1.

Abstract:
This research project critically reviews the concept of import substitution through the Make in
India initiative. Since its launch in 2014, the Make in India campaign aimed to boost the
manufacturing sector, create employment opportunities, and stimulate economic growth.
However, the COVID-19 pandemic presented challenges, particularly in the form of supply
shortages. As a response, the Indian government introduced Production Linked Incentive (PLI)
schemes to enhance self-sufficiency and foster manufacturing. This study examines the objectives,
progress, and effectiveness of the Make in India campaign, highlighting its impact on foreign direct
investment (FDI) inflows and the need for further attention.

2. Introduction:
In 2014, the Indian government under the leadership of Prime Minister Narendra Modi introduced
the Make in India initiative, aimed at boosting manufacturing and attracting domestic and
international investments into the country. The program seeks to transform India into a global
manufacturing hub, create employment opportunities, and contribute to the growth and
development of the economy. This research project critically reviews the concept of import
substitution through the Make in India initiative, assessing its impact on manufacturing output and
foreign direct investment inflows. The objective of the study is to examine the effectiveness of the
Make in India campaign in achieving its goals and further understand its implications in the context
of import substitution.
2.1 Brief Account of the Manufacturing Sector:
India's manufacturing sector boasts a rich and evolving history. While its pre-colonial past
thrived on vibrant handicraft production and export, the landscape shifted significantly with
the advent of British rule. The two World Wars, with their immense demand, provided a
temporary impetus to Indian industries. However, true independence in 1947 marked a
turning point. The newly formed government, guided by the Five-Year Plans, prioritized the
development of essential and heavy industries. The Industrial Policy Resolution of 1956
emphasized sectors like iron and steel, heavy engineering, lignite projects, and fertilizers.
However, this period, also known as the "License Raj," saw increased bureaucratic control,
hindering long-term growth. Additionally, the performance of Public Sector Undertakings
(PSUs) deteriorated, leading to a drain on foreign exchange reserves.

Recognizing these challenges, the Indian government embarked on a significant

transformation in 1991, ushering in the New Economic Policy. With a focus on Liberalization,
Privatization, and Globalization (LPG reforms), Indian markets opened to global competition.
This period witnessed impressive growth in the private sector, particularly the burgeoning
service industry. However, industrial growth experienced some instability. Micro, Small, and
Medium Enterprises (MSMEs) gained significant attention from the government through
various policy measures, recognizing their crucial role in the sector's development. Today,
India aspires to become a global manufacturing powerhouse. Initiatives like the "Make in
India" program aim to attract Foreign Direct Investment (FDI) and boost domestic
production, propelling the nation towards its ambitious industrial goals.

(a) Manufacturing Gross Value Added:The table displays the percentage of Gross
Domestic Product (GDP) over the years from 2000 to 2022. There is a noticeable
 upward trend in the percentage of GDP from 2000 to 2008, reaching its peak at
41.95% in 2007. Subsequently, there is a slight decline in the following years until
2013, followed by a fluctuating pattern. Notably, the percentage of GDP experienced
a dip in 2020 but recovered and slightly increased in 2021 and 2022, indicating
dynamic economic trends over the period analysed.
(b) Exports of Manufactured Goods

India experienced a 6.03% year-on-year growth in merchandise exports, reaching US$

314.4 billion in the fiscal year 2013-14. Subsequently, in FY2022-23, merchandise exports
continued this positive trend, recording a 6.03% year-on-year growth and reaching a total
of US$ 447.46 billion.

2.2 FDI
In emerging economies like India, foreign direct investment (FDI) fuels skill development and
economic growth. FDI provides essential capital without increasing national debt

(a) FDI inflow in India

Before the “Make in India” Campaign (Pre-2015): In the early 2000s, India was already
attracting FDI, but the growth rate was moderate. FDI inflows stood at around ₹10,000
crore in 2000-01 and gradually increased over the years. However, the pace of growth was
not substantial, and India faced challenges in attracting significant foreign investments.

The “Make in India” Campaign (Post-2015): Launched in September 2014 by Prime

Minister Narendra Modi, the “Make in India” campaign aimed to transform India into a
global manufacturing hub. The campaign focused on attracting both domestic and foreign
investments, fostering innovation, and creating employment opportunities. The impact
was remarkable:

I. FDI Inflows Surge: India overtook China and the United States as the top
destination for FDI in 2015. In the first half of 2015, India attracted $31 billion in
FDI, surpassing China and the US.
II. Consistent Growth: FDI inflows consistently increased since then. In FY 2021-22,
India reported the highest-ever annual FDI inflow of $83.57 billion, overtaking the
previous year’s FDI by $1.60 billion despite the COVID-19 pandemic.
III. Key Sectors: The “Make in India” initiative targeted sectors like manufacturing,
automobile, technology, and services. It successfully attracted foreign
investments, signalling international confidence in India’s capabilities.
IV. Job Creation: The campaign contributed to job creation across various sectors,
addressing unemployment issues.
V. Reducing Import Dependency: By promoting domestic production, the campaign
aimed to reduce India’s reliance on imports.
VI. Impact of COVID-19 Pandemic: The pandemic disrupted global economies,
including FDI trends. Despite challenges, India continued to attract FDI,
demonstrating resilience and adaptability. The government’s proactive measures,
ease of doing business, and sector-specific reforms played a crucial role in
maintaining investor confidence.
2.3 Balance of Payments (BoP)
The adverse global economic situation placed India’s BoP under pressure in 2022. While the
impact of a sharp rise in oil prices was discernible in the widening of the CAD, policy tightening
by the US Fed and the strengthening of the US dollar led to FPI outflows. As a result, as the
net financial inflows fell short of the CAD, there was a depletion of foreign exchange reserves
on a BoP basis to the tune of US$ 25.8 billion in H1 FY23 in contrast to an accretion of US$
63.1 billion in H1 FY22. But huge valuation losses (US$ 48.9 billion) contributed to the net
depletion of US$ 74.6 billion of reserves in nominal terms during the period.

(a) Global Economic Environment

In 2022, global trade reached a record high of approximately US$ 32 trillion. However,
during the second half of 2022, there was a slowdown in trade growth. Specifically:

Trade in goods is expected to decline by nearly US$ 2 trillion in 2023.

On the other h and, trade in services is projected to expand by US$ 500 billion in 2023.

Notably, exports from developing countries underperformed, and South-South trade

experienced a sharp decrease. Additionally, geopolitical trends, including the declining
interdependence between China and the United States, are significantly impacting global
trade.

The World Trade Organization (WTO) also predicts that global merchandise trade volumes
will grow by 0.8% in 2023, down from the earlier forecast of 1.7%. Looking ahead to 2024,
trade growth is expected to pick up slightly, reaching 3.3%.

