Saturday, October 31, 2020

Cover Story

MAKE IN INDIA

Scaling up

By SHRIKANT RAO in Mumbai

 

For the duration of the five day jamboree, the MMRDA grounds at Bandra Kurla Complex, the new nerve centre of India’s financial capital, resembled a brown Maratha fortress magnetically attracting the cream of government movers and shakers, business executives from global and domestic industries, investors looking at the main chance, development sector fashionistas or think tanks, politicians and diplomats – cynics and the believers in equal measure, all converging to discuss India’s capabilities in manufacturing and the prospects of an investment enabled environment.

 

And for those who believe in the India Growth Story, whether out of loyalty or the numbers being touted by the organisers – the Department of Industrial Policies and Promotion (DIPP) and the Government of Maharashtra in this case – were quick to dub Make in India, the country’s largest ever manufacturing sector event and exhibition, as an ‘outstanding success’.

 

It is difficult not to be enthused by the Make in India movement. In November last year it became the first non-US based brand to obtain a dedicated Twitter emoji.

Amitabh Kant, Secretary, Department of Industrial Policies and Promotion and the man who has been closely linked with the development of the Mumbai Delhi Industrial Corridor while characterising the Make in India Week as a ‘phenomenal hit’ spoke glowingly of its achievement. “Besides successfully bringing manufacturing, design and innovation to the centre-stage it has created avenues for national and international firms to showcase, connect and collaborate for manufacturing in India. It shows a strong foundation being laid for India’s manufacturing going forward.”

 

At the event’s conclusion on February 18, Make in India, the development programme launched by Prime Minister Narendra Modi in September 2014 to raise the profile of India’s industrial sector and to make the country a global hub for investments in manufacturing, may have given the NDA government, under attack from a combative opposition, both a breather and a shot in its arm if only from the point of sheer event statistics.

 

SHOW SCALE

The Make in India exhibition and awareness programme saw investment commitments totaling Rs.15.2 lakh crore with 2,094 memorandums of understanding signed between various industry players and state governments – this is more than triple the amount India has attracted through foreign direct investment since Modi came to office in May 2014. The exhibition, where domestic and global companies from across various sectors and states displayed their brands and capabilities, was spread over a 23 lakh sq ft area identified as the Make in India Center, a platform for exhibiting innovative products and manufacturing processes developed in India along with a vision to leverage design, innovation and technology against the backdrop of global manufacturing. About 215 exhibitors showcased their strengths and opportunities in 11 sectors covering aerospace and defence, automobiles, chemicals and petrochemicals, construction machinery, food processing, infrastructure, information technology and electronics, industrial equipment and machinery, micro, small and medium enterprises (MSME), pharmaceuticals and textiles.

 

Further a total of 150 events were organised under the Make in India Week banner with more than 25,000 people – including 1,200 experts drawn from various walks of life participating in the seminars and symposium. In the final analysis close to 8 lakh people visited the exhibition and related events of which there were 49,743 registered delegates, representing 102 countries. The event also witnessed nearly 8,200 business-to-business, business-to-government and government-to-government meetings. As many as 17 Indian states participated in the event with the host state Maharashtra receiving the maximum commitment – Rs.8 lakh crore – across various sectors from investors.

 

INVESTMENT OOMPH

Ergo if there was a vote for the one man who the Make in India week made the most proud, it would have to be Devendra Fadnavis, Chief Minister, Maharashtra. To the media inured to investment announcements which rarely materialize, he said, “The government will act as a facilitator for all development and will ensure ease of doing business conditions with land and other clearances given on time to ensure speedy execution of projects. A special task force headed by the state industry minister has been set up which will ensure that the MoUs signed for these investments translate to implementation. Maharashtra was, is and will continue to be No 1 state for investments.”

 

On the impact of the Make in India idea, the Maharashtra chief minister would say, “It has changed the outlook of the entire country and introduced an atmosphere of competitive federalism among states. Ultimately this will lead to the country becoming a hub of manufacturing. The state’s own 'Make in Maharashtra' initiative will complement the 'Make in India' campaign.”

