September2023 : Kurukshetra Magazine GIST : Micro Notes or Revision Notes : Kurukshetra Magazine Summary
Make in India Initiative
Launched
- September 25, 2014
Goals
- Encourage investment and innovation
- Build world-class infrastructure
- Make India a hub for manufacturing, design, and innovation
- Promote domestic manufacturing (“Vocal for Local”)
Why Make in India?
- Create jobs and improve skills in 27 sectors
- Increase manufacturing contribution to GDP
- Raise tax revenue
- Reduce regulations and bureaucracy
- Improve product quality standards
- Attract foreign direct investment (FDI)
- Promote growth in services and industry
Pillars of Make in India
- New Processes: Reforms to attract investment (domestic and foreign)
- New Infrastructure: Develop industrial corridors, smart cities, world-class infrastructure
- New Sectors: Focus on 27+ sectors for initial growth
- New Mindset: Change government interaction with businesses, become a partner in economic development
Key Reforms
- Since 2014, the government has:
- Simplified the tax system
- Attracted FDI
- Increased economic efficiency and competitiveness
- Introduced Production Linked Incentive (PLI) schemes for 14 manufacturing sectors
Attracting FDI
- Goods and Services Tax (GST)
- Reduced corporate tax
- Improved Ease of Doing Business (EoDB) ranking
- FDI policy reforms
- Reduced compliance burden
- Public procurement favoring domestic manufacturing
- Phased manufacturing programs
Advantages of Make in India
- Overall socioeconomic growth, especially in manufacturing and job creation
- Increased purchasing power and consumer base
- Reduced brain drain with focus on education and training
- Improved balance of payments and foreign exchange reserves
- Increased flow of FDI, technical expertise, and creative skills
- Higher credit ratings and attracting more investment
Challenges
- Land acquisition process
- Labor development ecosystem
- Tax rationalization and technology access
- Networking capacity building institutions
- Review of procedures and regulations
- World-class research and development infrastructure
Fostering Balanced Regional Development
- One-District One-Product (ODOP) initiative:
- Promotes local products from each district
- Provides a platform for farmers, artisans, and manufacturers
- Success depends on:
- Capacity building initiatives
- E-commerce platforms (including GeM)
- Buyer-seller meets
- Brand image and international marketing
- District Export Hubs (DEHs)
Impact of Make in India
- Improved EoDB ranking (142 in 2014 to 63 in 2022)
- Increased gross FDI (average 2.2% to 2.6% of GDP)
- Highest ever annual FDI inflow (US $84.84 billion in 2022)
- Growth in agriculture sector (average 4.6% annually)
- Increased agricultural exports (US $50.2 billion in 2021-22)
- Increased employment in manufacturing sector (57 million in 2017-18 to 62.4 million in 2019-20)
- Growth in services exports (US $254.5 billion in 2021-22)
Conclusion
- Make in India has the potential to make India a global manufacturing hub.
- Continued efforts are needed for balanced regional growth, poverty reduction, and job creation.