(b) Trade Facilitation

In 2019, India’s position in the ‘Trading across Borders’ indicator of the World Bank’s Ease
of Doing Business Report improved significantly. The country jumped from 143rd in 2016
to 68th out of 190 countries in 2019. This progress reflects India’s efforts to streamline
trade processes and enhance efficiency.

Furthermore, according to the UN Global Survey on Digital and Sustainable Trade

Facilitation 2019, India witnessed remarkable improvements in its overall trade
facilitation score. The score increased from 69% to 80%, showcasing the country’s
commitment to modernizing trade procedures.

India has outperformed other countries in Asia by implementing several key initiatives:

I. Direct Port Delivery (DPD): This scheme facilitates faster import clearance by allowing
cargo to be delivered directly from the port to the consignee’s premises, reducing
dwell time and costs.
II. Direct Port Entry (DPE): For exports, DPE enables direct movement of cargo from the
exporter’s premises to the port, streamlining export processes.
 III. e-Sanchit: An electronic platform that simplifies document submission for trade-
related clearances, making the process more efficient and transparent.
IV. Turant Customs: India’s next-generation software for customs management, aimed at
enhancing transparency, reducing paperwork, and promoting digital interactions.

These initiatives have contributed to India’s improved rankings and demonstrate the country’s
commitment to digital and sustainable trade facilitation. India’s efforts have positioned it as a
leader in the South Asia region, surpassing many developed countries in overall trade
facilitation scores.

(c) Trade Logistics

The logistics industry in India has experienced rapid growth and is currently valued at
approximately US$ 160 billion. Projections indicate that it will soon reach US$ 215
billion. This sector plays a crucial role in facilitating trade and economic development.
According to the World Bank’s Logistics Performance Index (LPI), India’s global ranking
has improved significantly. In 2022, India was ranked 38th, a notable jump from
the 54th position in 2014. This improvement reflects the country’s efforts to enhance
logistics efficiency, streamline processes, and boost connectivity.
Several key interventions have contributed to this positive trend:

I. Fast-tag: The implementation of electronic toll collection through Fast-tags has

streamlined road transportation and reduced transit time.
II. Bharatmala: This ambitious highway development program aims to enhance road
connectivity across the country, promoting efficient movement of goods.
III. Sagarmala: Focused on port-led development, Sagarmala aims to optimize port
infrastructure, enhance coastal shipping, and improve last-mile connectivity.
IV. Dedicated Freight Corridors (DFCs): These dedicated rail corridors are designed to
handle freight traffic efficiently, reducing congestion and transit time.
These initiatives have collectively contributed to India’s improved logistics performance,
making it a more competitive player in the global trade landscape.
3. Need for the Study:
The Make in India initiative, launched in 2014, holds significant promise for transforming India
into a global manufacturing powerhouse. However, as with any ambitious endeavour, it faces
challenges and requires a critical examination to determine its efficacy. The COVID-19 pandemic
revealed vulnerabilities in the global supply chain and highlighted the need for self-sufficiency,
thereby prompting the Indian government to introduce Production Linked Incentive (PLI)
schemes. To fully comprehend the impact of such measures and the overall effectiveness of the
Make in India campaign, a thorough investigation is essential. This study seeks to bridge existing
gaps in understanding by critically reviewing the objectives, progress, and outcomes of the Make
in India initiative, especially in the context of import substitution.

4. Literature Review:
 In examining the import substitution efforts through Make in India, existing literature highlights the
challenges and opportunities associated with this initiative. The imperative for the government to
foster a conducive business environment and establish world-class infrastructure is underscored
(Gupta, Kapoor, and Asudani, 2015). Bureaucratic hurdles have been identified as a deterrent to
India's attractiveness for investments (Gupta, Kapoor, and Asudani, 2015). Collaborative efforts
between the central and state governments are urged to ensure competitiveness (Saha, 2014), and
the simplification of licensing processes at the state level is emphasized (Paul, 2015).
Furthermore, the Make in India initiative has positively impacted India's standing in the Ease of
Doing Business Index (World Bank, 2020), with the country ascending to the 63rd position out of
190 nations. However, challenges persist in comparison to global counterparts (World Bank, 2020).
Continuous efforts are needed to streamline regulations and reduce bureaucratic obstacles for both
domestic and foreign investors.
Crucially, substantial investments in world-class infrastructure are deemed essential for attracting
investments and bolstering manufacturing in India (World Bank, 2019). Collaborative endeavours
between the central and state governments are pivotal, with transportation networks, logistics,
and connectivity playing crucial roles in enhancing India's appeal as a manufacturing destination
(World Bank, 2019). Initiatives like Bharatmala and Sagarmala mark positive strides in infrastructure
development.
Aligning state-level policies with the central government's vision is emphasized, with a particular
focus on streamlining licensing processes for encouraging investments and enhancing the ease of
doing business (World Bank, 2020).
From an economic theory perspective, Dr. TV Ramana's classical economic theory underscores the
significance of supply-side incentives (Ramana, date). Creating an environment that stimulates
producers to increase production is posited to facilitate a free flow of capital and attract higher
investments. Additionally, Dr. (Smt.) Rajeshwari Shettar's research accentuates the impact of Make
in India across diverse sectors, including automobiles, aviation, biotechnology, chemicals, and
electronics (Shettar, date). These changes are anticipated to contribute significantly to employment
generation and economic growth.

5. Research Methodology:
The proposed research will primarily rely on secondary data gathered from various sources such
as research articles, publications from the Ministry of Commerce (Government of India), reports
from government and private agencies, surveys, newspaper articles, books, and authenticated
websites. The data on FDI inflows will be obtained from the DPIIT of the Ministry of Commerce
and Industry of India, while information on the ease of conducting business will be sourced from
a report by the World Bank Group. A review of literature will be conducted by collecting relevant
research papers from different journals. The collected data will be classified and tabulated based
on research objectives, including year-wise, country-wise, sector-wise, state-wise, and month-
wise analysis. The research will adopt a descriptive research type and rely on secondary data
sources to identify the reasons behind investors' concerns and evaluate the impact of
government measures.

6. Objective of the Study:

• To understand the campaign of Make in India in the context of import substitution
 • To conduct a comprehensive study of the opportunities and constraints impacting
India's manufacturing landscape
• To assess the impact of FDI inflow on the effectiveness of the campaign

7. Limitations of the Study:

• The study is based on secondary sources of data and does not involve any primary
research findings.
• Secondary data may be lacking precision.