 

Much of Fadnavis’ chutzpah derived from pacts worth Rs.6 lakh crore signed by the state. Among those who rained investments on the state included Mahindra and Mahindra (Rs.8,000 crore), Mercedes (Rs.4,270 crore), Panchshil (Rs.5,000 crore), JSW Jaigarh Port (Rs.6,000 crore) and RCF Chemicals (Rs.6,204 crore) and CIDCO from its two projects - Khalapur Smart City (Rs.7,909 crore) and townships in the NAINA project area worth Rs.29,952 crore. MCHI-CREDAI, the developers’ body too has also signed a pact to develop 5.69 lakh affordable houses in the Mumbai Metropolitan Region at an investment of Rs.1.10 lakh crore. Further the state has received commitments from retail players like Future Group (Rs.850 crore), Trent Hypermarket (Rs.400 crore), D-Mart (Rs.250 crore), and Metro Shoes and Shoppers Stop (Rs.50 crore each) among others.

 

With such touching display of faith in the country’s financial powerhouse it is not difficult to see a groundswell of optimism looking to break free from the confines of traditional cynicism. There are enough examples from history to point to the potential of industrial growth to transform economies – South Korea, saw a 35 fold per capita income jump during the rapid industrialisation in the 1960s.

 

Kumar Mangalam Birla,Chairman, Aditya Birla Group, however, while expanding on his view that the investment climate in the country has improved in the last six months, is given to say that miracles should not be expected, “As Indians we need to infuse a sense of self-pride and positivity into our conversations related to the development of industry. I would like to believe that it is happening with events like Make in India. With commitment on our side Make in India will certainly become an international brand we can be justifiably proud of but an elephant can't dance in a few months.”

 

Continuing in the same pragmatic vein Anand Mahindra, CMD, Mahindra Group, said, “Make in India must not be viewed just as a policy. It is a rallying cry intended to grab attention of all stakeholders in the manufacturing sector. As part of this process India will need to build global brands. In my view manufacturing should be democratised, digitised and decentralised. Once the government has given a direction, created institutions to promote entrepreneurship, it must move away leaving the field to the industry actors.”

 

"Make in India is a great development initiative on the part of the Indian government and we are happy to participate in it," added Anil Agarwal, Chairman, Vedanta Group.

 

CONSTRUCTIVE OPTIMISM

 

In Circa 2016 it is a pragmatic country which is well aware that the programme with emphasis on domestic manufacturing is for the long haul. Since the Make in India mission was launched in September 2014 several companies operating in various segments of the economy, including both Indian and international firms, have jumped on the bandwagon. Every firm worth its construction salt today has a frontier look when it comes to opportunities in India.

 

It might well be difficult to find a more ardent devotee than UK digger manufacturer JCB, which many in the country consider more Indian than British. The company which is a major contributor to the construction equipment sector can claim to be among the first international ‘Make in India’ players in the country with manufacturing capacities built at five places including Ballabgarh, Jaipur and Pune, which it uses as its platform for exports. Vipin Sondhi, Managing Director & CEO, JCB India, says, “What we have been doing in India as a strategy for years has now only been formally institutionalised by the government. With the construction equipment sector looking for a big leap because of the project push the Make in India platform can only energise the industry.”

 

JCB is not alone in this mission. A host of construction equipment firms are keenly eyeing the big chance to contribute to the India Growth Story. Chinese heavy equipment major Sany Group had announced ramping up of its presence in the country – the company has already invested Rs.100 million at its plant in Pune – and is expected to increase its overall commitment in India to $1 billion over the next decade. Caterpillar India, for example, has already built enough capacity at its five plants in country for the foreseeable future but is also expected to commission its $150 million Aurangabad plant sometime this year. Vivekanand Vanmeeganathan, MD, Caterpillar India, explains the current mood, 'Make in India has had a great impact in that it has changed the investment mood in the country. While the industry had built enough capacity to meet the projected demand growth earlier what will now happen will be better capacity utilisation. That augurs well for the business.”

