Professional Documents
Culture Documents
Economics Project
Economics Project
Economics Project
A PROJECT REPORT
Submitted By:-
Name: Valencia Donson
CBSE Board Roll No.:__________
Class: 12 Com C
Date of submission:-____________
0
THE INDIAN HIGH SCHOOL, DUBAI
BONAFIDE CERTIFICATE
Certified that this project report “……………..Make In India – a way ahead …………….” is the
bonafide work of “……………….Valencia Donson …………………” who carried out the project work
under my supervision.
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ACKNOWLEDGEMENT
I would like to express my sincere gratitude to my Economics teacher, Mrs. Shalini D’mello and
my Supervisor, Mrs. Rachna Saran , who gave me this opportunity to do the project on Make in
India which has enhanced my knowledge and sharpened my research skills.
I would also like to thank my parents and friends who put in their time and energy to help me
finish this project within the allotted time.
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Index
S no. Topic Teacher’s
Signature
1. Introduction on Make in India – a way ahead
2. Four pillars of Make in India
3. Advantages and Disadvantages
4. Demerits
5. The Major Challenges
6. The Success story of Patanjali
7. Application to Macroeconomics
8. Zero Defect Zero Effect
9. The impact of Make in India on FDI, GDP and
Increase in employment
10. The effect of BOP on Make In India
14. Bibliography
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Introduction on Make In India
Make in India, a type of Swadeshi movement , was launched by the Government of India on 25
September 2014 to encourage companies to manufacture their products in India and enthuse
with dedicated investments into manufacturing. Make in India is an initiative launched by the
Government of India to encourage national and multinational companies to manufacture their
products in India.
It also seeks to attract foreign capital investment in India. It focuses on job creation and skill
enhancement and is in 25 sectors of the economy and to transform India into a global design
and manufacturing hub. Under the initiative, brochures on these sectors and a web portal were
released. The initiative aims at high quality standards and minimizing the impact on the
environment.
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Four Pillars of Make In India
The “Make in India” initiative is based on four pillars, which have been identified to give boost
to entrepreneurship in India, not only in manufacturing but also other sectors.
New Processes: ‘Make in India’ recognizes ‘ease of doing business’ as the single most
important factor to promote entrepreneurship. A number of initiatives have already
been undertaken to ease business environment. The aim is to de-license and de-regulate
the industry during the entire life cycle of a business.
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arrangements. Existing infrastructure to be strengthened through upgradation of
infrastructure in industrial clusters. Innovation and research activities are supported
through fast paced registration system and accordingly infrastructure of Intellectual
Property Rights registration set-up has been upgraded. The requirement of skills for
industry are to be identified and accordingly development of workforce to be taken up.
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Fortify the Rupee
The emergence of the manufacturing industries would automatically convert India into a hub
for the fabrication of various commercial products; as a result, there would be a grand
collection of the FDI, which, in turn, would strengthen the rupee against the domination of the
American dollar.
Up-gradation of Technology
India being an underdeveloped country obviously lack various latest mechanization, which, is a
big hurdle in the path to development of the nation. Hence, with the myriad of countries
coming forth by the make In India crusade, India will be given the opportunity to make use of
the latest technology these countries bring along.
Flow of Capital
Since the beginning of capitalization, the Indian currency is being spent on the foreign countries.
With the introduction of make in India, the capital will not only remain in India, but also the
foreign currency will be provided to the nation as well. In a nutshell, India will not spend on
foreign countries, but the foreign countries will spend in India in the form of investments and
wages.
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As stated above, India is very rich in the agriculture sector. About 60% of the Indian soil is
arable. With the emphasis being given to the Make in India campaign, thousands of companies
would come forth to set up their factories on the land which could be used for cultivation.
Eventually, this set up of manufacturing factories would lead to the permanent disruption of the
agrarian land in the near future.
Interest in International Brands
As stated earlier, the brand value of Indian merchandise will definitely increase. But the Indian
upper class, which can actually afford such merchandise, is addicted to the foreign label. This
will eventually become a big hurdle for the local entrepreneurs as a great level of promotion is
required to build the confidence of people in the local brands.