8. Make in India - An Introduction:

The Make in India initiative, a flagship program launched by the Indian government in 2014, aspires
to position the country as a preferred investment destination and a global manufacturing hub.
Designed to boost the manufacturing sector, the campaign aims to stimulate economic growth,
generate employment opportunities, and enhance self-sufficiency. In response to the challenges
posed by the COVID-19 pandemic, the government introduced Production Linked Incentive (PLI)
schemes to bolster the manufacturing sector and reduce dependence on international supply
chains.

This initiative aligns with the broader goal of import substitution, a strategy that gained renewed
significance in the wake of global disruptions. Import substitution through Make in India envisions
not only economic resilience but also the creation of a robust and competitive domestic
manufacturing landscape. As the campaign evolves, it becomes imperative to delve into the
intricacies of its implementation, its impact on the manufacturing sector, and its role in attracting
Foreign Direct Investment (FDI). This study aims to provide a comprehensive and critical analysis of
the Make in India initiative, shedding light on its achievements, shortcomings, and its significance
in the larger context of import substitution. Through meticulous examination and data-driven
insights, this research endeavours to contribute valuable perspectives to the ongoing discourse
surrounding India's manufacturing and economic-development.

8.1 Components of the Scheme:

(a) Goal: Establish India as a global manufacturing hub.
(b) Focus sectors: 25 sectors including automobiles, aviation, chemicals, IT & BPM,
pharmaceuticals, construction, and defense manufacturing.
(c) Objectives:
I. Increase manufacturing sector growth rate to 12-14% per year.
II. Create 100 million additional manufacturing jobs by 2022 (target revised later).
III. Increase the manufacturing sector's contribution to GDP (target revised to 2025).
(d) Policy approach:
I. Create an investment-friendly environment.
II. Develop modern and efficient infrastructure.
III. Open up new sectors for foreign capital.

8.2 Advantage India:

(a) Population: India, currently at 1.43 billion, is poised to become the world's most
populous nation by 2027, with a significant working-age population (15-64 years).
 (b) Internet Users: With over 624 million users as of July 2021, India boasts the world's
second-largest internet user base, reflecting substantial growth in internet penetration.
(c) Consumer Market: India's consumer market, driven by upward mobility and a growing
middle class, is projected to reach $6 trillion by 2030, positioning it among the world's
largest consumer markets.
(d) Start-up Ecosystem: India's burgeoning start-up ecosystem spans sectors like e-
commerce, fintech, health-tech, and food-tech, making it a thriving hub for innovative
and successful start-ups.
8.4 Ease of Doing Business:
The World Bank's latest report on Ease of Doing Business ranks India at 63rd, a significant
improvement from its previous position of 77th among 190 economies worldwide. This
ranking considers 11 key indicators to assess the regulatory environment for businesses,
particularly focusing on small and medium-sized enterprises, at both national and subnational
levels. Launched in 2002, the initiative aims to evaluate and improve the business regulatory
landscape across various countries.

(a) Components

(b) Shortfall of the Index:

I. The index primarily focuses on regulatory aspects and may not fully capture
broader socio-economic factors influencing business environments.
II. Some indicators used in the index can be subjective and may not reflect the
nuanced challenges faced by businesses in different contexts.
III. The index may struggle to adequately measure factors like corruption and informal
business practices.
IV. The index may overlook the complexities of informal economies, where a
significant portion of businesses operate.

8.5 Micro Small and Medium Enterprises (MSMEs)

In FY22, India's "MSME-related export" surged to $189,768 million, marking a robust 31.9%
growth from FY21's $143,823 million. However, the share of items exclusively reserved for
MSME manufacturing in India's total exports dipped from 9.1% ($26.4 million) in FY21 to 7.7%
($32.6 million) in FY22. This nuanced shift calls for a closer examination of factors influencing
MSME export dynamics.

(a) Union Budget 2019-20

The key highlights from the Union Budget 2022-23 specifically related to the
(MSMEs):

The budget allocated ₹21,422 crore to the MSME sector, reflecting a 26.71% increase
compared to the previous year.

The exemption on customs duty for steel scrap imports, a key raw material for many
MSMEs, was extended for a year.

The Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme received
an infusion of funds for revitalization.
 (b) Solar Chakra Mission
Launched in 2018, the Solar Charkha Mission is dedicated to generating employment
in rural areas, with a particular emphasis on empowering women and youth. The
initiative focuses on harnessing solar power for spinning yarn through solar-powered
charkhas (spinning wheels). Notable achievements include the establishment of 50
clusters, aiming to create 1 lakh jobs. The government allocated ₹550 crore in
investment between 2018 and 2020 to support this sustainable and employment-
centric mission.

(c) Udyam Sangam

Udyam Sangam, an annual initiative by the Ministry of MSME in India, serves as a
platform to foster partnerships and collaborations between Micro, Small, and Medium
Enterprises (MSMEs) and larger corporations. The inaugural edition took place in 2018,
with achievement data not readily available. Subsequent editions have centred around
specific themes such as "Promoting Exports" and "Innovation & Technology," although
detailed achievement data for these focused themes is limited. The initiative plays a
crucial role in promoting synergy and collaboration within the MSME sector.
Amendments Made to MSMED Act, 2006

(d) Others
I. Revised Definition: The most significant amendment in 2020 redefined MSMEs based
on investment in plant & machinery/equipment and annual turnover:
• Micro: Investment ≤ ₹1 Cr, Turnover ≤ ₹5 Cr
• Small: Investment ≤ ₹10 Cr, Turnover ≤ ₹50 Cr
• Medium: Investment ≤ ₹20 Cr, Turnover ≤ ₹200 Cr
II. Simplified Registration: Introduced Udyam Registration through a Udyog Aadhaar
Memorandum (UAM) for easier online registration and self-certification.
III. Faster Dispute Resolution: Established Commercial Courts for faster settlement of
commercial disputes, including those involving MSMEs.
IV. Easier Access to Credit: Initiatives like Pradhan Mantri Mudra Yojana and Revised
Credit Guarantee Scheme aim to facilitate easier loan access for MSMEs.
V. Emphasis on Ease of Doing Business: Measures like reducing compliance burden and
simplifying regulations.
VI. Delayed Payment Protection: Provisions for timely payments to MSMEs from buyers,
with specified interest rates for delayed payments.