 

Global fluid management company Kirloskar Brothers Limited showcased its innovative fluid management solutions at the Make in India event displaying some some of its flagship products including LLC pump, Solar Pump and API 611 compliant Steam Turbine. Sanjay Kirloskar, CMD, KBL said: “The Make in India platform will certainly spark a renewed sense of pride in India's manufacturing and take corporate and public participation to the next level. It is an opportunity to showcase some of our most innovative and successful products to the global audience. As a company we are glad to be a part of India’s most comprehensive and inspiring event for our country’s manufacturing sector.

 

ABB India showcased some of its path breaking projects and solutions at the Make in India Week, including its dual-arm collaborative robot YuMi, designed to work side-by-side with humans, the world’s first multi terminal ultra-high voltage direct current link to bring power to more 90 million people, a locally engineered solar pump drive for irrigation and an independent grid. “ABB has been a significant catalyst in shaping the ‘Make in India’ story for the power sector,” Sanjeev Sharma, CEO and MD, ABB India Ltd said.

 

 

DEFENCE

 

With India’s defence budget allocation expected to touch $620 billion by 2022 of which half will be capital expenditure aviation sector firms are looking for business opportunities. It is reported the annual opportunity for Indian companies—both state-owned and private—is expected to touch $41 billion by 2022 and $168 billion cumulatively. Defence Minister Manohar Parrikar revealed at the Make in India event that a defence procurement policy would be soon announced which would be lucrative for the Indian industry. He said a new category -- 'indigenously designed, developed and manufactured' – would be introduced as the most preferred category for procurement in order to boost domestic private and small scale industry.

 

Swedish defence major Saab AB revealed it was eyeing prospects to manufacture its Gripen fighter aircraft in India under a 100 per cent technology transfer arrangement and investment help from Indian partners. The company is looking at a number of places in Karnataka, Maharashtra, Andhra Pradesh, Telangana and Gujarat to set up the aerospace factory. Baba Kalyani, Chairman, Bharat Forge Group whose subsidiary Kalyani Strategic Systems Ltd (KSSL) has forged a joint venture with Saab for development of missiles said, “Make in India has opened up floodgate of business opportunities for companies.”

 

Boeing Co., the world’s largest aerospace company, used the occasion of the manufacturing event to announce plans to set up an industrial complex in India which will initially make Super Hornet fighter jets. Pratyush Kumar, President, Boeing India, said “Since the Make in India programme was announced, the company has doubled its sourcing of products and services from India. Going forward it will be more so.”

 

Airbus Group, meanwhile, has proposed multiple projects in a bid to kick-start a defence-focused industrial ecosystem in India. For example it has proposed the production of the C295 military transport aircraft in India along with Tata as a replacement for the Indian Air Force’s aging Avro aircraft fleet. It has also tied up with Mahindra to produce military helicopters locally and is associated with the joint design and manufacture of telecommunications satellites with ISRO-Antrix. Airbus’ suppliers include Hindustan Aeronautics, Indian Space Research Organisation, Dynamatics, Aequs, Tata, Mahindra, HCL and Wipro, who provide it with aero structures, detail parts and systems, and engineering services. Pierre de Bausset, President, Airbus Group India is led to say, “Make in India’ is at the centre of our business strategy in aerospace and defence.”

 

AUTOMOBILES

 

German auto major Volkswagen showcased its brand new car, the Ameo, and its highly successful export product, the Vento in a left-hand drive configuration, at the exhibition. Volkswagen India has set up a full-fledged state of the art manufacturing facility at Chakan in Pune which caters to domestic as well as export markets. The company which is one of the leading exporter of cars from India to markets like Mexico and Brazil is also worked to localise components and assemble engines like the 1.5-litre diesel in India. At the ‘Make in India Week’ the company showcased efforts undertaken through the Volkswagen Academy towards skill development and training its workforce modern manufacturing processes.
Dr. Andreas Lauermann, President and Managing Director, Volkswagen India Pvt Ltd, said, “India offers great potential in terms of manufacturing capabilities and this is why we support ‘Make in India’. Volkswagen has a long term commitment towards India. I am sure the continuation of this initiative will establish India as one of the largest automotive markets in the world.”