Relations with China
The Indo-China relation is already a problematic cause for the country, with the initiation of the
make in India crusade, India stands as one of the most promising rivals for China. This
automatically will worsen India’s long-term feud with China, gradually with the success of Make
in India, it is possible for the situation to become worse among the two economically growing
countries because India has the advantage of young and skilled workforce over China which will
expectedly take make in India to new heights in the near future.
It can be safely stated that make in India is an opportunity for everyone. It is a prospect, which if
given time will flourish like a spring flower and would provide with the expected fruit.
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competitiveness. The Industrial Disputes Act, 1947, mandates companies employing 100 or
more workers to seek prior permission of the government to lay off even a single worker.
B. Taxation Regime
The complex taxation system, a huge amount of paperwork and corruption may be the main
cause of worries among the investors. India started out with an overly complex, poorly-designed
GST, which has dampened investor sentiment and created tremendous compliance burdens on
small and medium sized enterprises (SMEs).
Solution:To revive the investment climate, the finance minister needs to do only one thing – act
on his own promise made in his very first budget of 2015-16, that he will eliminate most tax
incentives and put in place a flat 25% tax rate.
C. Political hold-ups
The biggest concern of policy makers, analysts, and investors related to the success of the ‘Make
in India’ initiative is around political hold-ups. In every session, the working of Parliament is
interrupted which delays the approval of important bills. Therefore, the economy and the mind-
sets of the investors suffer setbacks. Red tape can stifle the spirit of innovation and
entrepreneurship. Important bills and reforms related to land acquisition and labour are some
examples.
Solution: The government has to act as the central pivot of aligning industries, private
companies, public sectors and all stakeholders in realising this vision. The government has to
put realistic policies in place and concentrate on eliminating business barriers.
D. Skilled manpower
A report by consulting firm Ernst & Young said in 2012 that India lags far behind other nations in
imparting skill training. Not too much has changed since then. Over the years, industry experts
have argued that ‘lack of opportunities’ is a concern. But, it seems ‘lack of skills’ is a greater
concern. According to the National Sample Survey, out of the 470 million people of working age
in India, only 10% receive any kind of training or access to skilled employment opportunities.
Solution: Government should improve access to education with higher enrolment coupled with
better quality of education. Use of technology enabled solutions and adoption of the ‘PPP
model school’ format should be brought in. Also the number of Industrial Training Institutes
needs to be increased.
E. Role of states
Indian states play a very crucial role in the implementation and success of the Make in India
initiative. India has a versatile geographical and demographical distribution with a federal
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political system. The involvement and cooperation of state-level decision-makers, political
leaders and authorities in a positive way is the basic requirement for the initiative to work. But
different political parties ruling different states differ and can never be brought on the same
page. To make the concept of Make in India a success, a common consensus among the states
need to be achieved.
Solution: There is lack of coordination between the state and the central government. Public
agencies which are mostly involved in the project execution have to set practices and processes
to execute and monitor investments in order to avoid project delays. PPI (Private Participation in
Infrastructure) should be high. The government and the financial institutions must help to
create MSME-oriented SEZs, hubs, clusters in rural areas.
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Success : Patanjali brand toothpaste had 6.2 per cent share during the quarter ended
June, compared to 2.2 per cent a year ago, making it the country's fourth-largest
toothpaste company.
In 2016, Patanjali announced entry to textile manufacturing with plan to make traditional
clothes such as Kurta Payjama and jeans.
Patanjali’s Revenues Form 2009- 2017.
Year Revenue(in Rs crores)
2009-10 165
2010-11 317
2011-12 446
2012-13 850
2013-14 1200
2014-15 2006
2015-16 5000
2016-17 10561
Graph
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Revenue(in Rs crores)
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
0.80%
1.54%
2.17%
4.14%
5.84%
9.76%
51.40%
24.34%
Patanjali has inspired people by being an example of Make in India. Its 2020 vision is Rs 1,00,000
crore annual sales which looks completely possible with all multidirectional efforts made by the
company.
