TEAM NAME: ELIXIR

Geetanjali Gulati
Shipra Saini

THE VISION OF
MAKE IN INDIA & MADE IN
INDIA

IIM Lucknow

January 2015, Davos: Hoardings of the now ubiquitous lion adorn the walls of the
Indian lounge during the World Economic Forum, a powerful and effective
demonstration of Modis pet project: Make in India. This ambitious projects main
objective is to provide a fillip to the struggling manufacturing sector of our economy
by attracting foreign investors. Newspapers are replete with articles on this subject,
and India Inc. leaders are busy extolling it.
In the backdrop of the current situation of our manufacturing sector, all this bugle cry
and appreciation is indeed justified. IIP numbers in the last 10 years have seen a
downward trend, with negative figures in 2008. Since then, the index has not been
able to recover its previous buoyancy. The manufacturing sector contributes a dismal
16% to the GDP as compared to 56% contribution of the services sector. These
alarming figures become all the more worrying in the light of the fact that agriculture,
which contributes 22% to the GDP employs 60% of the working population. As our
manufacturing sector recedes back, fiscal deficit soars due to increased imports.
The following infographic provides a bird eye view of the imports of the Indian
economy. It sheds light n Indias position as an importer in the world. It also talks
about the IIP data from 2004-2014 and the fiscal deficit from 2001-2014. Inability of
manufacturing sector to meet even domestic demand consequently leads to fiscal
deficit.

Needless to say, the prerogative of the new Modi government was to uplift the
gloomy economy and create millions of jobs. And since no economy can grow if it is
dependent on imports like India, manufacturing was the key to accelerated growth.

But to build the foundation of the economy was no easy task and the Modi
government rightly oversaw the roadblocks. The most important roadblock was lack
of capital followed by lack of technical expertise. Even though India has abundant
unskilled labor, it has failed in providing good conditions for foreign plants.
Working from the ground up, investment in infrastructure, roads, highways, railways,
energy, ports, etc. would be pertinent. But all the more challenging would be the
technical knowhow required to build indigenous industries.
A simple example would be the defense industry. India is the largest importer of
defense equipment. Even after decades of independence, our domestic defense
industry lacks the skills, knowledge and technical expertise to manufacture the
equipment.
Policy makers mulled over the problems for months and finally came up with Make In
India: the panacea of all our manufacturing woes.
Not only is the government trying to attract foreign investment through it, but also
focusing on innovative solutions through transfer of knowledge. Creation of jobs
coupled with skill development is the biggest benefit that our country would get.
Roads, highways, thermal energy, ports, biochemical industries; all major sectors
required to build the backbone of the manufacturing sector are covered in this
program. All these industries are extremely capital intensive and require extensive
global supply chain management. Sectors with the potential of contributing like
tourism, wellness, media and entertainment are also covered. Each sectors
attractiveness is summed up articulately with FDI norms, growth drivers and
investment opportunities. Most sectors have a welcoming 100% FDI, to ease the entry
of foreign players. The website also includes financial support provided by the
government. For example, INR 5 billion has been allocated towards the proposed
creation of 5 tourist circuits around specific themes.
To sum up, the vision for this comprehensive program is simply to sell India as a
manufacturing hub.
But beyond the blankets of the promised growth is a growing concern: Make in
Indias impact on Made in India. The dissimilarities go beyond the single letter. Made
in India is a concept that deals with products manufactured in India-completely.
Lets understand this difference through an example. Lets say, impressed by the shiny
Make in India campaign, Armani wishes to set up its manufacturing plant in India.

This will create jobs, transfer of knowledge to its Indian partner, sophisticated
machinery and processes. And once the foreign brand is satisfied with the returns, exit
is inevitable. Made In India, however, would come into play when the government
bolsters domestic firms like Arvind Mills to manufacture garments in India and export
them. Self-sufficiency would not be the only benefit; factored in would be the impetus
to thousands of entrepreneurs waiting with their nascent ideas for government
support. Equal chance for Indian companies to carve their place in the global scenario
would be another benefit.
Understanding the consumer psyche is difficult, for decoding why an Indian would
pay six times more for a Samsung phone instead of a Micromax phone (Indian brand),
even though the specifications would be almost the same, is still a mystery. Indian
products are considered generally inferior to their international competitors. Branding
is surely something that Indian industries have to focus on, if they wish to compete
with the world. The chain reaction of a healthy business environment will make sure
the wheels of domestic development move for a longer time.
After studying the two concepts thoroughly, in conclusion, we would like to point out
that both these campaigns: Make In India and Made In India converge on a single
focal point of encouraging manufacturing to grow our economy. What they differ on,
is their approach. Where one focuses on indigenous industries for growth, the other is
relying on foreign investors for progress. Where make in India is a question mark on
the sustainability of investment, made in India requires capital to oil the gears.
Moving in tandem is something, which will make sure that India gets the best of both
worlds by combining the advantages of both these ambitious programs.

References
1. www.makeinindia.com
2. http://data.worldbank.org/indicator/NV.IND.MANF.ZS
3. http://www.rooseveltinstitute.org/new-roosevelt/six-reasons-manufacturingcentral-economy
4. http://business.mapsofindia.com/india-gdp/sectorwise/
5. http://www.quora.com/What-is-the-difference-between-Made-in-India-andMake-in-India
6. http://www.businessworld.in/news/economy/india/make-in-india-vs-made-inchina/1550000/page-1.html
7. Infographic is original, the data sources have been mentioned.
8. Credits for the cover page photograph: www.makeinindia.com