. Tata also signed a landmark deal with U.S defense giant Lockheed Martin to manufacture F-16 fighter jets in India.South Korean company Hyundai Heavy Industries (HHI) and Hindustan Shipyard Limited have joined hands to build warships. The defense ministry is also set to sign a $700 million deal with the US government to assemble 145 BAE Systems lightweight guns in India.
4. Textiles & Garments
The Indian Textile Industry contributes 4% to the GDP and provides jobs to over 45 million people, making it the second largest source of employment in India after agriculture. With the ability to produce natural fibres like cotton and man-made fibres like polyster at low costs, the textile and apparel industry in India is estimated to reach $100 billion by 2016-17 from $67 billion in 2013-14.
Encouraged by this, American chemical company Dupont has joined hands with Reliance and Vipul Sarees to make an ‘environment-friendly’ version of the Indian sari. American fashion retailer, Aéropostale, has partnered with Arvind Lifestyle Brands Ltd to open 30 stores in the country over the next three years. Other foreign companies that have invested in India include Rieter and Trutzschler, Zara, Mango, Promod, Benetton, Esprit, Levi’s and Forever 21.
5. Food Processing
By 2020, one-third of the population will be living in urban areas and therefore the demand for packaged and ready-to-eat food is expected to grow. Out of India’s total exports, 13% comes from this sector itself. Major global players are already present in India and are continuously increasing their investments.
Poland is set to double its investment in Punjab’s food processing sector by offering the latest state-of-the-art technology. Loulis Mills, a Greek company, expressed a desire to setup a wheat-based food processing unit in Madhya Pradesh. Papa John’s India Inc. plans to merge with the Pizza Corner brand to become the third-largest pizza chain in India. Restaurant search-service Zomato raised US$ 110 million from existing investors and is now present in 22 countries and over 500 cities around the globe.
It’s been over a year since the ‘Make In India’ campaign was launched and despite debates about its scalability, there has been a significant response to it so far. However, to truly become a “global manufacturing hub”, India will have to open up its gates to a lot more complimentary policy reforms. While PM Modi has repeatedly promised that the Government is doing everything to augment the campaign, whether ‘Make in India’ gets consistent and sustainable support is yet to be seen.