8.6 Industrialization and Urbanization:

Industrial corridors in the context of industrialization and urbanization signify strategic zones
of economic development characterized by integrated infrastructure and specialized facilities.
Industrial corridors are designated stretches of land with concentrated industrial activity and
world-class infrastructure, designed to foster both industrialization and urbanization. They act
as engines of economic growth, attracting investments, creating jobs, and promoting overall
social development. These corridors aim to foster economic growth and social advancement
by facilitating seamless connectivity and efficient resource utilization. They typically
encompass cutting-edge infrastructure such as high-speed transportation networks,
 technologically advanced ports, modern airports, special economic zones, industrial areas,
and knowledge parks.
The Government of India has initiated and implemented five prominent industrial corridor
projects to bolster regional development and national connectivity:

➢ Delhi-Mumbai Industrial Corridor (DMIC)

➢ Chennai-Bengaluru Industrial Corridor (CBIC)
➢ Bengaluru-Mumbai Economic Corridor (BMEC)
➢ Vizag-Chennai Industrial Corridor (VCIC)
➢ Amritsar Kolkata Industrial Corridor (AKIC)

Furthermore, the Sagar Mala project initiated by the Government of India aims to modernize
the country's ports and inland waterways to catalyse port-led development and leverage
coastal resources for national progress. With an allocated project outlay of $10 billion, the
Sagar Mala project seeks to enhance connectivity and promote economic activities along
India's coastlines.

In addition, the Smart Cities Mission, with a project outlay of $7.69 billion, is underway, with
Special Purpose Vehicles established for 19 cities. This mission aims to transform select urban
centres into technologically advanced, sustainable, and liveable cities.

8.7 Confluence with other schemes:

(a) Goods and Services Tax (GST)
GST, introduced in July 2017, replaced a complex web of indirect taxes with a unified
tax structure across the country. This reform aims to simplify tax compliance, reduce
tax cascading, and create a more business-friendly environment conducive to
manufacturing and production. By harmonizing taxes and eliminating barriers to
interstate trade, GST promotes the growth of indigenous industries, enhances
competitiveness, and fosters the vision of making India a global manufacturing hub.

(b) Digital-India
These initiatives include the transition to e-governance for online tax systems, the
introduction of web-based Reserve Unique Name (RUN) for name reservation,
streamlined processes such as the SPICe form exemption of MCA fees for company
incorporation, and the E-KYC drive for directors facilitating the allotment of Director
Identification Number (DIN). Additionally, the BharatNet project, which as of 2018 has
extended high-speed broadband access to over 118,000 Gram Panchayats or Village
Councils, is pivotal. BharatNet is poised to revolutionize the digital delivery of essential
services, driving forward the vision of Digital India and bolstering the broader goals of
the Make in India campaign.

(c) Startup-India
Startup India, a key component of the Make in India Scheme, represents a
comprehensive ecosystem designed to foster innovation, entrepreneurship, and job
creation in India. Launched in 2016, Startup India aims to cultivate a conducive
environment for startups to thrive by simplifying regulations, providing access to
 funding, and nurturing innovation hubs across the country. Incentives provided to
startups under Startup India initiative:
➢ Access to funding through government-backed schemes like Fund of Funds
for Startups (FFS).
➢ Incubation and mentorship support through Startup India Hub and Atal
Innovation Mission.
➢ Innovation and research grants provided by various government departments
and agencies.
➢ Relaxation in public procurement norms for startups.
➢ Networking opportunities and exposure through participation in national and
international events.

(d) Start-ups Intellectual Property Protection (SIPP)

SIPP entails safeguarding the innovative ideas, inventions, and creations of emerging
enterprises from unauthorized use or infringement. It involves securing legal rights to
intangible assets such as patents, trademarks, copyrights, and trade secrets, which
form the foundation of a start-up's competitive advantage and market differentiation.

(e) Insolvency and Bankruptcy Code (IBC)

Enacted in 2016, the IBC aims to consolidate and streamline the insolvency resolution
process for corporates, partnerships, and individuals, promoting ease of doing
business and fostering investor confidence. It provides a structured mechanism for the
timely resolution of financial distress, either through the revival of the insolvent entity
or the orderly liquidation of its assets. The code empowers creditors to initiate
insolvency proceedings against defaulting debtors, thereby facilitating the
maximization of value from distressed assets while protecting the interests of all
stakeholders involved.

(f) FDI Policy

Here’s a concise summary of India’s FDI policy across various sectors, including FDI
inflow channels and government support:

(g) Pradhan Mantri Kaushal Vikas Yojana

This is a flagship skill development initiative launched by the Government of India to
empower youth with industry-relevant skills and enhance their employability prospects.
Introduced in 2015, PMKVY aims to provide training to millions of individuals across
various sectors through standardized skill development programs and certification.

(h) Pradhan Mantri Jan Dhan Yojana

This is a financial inclusion initiative launched in 2014 by the Government of India to
provide universal access to banking services for all citizens, especially those from
marginalized communities. Their aims to ensure that every household in the country
has access to a basic bank account. The scheme emphasizes the empowerment of
individuals through access to formal banking channels, enabling them to save, invest,
and secure their financial futures. By promoting financial literacy and inclusion.

9. China vs. India

In 1949, India and China underwent significant political transformations, with China adopting
communism and India establishing itself as a democratic republic. Since then, their developmental
trajectories have diverged, resulting in substantial economic disparities. While both nations
started as impoverished economies in the mid-20th century, China has surpassed India
economically, evident in their divergent GDP per capita figures. Historically comparable, China's
more rapid growth, driven by diverging policies since the 1950s, has led to a substantial disparity.
According to the World Bank, China's GDP per capita reached $12,670 in 2022, far exceeding
India's figure of $2,845.
9.1 China's Rise
In spite of the authoritative governance in China, there are crucial lessons to be gleaned
from its economic performance for India

(a) Focus on Human Development

a. China's emphasis on human development has been noteworthy, and as India
charts its course, there are valuable lessons to be drawn. In recent decades,
India has achieved notable progress in key human development indicators. The
adult literacy rate, a crucial measure, has experienced a steady ascent, reaching
74.37% in 2020, reflecting a commendable 5.07% increase since 2011.
Additionally, improvements in life expectancy have contributed to overall
advancements in human development. Despite these positive strides,
challenges persist, particularly in the areas of gender equality and regional
disparities, signalling the need for sustained efforts to address these issues
comprehensively.

(b) Focus on labour-intensive industries

Focusing on labour-intensive industries, China's success stems from abundant low-cost
labour, strategic investments in manufacturing, and the establishment of Special
Economic Zones. In contrast, India initially prioritized capital-intensive heavy
industries, resulting in lower labour absorption and a notable disparity in attracting
foreign investments. India later shifted to a services-led economy, fostering growth in
IT and finance, while China became a global manufacturing hub, dominating industries
like electronics and textiles.

9.2 China’s Growth Factors

Before 1978, China's annual growth stood at 6%. Subsequently, it witnessed an

average real growth exceeding 9% per annum. As per the IMF, pivotal drivers for this
growth encompassed a substantial workforce, sustained productivity escalation,
reduced state intervention, and capital accumulation through foreign investments.