 

Incidentally over 18 Swedish companies including big names such as ABB, Atlas Copco, Camfil, Ericsson, Ikea, Saab, Sandvik, Scania, SKF, TetraPak and Volvo participated in the event. Sweden had the largest pavilion where the theme was ‘Smart Manufacturing’.

 

Fredrika Ornbrant, Consul General of Sweden, Mumbai said “The importance we attach to doing business with India is reflected in our large presence at Make in India. We are keen to extend that relationship further.”

 

In what is a first for India, Volvo Buses introduced its 8400 Hybrid City Bus, making it the first manufacturer to commercially deploy the sophisticated technology in the country. The announcement was made on the sidelines of the Make in India event in Mumbai. It is reported Navi Mumbai will be the first city to use the hybrid buses as part of the Navi Mumbai Municipal Transport (NMMT) fleet. Akash Passey, Senior Vice President – Business Region International, Volvo Buses, said, “The fact that the first hybrid bus introduced in this country is a Volvo is evidence of the company’s commitment to India. We are sure there will be demand from other places in India for hybrid mobility solutions.”

 

Leading commercial vehicle manufacturer Scania displayed its might at the Make in India Week by showcasing its ethanol-run green bus, a pioneer in sustainable transportation and biofuel solutions.

 

 

THE TAKEAWAYS

 

Notable business deals have been concluded during the Make in India event. These include the MOU between the Sterlite Group company TwinStar Display Technologies and Maharashtra Industrial Development Corporation (MIDC) for an LCD manufacturing unit in technical collaboration with Autron of Taiwan; BAE Systems and Mahindra for assembling and testing of M777 Howitzers; between the Government of Gujarat and Vestas of Denmark) for a wind mill blade manufacturing unit at Ahmedabad; Oracle’s $400 million investment in India to set up 9 incubation centers, Mahindra and Mahindra’s Rs.8000 crore expansion plan, Raymond Industries’ Rs.1,400 crore plan for manufacturing linen yarn and fabric facility, Mercedes’s Rs.1,500 crore expansion project….the list is long.

 

What is also significant is that the Make in India week in Mumbai became a platform for the unveiling of several new industrial policies by the central government and various states. These include the Rs.2,200 crore Electronics Development Fund unveiled by the Union Communications and IT Minister Ravi Shankar Prasad to finance innovations, research and development in the electronics manufacturing sector and the National Capital Goods Policy unveiled by the Heavy Industries Minister Anant Geete to create an ecosystem for a globally competitive capital goods sector. Meanwhile states like Odisha, Jharkand and Chattisgarh used the occasion to launch policies of their own.

 

How much of intention will translate into action on the ground remains to be seen. There is a lot of scaling up to be done by the stakeholders concerned on the ease of doing business front and in terms of creating the right policy framework. Admittedly, since Narendra Modi assumed office in 2014, FDI has increased by 33 per cent to $64 billion from the previous 20-month period. However most of those have gone into the e-commerce sector which heavily imports consumer electronics, while job-intensive sectors like construction and energy have registered a decline in investments. There is then also the danger of overreaching. Investment pledges of at least $288 billion have been made since the new government assumed power which is four times of the amount which has flown in. It is natural therefore to be skeptical about the funds.

But there is nothing to beat pragmatic optimism. India has the wherewithal to be the manufacturing hub of the world. Getting there though will take some perseverance.

“Make in India”, as K Ratna Prabha, Additional Chief Secretary (Commerce and Industries) Karnataka, pointed out, “must not be viewed as a sprint towards a manufacturing future. It is a marathon to be run.”

We agree.