Application To Macroeconomics
Focusing on 25 key sectors, the campaign has brought in significant reforms such as higher
limits for foreign direct investment (FDI) and simplified investment norms for several sectors,
including railways, defence, insurance and medical devices. The campaign has been
supplemented by initiatives to make it easier to do business in India – simplifying processes of
incorporation and obtaining clearances, easing regulatory requirements, digitising regulatory
processes, along with various other state-specific initiatives. With the help of these campaigns,
India has become one of the most favourable investment destinations in the world.
Since the launch of the Make in India campaign in September 2014, gross FDI inflows have
increased substantially, by 32% to US$64.8bn, compared with a 16% increase in the 15 months
before the campaign. The main sectors attracting investment include services, construction
development, computer hardware and software, telecommunications and automotive.
During 2014–16, India received most of its FDI from Mauritius, Singapore, Netherlands, Japan
and the US. On 25 September 2014, Government of India launched Make in India initiative in
which policy statement on 25 sectors were released with relaxed norms on each sectors.
Following are some of major sectors for Foreign Direct Investment.
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Infrastructure
10% of India's GDP is based on construction activity. Indian government has invested $1 trillion
on infrastructure from 2012–2017. 40% of this $1 trillion had to be funded by private sector.
100% FDI under automatic route is permitted in construction sector for cities and townships.
Automotive
The automotive value chain is one of the most significant industrial sector in order to explain
the worldwide foreign direct investment flows (FDI). During 2003-2013 period, the automotive
industry received the 8% of the total worldwide FDI; becoming the fourth major industrial
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sector in terms of investment received. Inside the automotive value chain, the proportion of FDI
received by the automotive supply chain significantly increased during the last 10 years. In
2003, only the 26% of the total automotive FDI corresponded to the supply chain. However, in
2013, these proportion raised to 44% (FDI Markets, Financial Times). Taking into account the
previous evidence, the aim the paper is to contribute to the study of FDI determinants of
location decisions in the automotive industry, and particularly in the supply chain during the
2003-2013 period.
Pharmaceutical Industry
India is one of the cheapest producers of drugs, the pharmaceutical industry and has
continuously witnessed large investments in the form of FDI. Indian Multi-National Corporations
(MNCs) have highly trained manpower and better technology. Therefore, these companies can
produce at a large scale at lower costs. Huge foreign investments have brought in new products,
latest technologies and better quality systems. In India, 100% FDI is allowed under the
automatic route under certain conditions.
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Service
FDI in service sector was increased by 46% in 2014–15. It is US $1.88 billion in 2017. Service
sector includes banking, insurance, outsourcing, research & development, courier and
technology testing. FDI limit in insurance sector was raised from 26% to 49% in 2014.
Textile
India has most liberal and transparent policies in Foreign Direct Investment (FDI) amongst
emerging countries. India is a promising destination for FDI in the textile sector. 100% FDI is
allowed in the textile sector under the automatic route. With its consistent growth performance
and abundant cheap skilled manpower, there are enormous opportunities both for domestic
and foreign investors to make investments in textile sector in India.
Chemicals
The chemical industry in India is an indispensable part of the economy of the country, for it
constitutes around 6% of the country's GDP. Chemicals industry in India is highly diversified,
covering more than 80,000 commercial products. It is broadly classified into Basic chemicals,
Specialty chemicals, and Agrochemicals.
India is a strong global dye supplier, accounting for approximately 16% of the world production
of dyestuff and dye intermediates. In financial year 2019, the chemicals sector saw foreign
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direct investment inflows of almost two billion U.S. dollars. This was a considerable increase in
investment inflows compared to the previous fiscal year when the foreign investments were
valued at about 13 million dollars.
Airline
The civil aviation industry in India has emerged as one of the fastest growing industries in
the country during the last three years. India is currently considered the third largest
domestic civil aviation market in the world.
The country has 86 scheduled international airlines comprising of 5 Indian carriers and 81
foreign carriers, which ensure that India is well connected with most major countries.
Revenue passenger kilometres (RPK) in domestic airline demand rose by 18.7% in 2017-18.
