FB   
 
Powered bysps
        Society for Policy Studies
 
 

 
Make in India has fallen far short of expectations on the job front
Posted:Apr 16, 2017
 
Print
Share
  
increase Font size decrease Font size
 
How does one judge Make in India? Recent news that foreign direct investment (FDI) flowing to defence in 2016-17 was an absurd trickle of Rs. 61,000 (or perhaps $61,000, the Ministry of Defence didn’t specify) seems to have not caused much of a ripple. Nor has the fact that FDI in defence in the past three years has been – this isn’t a typo either – $174,000, notwithstanding several liberalisation announcements.
 
Defence is just one, albeit telling, sector, with its own peculiarities such as the much-delayed “strategic partners” policy and a single buyer – the Ministry of Defence. But it is an exaggerated version of the story playing out across the high-profile Make in India campaign, which promises to generate millions of jobs in India by increasing the share of manufacturing to 25% of gross domestic product (GDP).
 
India has seen strong FDI flows in the last couple of years, but most of this is going to ride-sharing services like Uber and Ola and e-commerce providers like Amazon and Flipkart. FDI in manufacturing hit a high of US$9.6 billion in 2014-15 (slightly better than the previous 2011-12 record), but actually fell the next year to US$8.4 billion. A major pickup in 2016-17 seems unlikely.
 
Despite rising costs in China, India has made little headway into becoming a global manufacturing alternative, particularly at the low end that generates the most jobs. Textiles and clothing jobs from China are moving to Myanmar, Cambodia and, yes, Bangladesh, while Vietnam, Thailand and Indonesia are gaining in electronics production. India has become a global small-car hub over the last couple of decades, but this relatively high-end segment is not a massive job-creator.
 
Things are slowly changing. India has a large domestic market to leverage, and the two dedicated freight rail corridors it is now building (connecting Delhi with Mumbai and Kolkata) should contribute to a major reduction in logistics costs in a few years. But, for now, southeast Asia is eating India’s lunch.
 
There are limits to what a government can do. India’s can’t, and arguably shouldn’t, try to emulate China’s labour suppression that kept manufacturing costs down, which Myanmar, for instance, could. This government isn’t even pushing the smaller measures forcefully enough. The focus on “ease of doing business” reforms is commendable, but only four of 31 states have implemented meaningful labour reform in the last three years. Even if the opposition doesn’t want to cooperate, the BJP could certainly prod its 12 other states to follow suit.
 
And let’s not forget the self-goals. Demonetisation might have contributed to the BJP’s political victory in Uttar Pradesh, but it has shredded the informal sector. Large companies in sectors from automobiles to consumer goods have laid off thousands of workers, as have their suppliers. Demonetisation may have delayed the goals of Make in India by months, if not years.
 
It’s not a bad thing for India’s aspirations to exceed its political grasp, but a trending social media hashtag won’t generate jobs. India has always done its bit of manufacturing, and the true test of Make in India lies in whether its GDP share meaningfully rises, not in photo-ops.
 

Source: Hindustan Times, April 17, 2017

 
 
 
 
Print
Share
  
increase Font size decrease Font size
 

Disclaimer: South Asia Monitor does not accept responsibility for the views or ideology expressed in any article, signed or unsigned, which appears on its site. What it does accept is responsibility for giving it a chance to appear and enter the public discourse.
Comments (Total Comments 0) Post Comments Post Comment
Review
 
 
 
 
spotlight image Relations between India and Morocco go back a millennium with the first recorded links dating to the 14th century, when the famous traveller and writer from Tangier, Ibn Batuta, travelled to India.
 
read-more
US President Donald Trump has said he sees a “critical” role for India in his country's South Asia strategy for fighting terrorism and building up a safe Afghanistan.
 
read-more
On 14 August 1947 Pakistan, consisting of East and West Pakistan, celebrated its independence. The 14th was chosen for the ceremony because Lord Mountbatten who came to Karachi as the Chief Guest had to later leave for Delhi where ot the midnight stroke India was to declare its independence.
 
read-more
The Doklam stand-off and a variety recent opinion pieces in magazines and newspapers draws attention to the poor state of defence policy preparedness and the lack of meaningful higher defence control in India. 
 
read-more
The two ideologically divergent ruling partners - the Peoples Democratic Party (PDP) and the Bharatiya Janata Party (BJP) - in Jammu and Kashmir are headed for a showdown as the debate over the abrogation of Article 35A of the Constitution of India heats up.
 
read-more
At the root of the present Doklam crisis is China’s intrusion into Bhutanese territory for its road building projects. These connectivity projects are integral to President Xi Jinping’s dream project, the Belt and Road Initiative (BRI). India and Bhutan were the only two countries that did not participate in the first forum
 
read-more
There are six encouraging and bold pillars in the new US strategy on Afghanistan as outlined by President Donald Trump.
 
read-more
Is the United States threatened by Nazism? The short answer is no, notwithstanding the frightening events in Charlottesville, Virginia, recently.
 
read-more
It is a privilege to be invited to this most prestigious of law schools in the country, more so for someone not formally lettered in the discipline of law. I thank the Director and the faculty for this honour.
 
read-more
Column-image

As talk of war and violence -- all that Mahatma Gandhi stood against -- gains prominence across the world, a Gandhian scholar has urged that the teachings of the apostle of non-violence be taken to the classroom.

 
Column-image

Interview with Hudson Institute’s Aparna Pande, whose book From Chanakya to Modi: Evolution of India’s Foreign Policy, was released on June 17.

 
Column-image

This is the continuing amazing spiritual journey of a Muslim man from Kerala who plunged into Vedic religion after a chance encounter with a Hindu mystic under a jackfruit tree in the backyard of his house when he was just nine. It is a story w...

 
Column-image

History is told by the victors but in our modern age, even contemporary events get - or are given - a slant, where some contributors soon get eclipsed from the narrative or their images tarnished.

 
Column-image

Humans have long had a fear of malignant supernatural beings but there may be times when even the latter cannot compare with the sheer evil and destructiveness mortals may be capable of. But then seeking to enable the end of the world due to it...

 
Subscribe to our newsletter
Archive