India – Hub for Electronics Manufacturing
Government Initiatives
- Aims to boost manufacturing for domestic and international markets
- Subsidies to manufacturers to:
- Increase exports
- Reduce cheap imports
- Create jobs
- Target: Increase electronics manufacturing capacity to Rs. 24 lakh crore by 2025-26 (create over 10 lakh jobs)
Early Signs of Success
- Mobile phone exports crossed $11 billion in 2022-23
- Increased value addition in electronics and smartphone manufacturing (PLI Scheme and PMP)
- Import substitution in telecom sector
- 7-fold jump in drone sector turnover due to PLI Scheme
- Electronics good exports increased from Rs. 39,978 crore in 2016-17 to Rs. 1,09,797 crore in 2021-22 (CAGR 22.39%)
- India’s share in global electronics manufacturing grew from 1.3% in 2012 to 3.75% in FY 21-22
Make in India Initiative
- PLI Scheme for LSEM: 4-6% incentive on incremental sales for mobile phone and electronic component manufacturing
- PLI for IT Hardware: 4-2%/1% incentive on net incremental sales of goods manufactured in India
- SPECS: 25% financial incentive on capital expenditure for electronic goods
- Modified EMC 2.0 Scheme: Support for world-class infrastructure to attract major manufacturers
- Programme for Development of Semiconductors and Display Manufacturing Ecosystem: Rs. 76,000 crore outlay
Fiscal Incentives
- Semiconductor Fabs: 50% fiscal support for setting up silicon-based fabs
- Display Fabs: 50% fiscal support for setting up TFT LCD/AMOLED fabs
- Compound Semiconductors/SiPh/Sensors Fabs: 50% fiscal support
- Design Linked Incentive Scheme: Financial incentives for semiconductor design
PLI Scheme 2.0 for IT Hardware
- Budgetary outlay of Rs. 17,000 crore to enhance manufacturing and exports
- 3 categories: global companies, hybrid companies, domestic companies
- Expected to:
- Broaden manufacturing ecosystem
- Localize components and sub-assemblies
- Increase production (Rs. 3.35 lakh crore)
- Attract investment (Rs. 2,430 crore)
- Create jobs (75,000)
Challenges
- Infrastructure: Insufficient and poor-quality roads and ports
- Bureaucracy and complex taxation system
- Scarcity of skilled labor
Way Forward
- Increase manufacturing sector contribution to GDP (16% to 25% by 2025)
- Leverage domestic demand, government initiatives, and demographic edge
Cultural Heritage Tradition to Innovation
India’s Cultural Heritage
- Diverse tapestry shaped by thousands of years of history
- Soft power tool attracting tourists, scholars, and enthusiasts
- Yoga, music, dance, and traditional medicines garner international acclaim
Make in India and Cultural Heritage
- Opportunity to combine tradition and innovation
- Empowering and uplifting traditional artisans and craftsmen
- Initiatives:
- Training in modern techniques, design, marketing, and e-commerce
- Financial support through schemes like PMEGP
- Trade fairs and online platforms like e-Haats
- 150 rural handicrafts clusters for training and resources
Revitalising Traditional Art Forms
- Cultural renaissance for India’s art, crafts, and traditions
- Blending modern tools with traditional craftsmanship
- Examples:
- National Handloom Day celebration
- SF value chain promotion (Farm-to-Fiber, Fiber-to-Fabric, Fabric-to-Fashion, Fashion-to-Foreign)
- Resurgence of pottery with innovative glazes and shapes
Leveraging Technology
- Digital replicas, high-resolution images, 3D scanning and printing for preservation
- Virtual museums and online exhibitions
- E-commerce platforms for direct consumer connection and fair prices
Cultural Tourism and Experiential Learning
- Make in India promoting cultural tourism:
- Swadesh Darshan scheme for theme-based tourism circuits
- Incredible India! campaign to highlight cultural heritage
- Indian Council for Cultural Relations (ICCR)
Economic Impact
- Tourism promoting Indian art and culture globally
- Cultural diplomacy strengthened through cultural exchanges
- Showcasing artistic heritage to global audiences
Conclusion
- Make in India has potential to preserve and promote cultural identity
- Initiatives:
- Integrating cultural elements into tourism
- Fostering artisanal growth through e-commerce
- Promoting cultural diplomacy
- Elevates global visibility of India’s rich heritage
Make in India’s Super Star Sectors and Water Management
Introduction
- Make in India initiative launched in September 2014
- Aims to promote India as a global manufacturing destination
- Relies on effective water use
Super Star Sectors
- Six sectors identified to boost Make in India:
- Automotive
- Electronics System Design and Manufacturing
- Renewable Energy
- Roads and Highways
- Pharmaceuticals
- Food Processing
