As the government sets out to observe the Make In India week in Mumbai, starting February 13, commerce and industry minister Nirmala Sitharaman says the programme is aimed at promoting manufacturing for both exports and domestic requirements, as opposed to apprehensions from some quarters that the government may incentivise manufacturing only for outbound shipments. Even RBI governor Raghuram Rajan had in 2014 suggested that only an incentive-driven, export-led growth strategy may not work well for the country in the current context and that Make for India is equally important. Sitharaman says the Centre is working closely with states in ensuring the ease of doing business for which as many as 300 additional issues, including those on environmental clearances and export-import documents, are being addressed. In an interview with Banikinkar Pattanayak, she also affirms that India has a robust intellectual property (IP) rights regime and court verdicts in certain cases have reinforced the government’s position, a day after the US Chamber of Commerce put India second from the bottom in its international IP index.
What are you specifically targeting through Make in India?
Make in India was launched in September 2014 with the objective that manufacturing has to be given emphasis. The manufacturing policy, stated in 2011, targeted to drive up the share of manufacturing in GDP from 15-16% now to 25% by 2022. There was a debate about confining Make in India to just (manufacturing for) exports, but that’s not the point. It’s Make in India, both for India and for exports. India is the only major economy in the world which is growing at over 7% annually. The larger plan of PM Narendra Modi is that manufacturing has to be given a lot of emphasis because a large pool of youngsters are coming into the job market—more than 300 million people are expected to enter the job market by 2020. And now with the PM also building Brand India with his initiatives, people from outside are not just interested in investing in India but also able to see that this is the best place for frugal manufacturing. The Make in India week in Mumbai will showcase the best of India’s designs, the best of India’s presentation capabilities, and the best in terms of manufacturing–whether it’s in the auto component sector or in aircraft parts or in textiles.
Just like the recently-unveiled Start-Up India, is there any plan for unveiling some kind of a Make-in-India package of incentives for investors?
The approach for Start-ups is different from Make in India, the latter talks about processes, newer thoughts, and 25 sectors have been identified. We opened up further for FDI and simplified FDI rules as well. These are initiatives under the Make in India.
How are you addressing the delay in environmental clearances for projects to improve the ease of doing business, an essential component of Make in India?
The ease of doing business is a work in progress. In fact, the first phase of work was over by June 2015 when we asked states what steps they took to address the 99 sets of issues we had identified during our interactions with them in December 2014. Based on the feedbacks from states on that front, they were ranked last year. Now, after June 2015, more than 300 issues have been identified and states and informed about the new issues which require simplification, clarifications and, if necessary, eliminations. The ease of doing business, including issues on environment, are all being addressed. We are sure keeping the momentum going there, and the states are co-operating.
India has been ranked second from the bottom in US Chamber of Commerce’s index on IP rights. How will you assuage concerns of investors on this front, especially of the Big Pharma?
On IP issues, we have had consultations and appointed a thinktank to formulate a policy. They submitted a draft report, after which we have been engaged in discussions with stakeholders. There are many universities, thinktanks, lawyers etc discussing this issue, both inside and outside India. In fact, some decisions of courts in certain cases have proved how India has a robust legal framework which protects IP. The respective ministry is also seized of the matter.
What will you tell investors in Mumbai during the Make In India week?
First, I would want them to take cognisance of the good work this government has done. Second, India is still growing at over 7% when the global economic picture is not encouraging. The economy’s buoyancy because of domestic manufacturing, growing purchasing power, especially of the middle class, are among the facts that I would like investors to factor in while making investment decisions.
China is slowing down and there is a scope for India to take advantage of a potential shift in the base of manufacturing from that country to India. However, our export competitiveness is not yet good. In such a situation, what are the challenges and opportunities you see for India?
The Chinese are no longer that economical in manufacturing because wage costs have gone up significantly there. In general, their cost of production has risen and, therefore, some manufacturers are said to be keen on getting out of China. So the fact that we can draw them to India is definitely an issue which all of us are seized of. But I think it could take some time because China is also sitting over huge inventory. And the devaluation of the yuan will help them in pushing massive stocks of goods they have piled up at very cheap rates. For any worthwhile advantage (arising out of the Chinese slowdown) India can have in manufacturing is going to be only after China clears its huge inventory. The excess capacity together with the devaluation of the Yuan still give China some deal of advantage compared with other nations. The Indian export competitiveness also gets affected by the high cost of capital. Moreover, the less depreciation of the Indian currency against the dollar compared with those of other countries like Brazil, China and Russia also works to the disadvantage of India in exports.