Modi to kick off nationwide Make-In-India campaign by month-end

Written by Arun S | New Delhi | Updated: Sep 8 2014, 07:44am hrs
PM Narendra Modi is likely to announce by this month-end a mega nation-wide campaign called 'Make-In-India' to boost domestic manufacturing as also a strategy, in partnership with state governments, to attract more foreign investment.

Also in the works is an announcement on a composite foreign investment cap (including foreign direct, portfolio, institutional and venture capital investments besides non-resident Indian investments) for all sectors to simplify norms and bring clarity.

This will be followed up by roadshows overseas where efforts will be made to woo foreign investors, including sovereign wealth funds and pension funds to invest especially in defence, railways, construction and infrastructure sectors, in addition to the industrial and economic corridors and national investment and manufacturing zones, highly placed officials told FE.

In his Independence Day speech, Modi had appealed to everyone across the world to make in India. He had said: Sell in any country of the world but manufacture here. Besides increasing employment, investment and exports, the aim is to reduce dependence on imports and not to have worries on the current account deficit front.

The Centre, through the campaign, will assure states as well as domestic and foreign investors of a hand-holding approach. Emphasis will be on use of latest technology to provide information on policies and approval process. Approvals, including those related to environment, will be expedited. Feedback will not only be taken from investors but also given to them in a dynamic manner, an official said.

Currently, in many sectors either only FDI is allowed or there are sub-caps on FDI and FIIs. All ministries have backed the idea of a composite cap. It will soon be taken up by the Cabinet for approval, the official added.

On criticism that it will lead to short-term investors (portfolio investors) having a say in many sectors, official sources said there were instances of such investors indirectly exercising control. The sources said composite cap will provide companies more flexibility on investment decisions.

In the overseas roadshows, the government will highlight the steps taken to improve the ease of doing business in India including the e-Biz project (facility for single application for multiple clearances along with an inbuilt payment gateway).

These roadshows will also detail recent initiatives to de-licence manufacturing of several defence items. Also highlighted will be the recent hike in foreign investment limit in defence (from 26% to 49%), and permitting 100% foreign investments in areas in railways such as high-speed train systems and coaches manufacturing and maintenance (but barring train operations and safety), in addition to similar moves being planned in insurance (the pending Bill in Parliament to increase foreign investment from 26% to 49%) and construction sector (relaxation of FDI conditions).

What is of concern is the total FDI inflows (including government approval, automatic and acquisition routes as well as re-invested earnings, equity capital of unincorporated bodies and other capital) slipped from a high of $41.9 billion in 2008-09 to $36.4 billion in 2013-14 (though this figure was up 6% over 2012-13). Net FII inflows had plunged from a high of $29.4 billion in 2010-11 to $5 billion last fiscal.

India fell to a lowly 134th rank out of 189 countries this year (three down from 2013) in the World Banks Ease of Doing Business rankings, while in World Economic Forums Global Competitiveness Index, the country's ranking was down to 71 out of 144 countries this year from 48 in 2007-08.

FDI (equity flows alone) during April-June this fiscal has, however, clocked 34% growth over the same period previous fiscal to $7.2 billion.

Grand plan

* Centre to assure states and investors of a hand-holding approach through Make-In-India campaign

* Emphasis on use of technology to provide information on policies and approval process

* Govt keen on investments in defence, railways, construction

* Big roadshows overseas soon to woo foreign investors, including sovereign wealth funds and pension funds

* Announcement soon on composite foreign investment cap for all sectors