If there was one common agenda that Prime Minister Narendra Modi tried to pursue during his visits to 27 foreign countries this year, it was undoubtedly his campaign to promote India as a manufacturing base. The “Make in India” campaign has been the most high-profile international propaganda carried out by the Central government in 2015.
The government claims that the campaign, launched globally in September, 2014, has made an impact on the investment climate of the country in the past 15 months.
One of the oft-quoted positive impacts of the campaign is the increase in foreign direct investment (FDI). India attracted $31 billion of FDI in the first half of 2015, ahead of $28 billion of China and $27 billion of the US.
“The growth in FDI has been significant after the launch of Make in India initiatives, with a 48 per cent increase in FDI equity inflows during October 2014 to April 2015 over the corresponding period last year,” claims Amitabh Kant, secretary, Department of Industrial Policy and Promotion (DIPP), the government agency in charge of the Make in India campaign.
The electronics systems design and manufacturing (ESDM) market is one area where the government claims to have received tremendous investment interest during 2015.
Foxconn’s intention of investing over $5 billion in India and announcements made by the likes of Xiaomi, Cisco, LG, BrightSKY, Philips, Thomson, Samsung, LG, Flextronics and Quanta are all being highlighted as proof of this interest.
Retail segment is next. IKEA’s plans to open 25 stores across India, entailing an outlay of Rs 12,500 crore and entry and expansion plans of GAP, Wal-Mart and H&M group, etc are the ones that are highlighted.
The government is also taking credit for the announcements of investment plans from auto sector companies such as General Motors, Volvo, Fiat, Daimler-Benz, etc. and solar energy players such as Softbank, Foxconn and Bharti Enterprises. The plans of defence sector entities like Dassault, Boeing and Airbus to invest in India have also been highlighted. Bullet train link between Ahmedabad and Mumbai using Japan’s Shinkansen bullet train technology and Bombardier’s Make in India plans for rolling stock are the major examples cited from the infrastructure sector.
Investment plans of food processing companies and firms in the insurance sector are all brought under the single Make in India campaign umbrella to enhance its positive impact.
While “Make in India” will definitely be the most talked about campaign of the year, the fact remains that “making in India” has not been so promising during 2015.
As the mid-term review of the economy carried out by the finance ministry shows, growth in capital goods imports, which partially proxies for investment, has decelerated sharply from about 12 per cent in April 2015 to barely positive territory. Commodities such as steel, iron, aluminium and cement are all doing less well.
The overall Index of Industrial Production (IIP) has grown marginally faster in the first six months of this year because of the good performance of power, fertilisers and automobile sectors.
The eight core infrastructure supportive industries, with an overall weight of 37.9 per cent in IIP, registered a year-on-year growth of 2.3 per cent during April-September 2015/16 as against the growth of 5.1 per cent during the corresponding period of the previous financial year. The decrease in growth rate during April-September 2015 can be attributed to lower growth in electricity, coal and cement sectors and negative growth in steel and natural gas sectors.
The success of the “Make in India” campaign will be gauged by the success of Indian manufacturing in the coming years.