9.3 Role of FDI’s

Foreign Direct Investment (FDI) played a crucial role in propelling China's manufacturing
sector and its subsequent rise as a global manufacturing powerhouse. Here's how, with some
supporting data:
 i. Capital injection: FDI inflows into China's manufacturing sector surged from $4 billion
in 1979 to a peak of $181 billion in 2010, providing the crucial capital needed to fuel
rapid expansion.

ii. Technological advancements: FDI also brought advanced technologies and expertise,
contributing to a 45% increase in labour productivity in the manufacturing sector
between 1990 and 2008.

iii. Export boost: As foreign companies established production facilities in China,

leveraging their global networks, China's exports of manufactured goods skyrocketed,
increasing from $26.4 billion in 1978 to a staggering $2.58 trillion in 2010.

9.4. Relative Competitiveness

China's economic dominance is underscored by robust manufacturing, technological

prowess, and global trade strength. Its established supply chains and foreign investment
influx have solidified its competitiveness. India, while advancing in technology and
services, faces challenges in bureaucratic hurdles and infrastructure. However, with a
growing middle class, a youthful population, and ongoing reforms, India's relative
competitiveness is on the rise, presenting a dynamic landscape for global economic
considerations.

(a) Cost and availability of skilled labour in India and China

I. Manufacturing wage

China's national minimum wages have displayed steady growth, with the 2022 NMW at
$286.50. The consistent upward trend signifies the country's commitment to improving labour
conditions and ensuring reasonable compensation for workers. China's approach reflects a
balance between economic development and addressing social concerns, contributing to
sustained economic growth and stability.

Comparing the two nations, China's minimum wages significantly surpass India's, reflecting
the disparities in economic development and labour market dynamics. China's proactive
approach in maintaining higher NMWs aligns with its economic growth strategy, emphasizing
the well-being of its workforce. India, while making progress, faces the challenge of ensuring
that minimum wages keep pace with the rising cost of living, contributing to the ongoing
dialogue on fair labour practices and economic equality.

II. Labour force size and skill level

India's labour force has likely seen an increase since September 2019, and as of the latest
available information, it is estimated to be around 530 million. In comparison, China's labour
force, which stood at 783 million in 2019, has likely remained one of the largest globally.
 India's position in the World Economic Forum's human capital report may have evolved, but
historical challenges in factors like "know-how" and specialized skills persist. India's rank, as
of the last update, was 103rd, indicating room for improvement. China, with a rank of 34th,
continues to outpace India in various human capital indicators.

The quality and complexity of India's top export products may have experienced
improvements, but challenges in specialized skills may still impact the overall sophistication
of the export basket.

India's labour participation rate, particularly among the 25-54 age group, may have seen
marginal changes, and efforts to address the employment gender gap might be ongoing. As
of 2017, India had a labour participation rate of 67% for this age group, whereas China
reported a higher rate of 88%, showcasing a notable difference in workforce engagement.

III. Ease of Doing Business in India vs. China

In the 2020 rankings, China achieved a commendable position, securing 31st place overall.
Despite India's lower rank at 63rd compared to China, it surpassed certain manufacturing
centres in Southeast Asia, notably outpacing Cambodia, which (ranked 144th), and Vietnam,
which secured the (70th position).
Hence, there are significant distinctions in the manufacturing and trade scenarios of India and
China. India's lower wages render it a more economical choice for manufacturing specific
products. However, challenges arise due to its subpar infrastructure and complex regulatory
framework, creating obstacles in the process.

9.5. Why Is Manufacturing More Expensive in India than In China

(a) Power Availability and Cost:

In India, power availability is not 24/7, leading to wasted machinery capacity and
increased costs. Subsidized power for farmers contributes to higher electricity costs
for industries in India.

(b) Labour Challenges:

Difficulty in finding skilled factory labour in places like Tamil Nadu due to high-paying
alternatives. Unskilled labour turnover is high, impacting manufacturing consistency.
The cost of labour in India may be lower, but the quality may be inferior compared to
China.

(c) Transportation Costs:

Poor infrastructure and road conditions in India lead to delays and increased
transportation costs. Shipment from northern to southern India can take a week or
more, impacting product delivery timelines.

(d) Bureaucratic Hurdles:

Starting or expanding a plant in India involves complex bureaucratic processes,
requiring extensive paperwork and often involving corruption. Inter-state shipping is
plagued by delays, emphasizing the need for streamlined processes like GST.
 (e) Preferential Treatment for Small Enterprises:
Indian laws, especially in textiles, Favor small enterprises, limiting the ability to
compete with larger factories in China. Outdated laws contribute to challenges in
achieving economies of scale.

(f) Currency Value:

The value of the Chinese Yuan is higher than the Indian Rupee, influencing overall
manufacturing costs.

(g) Productivity and Scale:

China's focus on manufacturing scale and clustering enhances productivity and
efficiency. India's regulatory framework discourages scaling up, hindering
competitiveness in global markets.

(h) Infrastructure and Logistics:

China has invested in efficient and low-cost transportation, electricity, and energy
infrastructure. India needs significant investment in infrastructure to compete on
these fronts.

(i) Taxation and Land Acquisition:

China's favourable tax policies and simplified tax systems contribute to its export
sector. Land acquisition challenges in India hinder the establishment of large-scale
factories.

(j) Macroeconomic Stability:

China's macroeconomic stability and currency policies provide a conducive
environment for investors and entrepreneurs.

10. Countries investing in India

Several countries have been actively investing in India across various sectors. The landscape of
foreign investment can change, so it's essential to check for the most recent information. Here are
some of the countries that historically have had significant investments in India:

10.1 Mauritius:
Over the last ten years, Mauritius has consistently been a significant investor in India. In the
financial year 2021-22, Mauritius contributed $6.13 billion in Foreign Direct Investment (FDI)
equity inflows to India. Cumulatively, from April 2000 to March 2023, Mauritius has invested
a substantial $163.88 billion in India, accounting for approximately 26% of the total FDI
inflows.

10.2 Singapore:
Singapore has been a consistent player in India’s investment landscape. In FY 2021-22,
Singapore’s inward FDI reached $17.20 billion, making it the top investor in India.
Cumulatively, Singapore’s FDI equity inflow into India stands at $148.17 billion, representing
around 23% of the total FDI inflows.

10.3 USA:
 The United States has maintained its position as a significant investor in India. In the same
financial year, the USA invested $6.04 billion in India. Cumulatively, the USA’s FDI equity inflow
amounts to $60.20 billion, contributing approximately 9% of the total FDI inflows.

10.4 Netherlands:
The Netherlands has also been actively investing in India. In FY 2021-22, the Netherlands
provided $2.49 billion in FDI equity inflows. Cumulatively, the Netherlands’ FDI inflow into
India stands at $43.76 billion, constituting around 7% of the total FDI inflows.