 

 

MAKE IN INDIA STATS

  • 150 events, 1200 experts, 49,743 registered delegates, representing 17 Indian states and 102 countries – a total of over 800, 000 visitors
  • 2,094 MOUs signed between various industry players and state governments with commitments totaling Rs.15.2 lakh crore.
  • The event also witnessed nearly 8,200 business-to-business, business-to-government and government-to-government meetings.
  • Maharashtra received the most number of investment proposals – Rs.800000 crore

 

CAMPAIGN IMPACT

The impact created by Make in India campaign since its launch in September 2014 has led to the following:

India is now first among the world’s most attractive investment destinations

  • First among world’s fastest growing economies
  • First among 100 countries on the growth, innovation, and leadership index
  • First among 110 investment destinations polled globally
  • Seventh most valued national brand in the world
  • India’s rank jumped 12 positions in Ease of Doing Business 2016 list by World Bank
  • India moved 16 places in the Global Competitiveness Index 2015-16

 

BOOSTER SHOT

A FICCI-PwC survey on the prospects of the Narendra Modi government’s Make in India campaign has found it effective with 85 per cent of the respondents showing optimism of the future of the manufacturing sector. The study covered 98 companies in eight sectors including automobiles, cables, capital goods, cement, chemicals and downstream metals. Interestingly the observations came at a time when industrial production growth figures were not at all encouraging. Harshavardhan Neotia, President, FICCI was led to comment, “Key initiatives taken by the government in the past few months to attract investments are yielding results. We are hopeful of a more stable and stronger growth of manufacturing in coming months.”

 

 

STATES SCANNER

If the flood of investment proposals to Maharashtra is any indication of progress other states are not far behind. India’s most industrialised state now has to reckon with rivals like Gujarat, Karnataka and Andhra Pradesh. Even states like Chhattisgarh, Rajasthan, Odisha, Madhya Pradesh and Jharkhand are aggressively marketing themselves. What is significant is that all of those states rank higher than Maharashtra on the ease of doing business (EODB) parameters many of them coming up with single-window clearance system and online mechanisms for search indexed properties, automated registration of deeds including e-registration. Maharashtra’s nearest rival Gujarat, which is at the first position on the EODB index, has been at the forefront of making a special pitch for investments at the Gujarat International Finance Tech-City (GIFT) and for other projects in the state. Neighbouring Karnataka has given a go-ahead to projects worth Rs.1.75 lakh crore and is working on giving clearances to additional Rs.1.33 lakh crore investments by May this year. With that the total amount of investment made into the state is expectedto be Rs.3.08 lakh crore. It is reported the investments have come in from sectors like textile, agro processing, pharmaceuticals and solar power among others. The Karnataka government has also planned to set up three industrial parks for chemical and fertilisers, machine and tools and pharmaceuticals respectively apart from an R&D centre for plastics industry in Bengaluru. During the Make in India week it signed MOUs with IKEA which plans to set up four stores across Karnataka and with French tidal wave energy major Tar Kovacs Systems for a €300 million renewable energy plant in the state.

Among the state pavilions which attracted the most visitors was Andhra Pradesh which highlighted the development of its capital city Amravati as a great opportunity for investors. Sudarshan Babu, Joint Director, Industries, Andhra Pradesh said, “We are already second in terms of ease of doing business. There is minimum of delay in setting up business and 26 necessary approvals to set up industry are accorded within 21 days of application through a single desk portal. Naturally we are keen to exploit the strengths. We have been applauded by the World Bank for offering a very supportive ecosystem in the form of policies for skill development, cluster development.”

The Rajasthan pavilion, meanwhile, showcased the industrial zone at Neemrana, dubbed as a mini Japan. The state is a major beneficiary of the development of the Western Dedicated Freight Corridors and the Delhi Mumbai Industrial Corridor (DMIC) in which cities and industrial clusters have been proposed. The state is pushing hard for investments in sectors such as automotive, IT &  ITeS, engineering, electronic hardware, renewable energy, solar, minerals and ceramics. Vaibhav Galariya, Commissioner, Bureau of Investment Promotion, Rajasthan, said, “We have very productively utilised the Make in India Week platform to showcase the opportunities available in Rajasthan and are open to cooperation with domestic and foreign companies. We have the policy environment to encourage private enterprise and are sensitising potential investors to the many advantages the state offers."




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