Indian carriers reported a combined profit of $ 122 mn in 2015-16.
Telecommunications
India is the 2nd largest Telecom Market in the World. The Indian Telecommunications network
with 1324 million connections (as on March 2015) is the third largest in the world. The sector is
growing at a speed of 45% during the recent years. This rapid growth is possible due to various
proactive and positive decisions of the Government and contribution of both by the public and
the private sectors. The rapid strides in the telecom sector have been facilitated by liberal
policies of the Government that provides easy market access for telecom equipment and a fair
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regulatory framework for offering telecom services to the Indian consumers at affordable prices.
Presently, all the telecom services have been opened for private participation.
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The Impact of Make In India on FDI, GDP And Increase in Employment
Foreign Direct Investment
Foreign Direct Investment (FDI) performs a multidimensional role in the overall development of
the host economies. Most of the studies advocates a positive relationship between foreign
direct investment and economic growth. FDI flows generally comes as capital bundled with
technology, skill and sometimes even market access.
Larger inflows of foreign investments will support the economy to achieve a sustainable high
path of economic growth. The Government of India announced a consolidated policy on May
12, 2015 and many initiatives have been taken towards relaxing FDI norms across sectors such
as defence , telecom, power exchanges and stock exchanges, among others. It is domestic
investment that has to lead the way, as FDI is under 8 percent of total investment in the country.
Not only the quantity but also the quality of FDI plays a crucial role in enhancing “Make in India”
initiatives. The economic development of a country is based on the performance of all three
sectors (Primary, Secondary and Tertiary) with more production, productivity and efficiency.
The development of the economy will geared up when foreign investment flows to India in the
areas like manufacturing, infrastructure, transport, technology, services, etc. In this context the
present study makes an attempt to study the relationship between FDI and economic growth in
the light of “Make in India” initiatives.
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The FDI inflow grew by 20 percent each in 2014-15 and 2015-16. However, in 2016-17, the
country attracted the highest ever FDI inflow of 60 billion USD. In 2017-18, the nation saw the
FDI equity inflow of worth $33.75 in the first half of this fiscal, and the country is poised to see
FDI inflows in 2017-18 surpassing even the record $60 billion it received in the last financial
year.
With the country already witnessing an increase in FDI by nearly 44% since the launch of this
initiative, India seems on its way to achieving its stated target with the government leading the
way. ‘Make in India’ is the proof that the nation is willing to embrace growth by adopting
changes on the journey to becoming an economic superpower.
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Increase in employment
The main and the prime motive of Make in India campaign is to strengthen the
manufacturing sector. This campaign mainly focuses on this sector just because there is a lot
of scope of growth, employment, and contribution in the economy from this sector. The real
estate sector of the country is the second-largest sector. The employment statistics in this
sector is more than 35 million. The approximate share of this sector in the GDP was 62%-
63% in 2009-10 and the government intends to increase this contribution up to 70%-75% by
2030.
Every USD 1 million investment in the tourism sector creates 78 jobs; hence, increase in
employment can be the reason of large investment. The government is also trying to
increase the number of domestic tourists as well.
Since foreigners are being driven towards India since ages, then it is also one of the ways of
dealing with the foreign currency. Hence, the focus is also on to increase the Foreign
Exchange Earnings. Moreover, tourism is one of the great sectors for generating
employment opportunities. Hence, the more the investment; the more the employment!
The contribution of automobile industry in country’s GDP is approximately 45%. The
employment rate of the sector is about 19 Million. India is the 7th largest producer of
vehicles in the world and produces approximately 24 Million vehicles annually.
So, these are some of the sectors where Make In India is targeting and the impact of the
relevant policies and schemes is evident as well. The way the government has arranged
these policies defines the enthusiasm of the ministers to take the country to a high level.
Moreover, all of these policies are a great source of creating employment opportunities. Not
just for men but for women as well! Besides, to increase the GDP will be the most beneficial
thing for the country.