10.5 Japan:
Japan’s investment in India has been consistent over the past decade. In the most recent
financial year, Japan invested $1.79 billion in FDI equity inflows. Cumulatively, Japan’s FDI
equity inflow amounts to $38.74 billion, representing approximately 6% of the total FDI
inflows.

With strengthened political alliances and a more robust economic negotiation framework,
numerous nations are increasingly viewing India as a pivotal strategic partner. Consequently,
there is a growing willingness among these countries to make substantial investments in India.

11. Make in India as an Import Substitution Strategy

As an Import Substitution Strategy, "Make in India" aims to promote domestic manufacturing

and reduce reliance on imports by encouraging local production of goods and services.

The strategy focuses on several key areas:

(a) Ease of Doing Business:

According to the World Bank's Doing Business Index, India's ranking has improved from
142 in 2014 to 63 in 2020, making it easier for businesses to operate in the country.

(b) Infrastructure Development:

India has made significant progress in infrastructure development, with the
government investing in projects such as the Delhi-Mumbai Industrial Corridor (DMIC),
Chennai-Bangalore Industrial Corridor (CBIC), and the Eastern Dedicated Freight
Corridor (EDFC). These projects are aimed at creating industrial clusters and improving
connectivity between manufacturing hubs.

(c) Skill Development and Education:

The government has initiated various skill development programs, such as the Pradhan
Mantri Kaushal Vikas Yojana (PMKVY), which aims to train millions of Indians in various
trades. Additionally, the government has established the National Skill Development
Corporation (NSDC) to facilitate skill development and enhance the employability of
the Indian workforce.

(d) Research and Development:

India has been investing in research and development, with the Department of Science
and Technology (DST) and the Council for Scientific and Industrial Research (CSIR)
 providing funding and support to academic institutions and research organizations
engaged in manufacturing-related fields.

(e) Public-Private Partnerships:

The Indian government has been promoting public-private partnerships, such as the
Smart Cities Mission, which aims to improve urban infrastructure and create jobs by
investing in technology-driven solutions.

(f) Export Promotion:

India's export-to-GDP ratio has increased from 4.7% in 2011-12 to approximately 9.6%
in 2019-20, reflecting the government's efforts to promote exports.

(g) Quality Certification and Standards:

The government has been working on establishing quality certification and
standardization systems, such as the Quality Council of India (QCI), to ensure the
quality of locally produced goods.

(h) E-commerce and Digital Platforms:

India's e-commerce market has been growing rapidly, with a projected growth rate of
45% in 2021, according to a report by KPMG and Google. The government has been
promoting the use of digital platforms to facilitate the sale of Indian-made products.

(i) Green Manufacturing:

India has been focusing on adopting green manufacturing practices and
environmentally sustainable technologies, with the government setting ambitious
targets for renewable energy generation and energy efficiency.

(j) Export-oriented Manufacturing:

India's export-to-GDP ratio has increased from 4.7% in 2011-12 to approximately 9.6%
in 2019-20, reflecting the government's efforts to promote exports and reduce reliance
on imports.

11.1. Policy Fallacy

India's economic strategy underwent a significant transformation post-1991, marking a shift
from import substitution to export orientation. This transition was necessitated by a balance
of payments crisis in 1991, which compelled India to abandon its largely inward-looking
economic policies and embrace liberalization, privatization, and globalization.

(a) Pre-1991 Era (Import Substitution):

India's economic strategy before 1991 was characterized by import substitution
industrialization (ISI). Under this model, the government protected domestic
industries from foreign competition through high tariffs and trade barriers. The focus
was on producing goods domestically that were previously imported, aiming for self-
sufficiency. However, this strategy led to inefficiencies, lack of competitiveness, and a
reliance on state controls.

(b) 1991 Economic Reforms:

 In response to the balance of payments crisis, the Indian government under Prime
Minister Narasimha Rao initiated sweeping economic reforms. The key reforms
included:

I. Liberalization: Opening up the economy to foreign investment and reducing trade

barriers.

II. Privatization: Disinvestment of state-owned enterprises to improve efficiency and

competitiveness.

III. Globalization: Integration of the Indian economy with the global economy through
trade and investment liberalization.

(c) Shift towards Export Orientation:

Post-1991 reforms facilitated a shift towards an export-oriented strategy. India aimed
to leverage its abundant labour force, technological capabilities, and emerging service
sector to boost exports and attract foreign investment. The focus shifted from
protecting domestic industries to enhancing their competitiveness in global markets.

(d) Impact on GDP Growth:

The economic reforms of 1991 significantly contributed to India's economic growth.
GDP growth accelerated, averaging around 6-7% per annum in the following decades.
Export-oriented sectors such as information technology (IT), software services,
pharmaceuticals, and automobile manufacturing experienced rapid growth,
contributing to overall economic expansion.

(e) Comparison with South Korea's Export-Oriented Strategy:

India's export-oriented strategy shares some similarities with South Korea's economic
development under President Park Chung-Hee in the 1960s and 1970s. Both countries
prioritized export-led growth, emphasized industrialization, and attracted foreign
investment. South Korea implemented policies focused on export promotion, targeted
industrial development, and investments in education and infrastructure. These
efforts propelled South Korea from a low-income to a high-income economy within a
few decades.

However, there are also notable differences between the two strategies. South Korea pursued
a more directed and interventionist approach, with strong government guidance and support
for targeted industries. In contrast, India's approach post-1991 was more market-oriented,
with a greater emphasis on liberalization and private sector-led growth. Additionally, South
Korea had a more homogeneous industrial base and stronger institutions compared to India,
which faced challenges such as bureaucratic inefficiencies, infrastructure constraints, and
regulatory complexities.

11.2. Re-Launching Make in India as an Import Substitution Program

Make in India has always had elements of import substitution, but the primary goals were
attracting foreign investment and easing business operations to boost manufacturing across
the board.
Recent circumstances like geopolitical tensions and COVID-19 disruptions have amplified the
need for India to become more self-reliant in critical industries.

(a) How Import Substitution is Gaining Focus?

I. Aatmanirbhar Bharat (Self-Reliant India): This complementary initiative pushes

for increased domestic production and reduced dependence on imports.
II. Production Linked Incentives (PLIs): The government has introduced PLIs in
various sectors (electronics, pharmaceuticals, automobiles) that reward
companies for increasing domestic manufacturing and reducing reliance on
foreign imports.
III. Import Tariffs: In some cases, the government has increased import duties on
certain products to make domestic manufacturing more attractive.