Water Usage by Sector
- Automotive:
- Uses 39,000 gallons of water per car
- Requires sustainable water management practices
- Electronics:
- Needs ultra-pure water in production
- Uses 2,200 gallons of water per integrated circuit
- Industry can innovate for water conservation
- Renewable Energy:
- 1-5 million gallons of water used to clean a 100 MW solar plant
- Green hydrogen production requires clean water
- Roads and Highways:
- Network needs careful planning to consider water conservation
- Pharmaceuticals:
- Requires high-quality pure water throughout manufacturing
- 80% of top global pharmaceutical companies focus on water sustainability
- Food Processing:
- Uses significant water in processing
- UNFAO reports 70% of agricultural water goes to food production
Government Initiatives
- Simplified regulations for businesses
- Need for cautious approach on water and environment norms
- Circular use: encourages water reuse and recycling
- Water-neutral approach: optimizes processes to reduce water use
Conclusion
- Innovation and manufacturing should not lead to resource overuse
- Water conservation is crucial for Make in India’s success
FDI: Changing Paradigm
FDI Explained
- Investment by foreign companies/individuals in a host country
- Boosts growth through resources, technology, jobs
- Promotes economic growth through:
- Foreign market access
- Capital, forex, technology
Impact on Manufacturing
- Brings new capital and technology
- Increases productivity and efficiency
- Creates jobs through new/expanded factories
Types of FDI
- Horizontal FDI:
- Company expands to produce same goods in host country
- Profitable due to lower costs (labor)
- Vertical FDI:
- Acquires raw materials or distribution outlets
- Makes production more cost-efficient
FDI in India
- Entry routes:
- Automatic route: minimal approval needed
- Government route: approval required for sensitive sectors
- Mergers and Acquisitions: quick market entry
- Top investors (2022-23):
- Mauritius (26%)
- Singapore (23%)
- USA (9%)
- Netherlands (7%)
- Japan (6%)
- Total FDI equity inflow (2022-23): $70.97 billion
Changes in FDI Policy
- Implemented to:
- Promote investment
- Ease business operations
- Enhance economic growth
- Examples:
- Single-Brand Retail Trading: 100% FDI allowed
- Construction Sector: broader definition
- Digital Media: 26% FDI for news/current affairs content
- Civil Aviation: 100% FDI in airlines
- Defence Sector: 74% FDI limit
- Insurance Sector: 74% FDI limit
Make in India and FDI
- Objectives of Make in India:
- Attract FDI for manufacturing base
- Promote domestic industries and self-reliance
- Increase employment
- Foster innovation and technology
- Enhance export competitiveness
- Impact of FDI on Manufacturing:
- Manufacturing contributes 17.3% to GDP
- Annual FDI inflows increasing
- Manufacturing output rising (2019-2021)
- Automobile industry:
- Growth (2017-18 to 2018-19): 25.54%
- FDI inflow (2021): $60 billion
- Contributes 7% of GDP, employs 19 million
- Textile sector:
- FDI inflow (2017-2022): $1.52 billion
- Contributes 4% of GDP, 14% of export earnings
Conclusion
- FDI plays a key role in emerging economies
- Bridges gap between capital and technology needs
- Drives economic growth
Food Processing: Advancing Make in India
Food Waste in India
- FAO estimates 40% of food production is wasted annually
- Causes: inefficient supply chain and fragmented food system
- Solution: strengthen food processing industry
Types of Food Processing
- Primary: basic cleaning, grading, packaging (fruits/vegetables)
- Secondary: alteration of product (milling paddy to rice)
- Tertiary: high value-added ready-to-eat food (bakery items)
Government Initiatives
- Pradhan Mantri Kisan Sampada Yojana (PMKSY)
- Aims to develop modern food processing infrastructure
- Creates infrastructure for efficient supply chain management
- Approved projects:
- 41 Mega Food Parks
- 376 Cold Chain projects
- 79 Agro-Processing Clusters
- 489 proposals under CEFPPC
- 183 Food Testing Labs
- Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME)
- Launched in June 2020
- Aims to improve and formalize microenterprises in the unorganized food processing sector
- Implemented in 35 states/UTs
- Provides financial assistance for working capital and equipment
- Production Linked Incentive Scheme for Food Processing Industry (PLISFPI)
- Aims to boost domestic manufacturing and exports
- Supports food manufacturers with incentives for expansion and branding
- Targets emergence of strong Indian brands
Industry Growth
- Indian Food Processing market growing at 15.2% CAGR
- Estimated to reach $535 billion by 2025
