“Come, make in India. Be it plastics or cars or satellites or agricultural products, come make in India,” Indian Prime Minister Narendra Modi said in his debut Independence Day speech as prime minister on August 15 last year. The “Make in India” campaign reached a fever pitch over the weekend in Mumbai as the government-sponsored event has lured executives from many of the world’s top companies.Lunched on September 25, 2014, the initiative, pitched by Modi as “the biggest brand that India has ever created”, seeks to revive the manufacturing sector for both boosting growth and providing jobs for a burgeoning youth population with over 10mn entering the labour force each year. But now’s the time for the prime minister, who will be celebrating his second anniversary in May, to have a reality check. For sure, “Make in India” has scored some major wins, including a pledge by Taiwan’s Foxconn to invest $5bn in a new electronics manufacturing facility. That helped FDI (foreign direct investment) to nearly double to $59bn last year, the seventh most in the world, according to the UN Conference on Trade and Development. Yet there is growing unease over India’s key indicators. The manufacturing sector’s contribution to the GDP (gross domestic product) has been stuck at 17% for five years (compared to China’s 35%), below the government’s goal to ramp it up to 25%, according to data from the World Bank as well as the Boston Consulting Group. India has only created 4mn manufacturing jobs since 2010 and at the current rate, it may only create 8mn by 2022, well below the government’s goal of 100mn. Ranked 130th in the World Bank’s Ease of Doing Business index, the country still has to shake off the unenviable reputation as a manufacturing laggard. The quality of country’s GDP numbers (7.3% annual growth in the last three months of 2015) has also been questioned. Indian companies are carrying high levels of debt and the benchmark stock index has shed about 20% in the past 12 months. Even more worryingly, a proposal to establish a nationwide sales tax has languished in parliament, leaving a byzantine system of state duties in place. Modi, if he has to keep the focus firmly on quality reforms and economic growth, also has to rein in such conveniently overlooked distractionary elements as the Rashtriya Swayamsevak Sangh (RSS), the powerful Hindu nationalist outfit, and its family of organisations.Sure enough, while many of the world’s major economies are struggling, India’s nearly $2tn, 60% consumer-driven economy remains an attractive bet for growth-hungry multinationals. The country’s growing middle class has money to spend, and its youthful population offers huge potential. Make no mistake, the reform agenda of Modi, who won India’s strongest election mandate in 30 years, has stalled of late due to a host of issues typical of the Indian polity, but no one doubts his commitment. Investors, mostly, are on Modi’s side, but time is not.
February 16, 2016 | 10:16 PM