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The Effect of Balance of Payments on Make In India
Balance of Payments (BOP) statistics systematically summarise, for a specific period, the
economic transactions of an economy with the rest of the world. The compilation and
dissemination of BOP data is the prime responsibility of RBI. The term “Make in India” is
another name of foreign direct investment with special focus on capital formation sector. The
“Make in India” Strategy is launched to attract foreign investors to invest almost in all sectors in
India to encourage International Economic Integration.
Foreign Direct Investment is one and only major instrument of attracting International Economic
Integration in any economy. It serves as a link between investment and saving. Many developing
countries like India are facing the deficit of savings. This deficit can be circumvented with the
help of Foreign Direct Investment. Foreign investment helps in reducing the defect of BOP.
From the above graph , we see that value of goods exports have fallen from $314 billion in 2013
to $275 billion in 2016 (12% fall).Value of goods imports too have fallen from $450 billion in
2013 to $384 billion in 2016 (15% fall).
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Since imports fell faster than exports, India’s trade balance has improved and current account
deficit has improved with that.
We should welcome inflow of foreign investment in such way that it should be convenient and
favorable for Indian economy and enable us to achieve our cherished goal like rapid economic
development, removal of poverty, internal personal disparity in the development and making
our Balance of Payment favorable.
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Suggestions and Future Scope
With the ‘Make in India’ campaign the government wants an image makeover for India,
making it an ideal destination for manufacturing which would be a big thrust to Indian
economy, increase employment and also add to the GDP. However, it is important to
understand that, only the launch of campaign will not guarantee its success.
The supportive policy creations and law formations, and constitutional decisions also
play a crucial role in making the campaign successful. The manufacturing sector in India
is yet to see big gains from ‘Make in India’ campaign. But government is moving slowly
but steadily in the right direction to make India a manufacturing hub.
The Insolvency and Bankruptcy Code 2016 recently passed by Rajya Sabha is expected to
help the country move up from its current rank of ease of doing business index. At
present, India is ranked 136 among 189 countries on the parameter of resolving
insolvency. The law new aims to consolidate the laws relating to insolvency of companies
and limited liability entities (including limited liability partnerships and other entities
with limited liability), unlimited liability partnerships and individuals, presently
contained in a number of legislations, into a single legislation. Such consolidation will
provide for a greater clarity in law and facilitate the application of consistent and
coherent provisions to different stakeholders affected by business failure or inability to
pay debt.
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Boost for FDI Recent policy changes have made it easier to invest directly in Indian
companies. Foreign Direct Investment (FDI) is perhaps the easiest way to take advantage
of the ‘Make in India’ campaign. It is a main source of non-debt financial resource for the
economic development of India. Foreign companies invest in India to take advantage of
relatively lower wages, special investment privileges such as tax exemptions, etc.
Project Conclusion
India has already proved itself as one of the fastest growing economies of the world. It has been
ranked among the top 10 attractive destinations for investments from all over the world. It has
now become a professional license for investors to approach and endow in the escalation
legend of India. Since 1991, the regulatory environment in terms of foreign investment has been
consistently eased to make it investor-friendly.
The measures taken by the Government are directed to open new sectors for foreign direct
investment, increase the sectoral limit of existing sectors and simplifying other conditions of the
FDI policy. FDI policy reforms are meant to provide ease of doing business and accelerate the
pace of foreign investment in the country.
Over all scenario of make in India and FDI was a positive summon to prospective investors from
all over the world. It represents a wide-ranging refurbish of processes and policies. Earlier,
Indian Government was working with a mindset of an issuing authority, but now with the
launch of Make in India, it has started working as a Business Partner.
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Bibliography
https://en.wikipedia.org/wiki/Make_in_India
http://www.makeinindia.com/home
https://businesseconomics.inchallenges-make-india
https://www.businessalligators.comadvantagesdisadvantages-make-india
https://www.mapsofindia.com-government-of-indiamake-in-india
https://www.livemint.comnewsmake-in-india-is-yet-to-create-enough-jobs
www.makeinindia.commake-in-india-reason-vision-for-the-initiative
www.managementinnovations.co.inMakeinIndiaPatanjali
https://www.oemupdate.comcover-storythe-future-of-make-in-india
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