- Food processing industry links farmers to domestic and international consumers
Key Statistics
- Retail segment contributes 70% of sales in India’s food and grocery market (world’s 6th largest)
- Indian gourmet food market valued at $1.3 billion (growing at 20% CAGR)
- India ranks:
- 1st in global dairy production
- 2nd in vegetable production
- 2nd in cereal, fruit, and nut production
- Exports:
- Processed food growing faster than unprocessed food
- 46th in dairy exports
- 15th in vegetable exports
- 5th in cereal exports
- 25th in fruit and nut exports
Government Support
- Food Processing designated as a Special Focus Sector in National Manufacturing Policy
- Mission Organic Value Chain Development in the North East Region (MOVCDNER) launched
- Provides subsidies to farmers for organic inputs
- Goal to quadruple marine product exports to Rs. 1 lakh crore in 5 years
- Plans to build 10,000 new Farmer Producer Organizations (FPOs) to accelerate farm-gate processing
Conclusion
- Food processing industry is crucial for Make in India’s success
- Government initiatives aim to address food waste, improve infrastructure, and promote exports
Renewable Energy: Making India Self-Sufficient
India’s Energy Landscape
- Fastest-growing economy globally (5th largest)
- Reliant on fossil fuels (imports 80% of crude oil)
- 4th largest CO2 emitter
- Ambitious goals:
- Cut carbon emissions by 1 billion ton by 2030
- Achieve net-zero emissions by 2070
Renewable Energy Advantages
- Sustainable: clean, green, environmentally friendly
- Job creation: opportunities in new technologies
- Market assurance: reliable source of energy
- Power security: 24/7 power supply and sustainable transport
Government Initiatives
- Renewable energy targets:
- 4th globally in installed capacity (including hydro)
- 500 GW of non-fossil fuel energy by 2030 (COP26 pledge)
- Wind energy program: target of 60 GW by 2022
- FDI in renewables: $251 million in FY23 Q3 (top investors: Singapore, Mauritius, Netherlands, Japan)
- Reduced costs:
- Solar power: 84% cheaper since 2010 (often cheaper than coal)
- Wind power: 49% cheaper in the past decade
- Solar technology leadership:
- World’s largest floating solar plant (Kerala)
- World’s largest solar park (Pavagada Solar Park, Karnataka)
- Pradhan Mantri-Kisan Urja Suraksha evam Utthaan Mahabhiyan (PMKUSUM):
- Launched in 2019 to provide solar energy benefits to farmers (30,800 MW target by 2023)
Other Key Steps
- 100% FDI allowed for renewable energy projects
- Waiver of interstate transmission charges for solar and wind power (until June 2025)
- Ultra Mega Renewable Energy Parks for streamlined project development
- Green Energy Corridor project: building new transmission lines for renewables
- Standard Bidding Guidelines for solar and wind power procurement
- Must-run status for solar and wind power
- Bio-CNG vehicles with 20% petrol blending
- Hydrogen fuel cell vehicles: future focus area
- Grid integration: key challenge (managing variable renewable energy sources)
Current Status and Challenges
- Installed renewable energy capacity: 174 GW (2023) – 37% of total energy supply
- Challenges:
- Integrating renewables with the grid
- Ensuring 24/7 power supply with storage solutions
- Optimizing energy consumption in agriculture sector
The Road Ahead
- Renewable energy shift needs to become a mass movement
- Achieve energy security for sustained development
- Promote electric vehicles and hydrogen fuel cell vehicles
- Rectify agricultural subsidies for efficient energy consumption
Make in India and Youth
Challenges
- Share of manufacturing in GDP: 16%
- Rote learning in education system
- Lack of advanced technology, practical training in institutes
- Low investment in research and development
- Poor infrastructure, especially in rural areas
- Complexities in securing intellectual property rights
- Pressure for conventional careers
- Gender disparity
Government Initiatives
- NEP 2020: Aims to identify unique skills, promote creativity and critical thinking
- Atal Tinkering Labs (ATL): Established in 10,000 schools to foster curiosity and innovation in STEM fields
- New incubators for startups
- Mentor India initiative: Provides support from professionals
- Start-up India: Launched to create a startup-friendly ecosystem (increased startups from 452 in 2016 to 84,012 in 2022)
- State-level programs: Additional funding, incubators, skill development based on local needs
Conclusion
- Make in India aims to create jobs and increase manufacturing.
- Collaboration among stakeholders (government, industries, education) is crucial.
- Continued efforts are needed to make India a self-sufficient nation.