Make in India is a government initiative launched by the Prime Minister of India, Narendra Modi in 2014, with an aim to transform India into a global manufacturing hub. The policy aims to attract foreign investment, create job opportunities, and promote entrepreneurship and innovation in India. In this blog, we will discuss the Make in India policy and its impact on Indian businesses.
Make in India policy: The Make in India policy has five key objectives:
- To increase the contribution of the manufacturing sector to the GDP of India.
- To create employment opportunities in the manufacturing sector.
- To promote entrepreneurship and innovation.
- To reduce dependence on imports and increase exports.
- To promote sustainable manufacturing practices.
The policy aims to achieve these objectives by providing a conducive environment for businesses to set up manufacturing units in India. The government has implemented several measures to achieve these objectives, including:
- Streamlining the process of obtaining licenses and approvals.
- Relaxing FDI norms in various sectors.
- Setting up special economic zones (SEZs) and industrial corridors.
- Providing financial incentives to businesses.
- Developing infrastructure such as roads, ports, and airports.
- Promoting research and development in the manufacturing sector.
Impact on Indian businesses:
- Increased FDI: The Make in India policy has resulted in a significant increase in foreign direct investment (FDI) in India. According to the Department for Promotion of Industry and Internal Trade, India received a total FDI of USD 81.72 billion in 2020-21, compared to USD 44.36 billion in 2013-14, before the launch of the Make in India policy.
- Job creation: The policy has also resulted in the creation of employment opportunities in the manufacturing sector. According to the National Statistical Office, the manufacturing sector in India employed around 61 million people in 2019-20, compared to around 52 million people in 2013-14.
- Increase in manufacturing output: The Make in India policy has led to an increase in manufacturing output in India. According to the Index of Industrial Production, the manufacturing sector in India grew by 8.6% in February 2021, compared to the same period in the previous year.
- Reduction in import dependency: The policy has also resulted in a reduction in import dependency in various sectors. For example, the government\’s focus on promoting domestic production of mobile phones has led to a reduction in import of mobile phones in India. According to the Ministry of Electronics and Information Technology, the import of mobile phones in India reduced from USD 21.04 billion in 2014-15 to USD 2.91 billion in 2020-21.
Make in India policy and its impact on Indian businesses.
- Increased FDI: The Make in India policy has been successful in attracting foreign direct investment (FDI) in India. The government has relaxed FDI norms in various sectors to attract investment. As a result, the FDI inflows in India have increased significantly since the launch of the Make in India policy.
According to the Department for Promotion of Industry and Internal Trade, India received a total FDI of USD 81.72 billion in 2020-21, compared to USD 44.36 billion in 2013-14, before the launch of the Make in India policy. This is a significant increase of 84% in just seven years.
The top sectors that attracted FDI inflows in India in 2020-21 were services, computer software and hardware, telecommunications, trading, and automobile. These sectors have the potential to create job opportunities and contribute to the growth of the Indian economy.
- Job creation: The Make in India policy has also resulted in the creation of employment opportunities in the manufacturing sector. According to the National Statistical Office, the manufacturing sector in India employed around 61 million people in 2019-20, compared to around 52 million people in 2013-14.
The government has taken several measures to promote job creation in the manufacturing sector. For example, the government has set up special economic zones (SEZs) and industrial corridors to attract investment and promote the growth of the manufacturing sector. The government has also implemented the Pradhan Mantri Mudra Yojana to provide financial assistance to small and medium enterprises.
The growth of the manufacturing sector in India has the potential to create more job opportunities and reduce unemployment in the country.
- Increase in manufacturing output: The Make in India policy has led to an increase in manufacturing output in India. According to the Index of Industrial Production, the manufacturing sector in India grew by 8.6% in February 2021, compared to the same period in the previous year.
The growth of the manufacturing sector in India has been driven by various factors, including the government\’s focus on infrastructure development, ease of doing business, and the availability of skilled labor.
The government has also launched various schemes and initiatives to promote the growth of the manufacturing sector. For example, the government has launched the Production Linked Incentive Scheme to promote domestic manufacturing in various sectors such as electronics, pharmaceuticals, and automobiles.
- Reduction in import dependency: The Make in India policy has also resulted in a reduction in import dependency in various sectors. The government\’s focus on promoting domestic production has led to a reduction in the import of various goods in India.
For example, the government\’s focus on promoting domestic production of mobile phones has led to a reduction in import of mobile phones in India. According to the Ministry of Electronics and Information Technology, the import of mobile phones in India reduced from USD 21.04 billion in 2014-15 to USD 2.91 billion in 2020-21.
Similarly, the government\’s focus on promoting domestic production of defense equipment has led to a reduction in the import of defense equipment in India.
Statistical Analysis:
- FDI Inflows: The Make in India policy has been successful in attracting foreign direct investment (FDI) in India. The following table shows the FDI inflows in India from 2013-14 to 2020-21:
| Year | FDI Inflows (USD billion) |
|---|---|
| 2013-14 | 44.36 |
| 2014-15 | 45.15 |
| 2015-16 | 55.46 |
| 2016-17 | 60.22 |
| 2017-18 | 60.97 |
| 2018-19 | 62.00 |
| 2019-20 | 74.39 |
| 2020-21 | 81.72 |
The FDI inflows in India have increased significantly since the launch of the Make in India policy. The FDI inflows in 2020-21 were almost double the FDI inflows in 2013-14.
- Manufacturing Sector Growth: The Make in India policy has led to an increase in the growth of the manufacturing sector in India. The following graph shows the growth of the manufacturing sector in India from 2013-14 to 2020-21:
- The growth of the manufacturing sector in India has been steadily increasing since the launch of the Make in India policy.
- Job Creation: The Make in India policy has also led to the creation of employment opportunities in the manufacturing sector. The following graph shows the employment in the manufacturing sector in India from 2013-14 to 2019-20:
- The employment in the manufacturing sector in India has been steadily increasing since the launch of the Make in India policy.
- Reduction in Import Dependency: The Make in India policy has also resulted in a reduction in import dependency in various sectors. The following table shows the import of mobile phones in India from 2014-15 to 2020-21:
| Year | Import of Mobile Phones (USD billion) |
|---|---|
| 2014-15 | 21.04 |
| 2015-16 | 13.33 |
| 2016-17 | 5.57 |
| 2017-18 | 1.81 |
| 2018-19 | 2.90 |
| 2019-20 | 2.84 |
| 2020-21 | 2.91 |
As seen in the table, the import of mobile phones in India has reduced significantly since the launch of the Make in India policy. The import of mobile phones in 2020-21 was almost one-seventh of the import of mobile phones in 2014-15.
The Make in India policy has been successful in attracting foreign investment, creating employment opportunities, promoting entrepreneurship and innovation, and reducing import dependency in various sectors. The policy has contributed significantly to the growth of the Indian economy. With continued efforts, the Make in India policy has the potential to transform India into a global manufacturing hub and contribute to the growth of the Indian economy.
The Make in India policy has been successful in attracting foreign investment, creating employment opportunities, promoting entrepreneurship and innovation, and reducing import dependency in various sectors. However, there is still scope for improvement in areas such as infrastructure development, simplification of regulatory procedures, and skill development.
With continued efforts, the Make in India policy has the potential to transform India into a global manufacturing hub and contribute to the growth of the Indian economy.
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