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Oct 22, 2014 12:10 pm
Make in India

Objectives and Background:

This is one of the pillars for the economy to soar ahead and along with Inclusive Banking (Jan Dhan Yojana), Clean India (Swachh Bharat Abhiyan) and Digital India one of the key focus areas of the NPA Government.

The Government clearly wants to leverage what the PM calls the 3 Ds

  1. Democracy
  2. Demographics
  3. Demand

The aim is to look at 10% growth every year in Manufacturing and establish India as a manufacturing base. 

 

Good signs:

Some of the signs that are encouraging are:

  • Government’s commitment
  • Commitment by US, Japan and China to the tune of 100 Billion $
  • Setting up of centres for R and D – Auto companies using India as a base, Xiaomi promising a 1000 seat R and D centre in Bangalore.
  • Government easing license and labour laws and reducing arbitrary powers of Inspectors
  • Tremendous response of PIOs in US
  • FDI in Defence Production and Insurance hiked up to 49%
  • Highest return of over 28% in the stock exchange in the past 12 months

 

Areas of concern:

However despite the above there are misgivings – the Government is aware of many of them and is trying to address some of these issues

  • India is not a signatory to WTO on account of our unwillingness to reduce food subsidy to 10%
  • Retrospective tax (Vodafone) and an uncertain tax regime on transfer pricing etc. – Shell, IBM, Nokia – all are victims
  • Uncertain legislation on Land Acquisition and Environment clearances
  • Fine print beyond legislation – example Insurance Bill mandates Indian Management and Control, even though the foreign investor may hold 49%!
  • Uncertain IPR laws
  • Export rejects – quality issues – Pharma sector and FDA
  • Experience of companies like Walmart – clearance regime for new businesses need to become simple
  • IIP flat again in September – way behind 10% planned

 

What could be done and perhaps will be done:

The Government has made its intentions clear at welcoming investments and reducing bureaucratic hurdles

Infrastructure and Logistics

Quickly iron out areas of concern – Insurance example above

Labour Reforms to be seen through

Clear and predictable guidelines are required on Tax and various clearances. The issue here is predictability and clarity

Skilling India quickly – question is education versus skills

 

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