De-risking from China

In an active effort against dumping of goods from China, and reducing our trade deficit
with it, there have been multiple efforts, especially in the electronics industry, to
manufacture as many components possible in India only. The effort is to reduce
dependence on a foreign country and focus on import substitution. Due to heavy reliance
on China for components, some of the Indian factories are running at 50% of their capacity

(b) Case Study 1: Mobile Phones - "Make in India" Impact on Xiaomi

I. Background:
• Prior to "Make in India," both Xiaomi and Samsung heavily relied on imports, primarily
from China, for finished phones and components.
• This dependence on imports made them susceptible to:
➢ Fluctuations in global prices: Affecting their cost competitiveness.
➢ Supply chain disruptions: Causing potential delays and inventory challenges.

II. The "Make in India" Effect:

The Indian government implemented various measures to promote domestic
manufacturing:
➢ Increased import duties on finished phones and components: This made
importing less attractive and encouraged local production.
➢ Fiscal incentives: Provided tax benefits and subsidies to companies setting up
manufacturing units in India.
➢ Improved infrastructure and regulatory environment: Created a more conducive
environment for domestic manufacturing.

III. Response of Xiaomi:

➢ Established local manufacturing units in partnership with Indian contract
manufacturers like Foxconn and Flextronics.
➢ Gradually increased local sourcing of components from Indian suppliers.
 ➢ By 2019, over 70% of their phones sold in India were manufactured locally.

IV. Outcomes:
➢ Increased domestic production of mobile phones in India, reducing reliance on
imports.
➢ Creation of jobs in the manufacturing sector.
➢ Improved cost competitiveness for both companies, allowing them to offer
competitive prices to Indian consumers.
➢ Increased exports of mobile phones from India, contributing to foreign exchange
earnings.

V. Conclusion:
The case of Xiaomi demonstrates how the "Make in India" initiative has successfully
encouraged global companies to increase local production and decrease dependence on
imports. This shift has contributed to job creation, improved cost competitiveness, and
boosted the Indian economy. However, continuous efforts are needed to address challenges
like skill gaps and infrastructure development to ensure the long-term success of "Make in
India" in the mobile phone sector, and beyond.

(c) Case Study 2: Automobiles - "Make in India" Impact on Maruti Suzuki and Hyundai

I. Background:
➢ Dominance of a few manufacturers: Primarily Indian companies like Maruti Suzuki
with significant local production and some foreign players like Hyundai with
import-driven strategies.
➢ Limited domestic value addition: A high dependence on imported components,
making the industry vulnerable to global price fluctuations and supply chain
disruptions.

II. The "Make in India" Effect:

➢ Similar to the mobile phone sector, the Indian government implemented measures
to promote domestic manufacturing in the automobile industry:
➢ Phased increase in import duties on finished vehicles and components: Gradually
increased over time to incentivize local production.
➢ Incentives for setting up manufacturing units and R&D centres in India: This
included tax benefits and subsidies.
➢ Focus on developing a skilled workforce: Initiatives to train and upskill workers in
relevant areas like automotive engineering and manufacturing.

III. Maruti Suzuki:

• Pre-existing strong domestic presence: Maruti Suzuki already had a deep-rooted
presence in India with established manufacturing facilities and a strong supplier
network.
• "Make in India" strategy:
➢ Leveraged existing infrastructure and supplier base to adapt quickly to the
changing landscape.
 ➢ Focused on further increasing domestic sourcing of components.
➢ Expanded production capacity to cater to the growing demand for automobiles in
India.
IV. Outcomes:
➢ Maintained its leadership position in the Indian market.
➢ Increased exports, particularly to emerging markets.
➢ Contributed to job creation and skill development in the automotive sector.
V. Hyundai:
• Initially import-driven strategy: Hyundai initially relied heavily on imports for both
finished vehicles and components.
• "Make in India" response:
➢ Gradually increased local sourcing of components from domestic suppliers.
➢ Invested in expanding their existing manufacturing facilities in India.
➢ Launched initiatives to train and upskill their workforce in line with the evolving
requirements.

VI. Outcomes:
➢ Enhanced cost competitiveness, allowing them to compete more effectively in the
Indian market.
➢ Increased their market share in India.
➢ Contributed to the growth of the domestic automotive ecosystem.

VII. Conclusion:
The case of Maruti Suzuki and Hyundai highlights contrasting approaches to "Make in India"
within the automobile sector. While Maruti Suzuki capitalized on their existing strengths,
Hyundai adapted their strategy to become more locally integrated. Both companies, however,
benefited from the initiative, contributing to:
➢ Increased domestic production and value addition
➢ Job creation and skill development
➢ Enhanced cost competitiveness and export potential

11.3. The Taste of Failure: Critical Analysis

The key reasons why the "Make in India" initiative has faced challenges and failed to fully
achieve its ambitious aspirations:

(a) Structural Challenges:

Ease of Doing Business: While India jumped 30 positions in the World Bank's Doing
Business rankings between 2016 and 2020, it still ranked 63rd out of 190 countries in
2020, highlighting the ongoing challenges.

Infrastructure Deficits: India's logistics costs are estimated to be around 13% of GDP,
compared to an average of 7-8% in developed economies, highlighting inefficiencies
due to infrastructure gaps.

Land Acquisition Issues: In 2019, a study by the Confederation of Indian Industry (CII)
found that 72% of industrial projects faced delays due to land acquisition hurdles.
(b) Skill Gap and Labour Market Issues:

Inadequate Workforce Skills: A 2020 World Bank report estimated that only 24% of
India's workforce possesses the skills needed for the jobs of tomorrow.

Restrictive Labour Laws: India's rigid labour laws, while offering worker protections,
can discourage companies from expanding, as evident by the slow growth of formal
employment in the manufacturing sector.

(c) Competition and Global Environment:

Intense Competition from China and others: China's manufacturing output is nearly 10
times larger than India's, and Vietnam's manufacturing sector has grown by an average
of 13% annually since 2010, highlighting the intense competition India faces.

Unfavourable Trade Agreements: Some critics argue that India's trade agreements
with certain countries haven't been optimal, leading to a trade deficit with those
nations and making imports more attractive than domestic production.

(d) Policy Implementation and Focus:

Insufficient Implementation: A 2018 report by the Comptroller and Auditor General of

India (CAG) found delays and inefficiencies in the implementation of various schemes
under "Make in India," highlighting execution challenges.

Too Many Sectors: With 25 sectors being targeted under "Make in India," critics argue
that the initiative spread itself too thin, diluting resources and attention.

Lack of Innovation Emphasis: While innovation was mentioned as a goal, the focus on
attracting foreign investment and basic manufacturing may not have been enough to
foster the development of high-value-added industries based on R&D.

(e) External Factors:

Global Economic Slowdowns: The global economic slowdown of 2019 and the COVID-
19 pandemic in 2020 significantly impacted India's economic growth and export
potential, further hindering the "Make in India" initiative's progress.

(f) Overly Ambitious Goals:

The targets set by "Make in India" were extremely ambitious. Aiming to increase
manufacturing's share of GDP to 25% and creating 100 million jobs within a short
timeframe was perhaps unrealistic. This created a gap between expectations and
reality, and may have led to rushed implementation without adequate preparation.

(g) Heavy Reliance on Foreign Capital:

 "Make in India" placed significant emphasis on attracting Foreign Direct Investment
(FDI). While FDI is important, it can carry its own risks. An over-reliance on it can
expose the economy to external shocks and fluctuations in global capital flows.
Additionally, FDI-dependent production might not always translate to long-term
technology transfer and domestic job creation in the desired scale.

12. Findings
The initiation of the *Make in India* campaign in 2014 marked a significant stride toward
transforming India into a global manufacturing hub. The campaign, however, faced the dual
challenge of stimulating domestic production while reducing dependence on imports. Insights from
existing research indicate that while the campaign succeeded in improving India's business
environment and attracting investment, certain hurdles persist, limiting its potential impact on
import substitution. Regulatory complexities and infrastructural gaps are key areas where the
campaign could further align with the principles of import substitution.

A comprehensive study of India's manufacturing landscape reveals a range of opportunities and

constraints. On the positive side, India has a large domestic market, abundant labor force, and
growing middle class, which provide opportunities for increased manufacturing activities. The
country also possesses expertise in certain industries such as automotive and information
technology. However, significant challenges persist. Bureaucratic hurdles, complex regulations,
inadequate infrastructure, and skill gaps pose constraints to the expansion of the manufacturing
sector. Addressing these challenges requires concerted efforts from the government, industry
stakeholders, and education institutions to foster a conducive ecosystem for manufacturing.

Foreign Direct Investment (FDI) inflow has played a crucial role in the success of the Make in India
campaign. It has brought in capital, technology, managerial expertise, and access to global markets.
The campaign's emphasis on attracting FDI has resulted in a significant increase in FDI inflows,
particularly in sectors such as manufacturing and services. However, it is important to note that the
effectiveness of FDI in promoting import substitution varies across sectors. While FDI has
contributed to the growth and modernization of certain industries, challenges remain in achieving
complete import substitution in high-value and technologically advanced sectors.

In summary, the Make in India campaign has made substantial progress in promoting import
substitution and boosting domestic manufacturing. It has created opportunities for businesses to
expand their production capabilities and tap into the growing domestic market. However, challenges
such as bureaucratic hurdles and inadequate infrastructure need to be addressed to fully harness
the potential of the campaign. The role of FDI inflows has been significant but sector-specific
strategies may be required to achieve import substitution across all industries.

13. Way Forward

A comprehensive discussion of strategies for enhancing India's economic development,
emphasizing manufacturing, innovation, and the aspects:

13.1 Strategies for Enhancing Manufacturing and Innovation

(a) Focused Sector-Specific Development:
Identify sectors of strategic importance based on India's inherent strengths, global
demand, and potential for value addition. Focus on areas like:
 ➢ High-tech manufacturing (electronics, precision engineering)
➢ Pharmaceuticals and biotechnology
➢ Renewable energy and green technologies
➢ Aerospace and defense
➢ Specialized textiles and garments

Develop sector-specific plans and incentives to promote domestic production and

attract FDI.

(b) Promotion of Innovation and R&D:

I. Significantly increase investment in research and development (R&D) both in
public and private sectors.
II. Encourage partnerships between industry, research institutions, and universities
to foster problem-solving innovation for the real economy.
III. Set up world-class technology incubation centres and innovation clusters.

(c) Education System Alignment:

I. Revamp the education system to emphasize critical thinking, problem-solving, and
practical skills needed for the modern workforce.
II. Partner with industry to create apprenticeship and internship programs.
III. Incentivize higher education institutions to better align their programs with
market needs.

(d) Learning from International Successes:

I. Actively study and adapt successful models from countries like Germany, Japan,
and South Korea known for manufacturing excellence and innovation.
II. Pay close attention to policies supporting SME development, skill upgrading, and
technology transfer.

(e) Logistics Optimization:

I. Invest heavily in upgrading transport infrastructure (roads, railways, ports, and
airports).
II. Reduce supply chain bottlenecks and inefficiencies with technology-driven
solutions.
III. Improve customs and clearance procedures for faster movement of goods.

13.2 Job Creation Strategies

(a) Support for MSMEs:

Micro, Small, and Medium Enterprises (MSMEs) are significant job creators.
Provide easier access to credit, reduce regulatory hurdles, and support skill
development within this sector.
(b) Labour Market Reforms:
Reform labour laws to create employment flexibility while ensuring fair working
conditions. This will encourage greater formalization and investment in labour-
intensive sectors.
 (c) Rural Development and Urbanization:
Invest in rural infrastructure and promote agro-processing industries to create
opportunities outside of major cities. Plan strategically for urbanization to
accommodate the growing workforce and minimize urban sprawl.

13.3 Potential Impact on Economic Growth and FDI:

14 Higher GDP Growth: A powerful manufacturing base, innovation-driven economy, and
quality job creation will all fuel robust and sustainable economic growth.
15 Increased FDI: A favourable investment climate, strong intellectual property protection,
and a skilled workforce will attract significant foreign direct investment. This can lead to
technology transfer and further growth acceleration.
16 Skill Development and Improved Socioeconomic Indicators: A focus on manufacturing and
innovation, accompanied by appropriate skill development, will lead to better wages,
social mobility, and improved human development indicators in India.

13.4 Key Recommendations:

(a) Establish a National Manufacturing Council: Create a high-level body involving the
government, industry, and academia to set strategic priorities, monitor progress, and
coordinate cross-sectoral efforts.
(b) Public-Private Partnerships: Forge strong partnerships between the government and
private sector for infrastructure development, skill development, and technology
transfer.
(c) Incentivize Performance: Link incentives and subsidies to measurable performance
indicators for companies and projects.
(d) "Make in India for the World": Encourage the mindset of producing high-quality goods
not just for domestic consumption, but with a keen eye toward global exports.

17 Conclusion
While the "Make in India" initiative has fostered some positive developments, its overall impact on
import substitution and export promotion remains limited. This limited success can be attributed to
several factors, including:
➢ A lack of focus on developing core competencies and fostering innovation in key
sectors,
➢ persistent challenges in the ease of doing business, and
➢ Infrastructure deficiencies.

To revitalize the program and achieve its ambitious goals, further reforms are needed. These
include prioritizing investments in research and development, streamlining bureaucratic
procedures, and enhancing physical and digital infrastructure. Additionally, a greater
emphasis on skill development and fostering global competitiveness will be crucial. As the
global economy continues to evolve, the "Make in India" initiative must adapt and innovate
to remain relevant and contribute meaningfully to India's economic growth and self-reliance.