What should 'Make in India' do in India

What should 'Make in India' do in India

What does Modi have in mind when he chants slogan ‘Make in India?’ Does he mean what people of Gujarat wanted from him, India wants the same? Create an investor-friendly geographic entity that would multiply wealth, create roads and flyovers, produce number of millionaires, and resolve many social problems like unemployment, poverty etc.? If that were to happen, then, wishes were horses.

If you look at the human development index of 2013, you would find Gujarat performed poorer and still lower in many such parameters like literacy rate, infant mortality rate, etc compared to other states. So, to acknowledge Gujarat model is a panacea, would be really hard to justify elsewhere. If Modi’s ‘Make in India’ campaign aims to apply the ‘just’ Gujarat model on ‘India scale’ and expect the results would be same, then it may invite failure and strong criticism. It may prove detrimental to Modi. Because, Indian masses have little patience and want instantaneous results. They all wanted Modi for a change.

‘Make in India’ then need to be functional and touch the hearts of millions and not just the investors, industrialists and some beneficiaries. If ‘Make in India’ needs to work, then it should aim at inclusive growth. Till now the campaign is somewhat confusing; whether Modi is basically copying the model of ‘China growth story’ like in inviting FDI, giving them tax breaks and concessions and in turn these assets made China globally the most competitive nation through economy of scale and cheap labour cost. If that is what Modi is contemplating, then it may not produce desired results. Because few other countries like Vietnam are ahead of India in that race.

China’s miracle lies somewhere else, not in the manufacturing sector. Its initial reforms in agricultural sector provided the kick-start to the entire planning process and the model they had in mind. Being an agriculturally dependent country, it was aware that large number of work force are dependent on agriculture, and therefore there is a need to first provide them employment and social stability by engaging them in collectivisation of agriculture rather than bringing them to the urban areas where China attracted FDI for a different purpose.

Chinese planners were aware that such masses won’t be able to handle the role foreign investment would be playing. Agricultural reforms there did the magic and later on, manufacturing experienced more miracles because it produced unprecedented economic success for China by exploiting a world market that was typically looking for China’s supply model. FDI policies and China’s authoritarian regime produced millions of workers who specialised in low-end manufacturing products through capital, skills and technology and filled the gaps that were required to satiate world’s hunger in manufacturing by supplying to global retails like Walmart.

China still is quite weak in its services sector, but slowly it’s building up by educating its workers in IT enabled services, in English language and encouraging a few talented services professionals to return home to take charge of a nation whose ability to excel is never in doubt. China will create similar magic in its services sector later though time horizon looks longer.

Agri or manufacturing?
What makes sense in a developing country like China and India is that it’s the sustainability of agriculture followed by prowess of manufacturing would be an appropriate model to excel. The point that needs to be driven home is China followed a model that was ‘China indigenous’ and ‘China capable’.

One can hope, Modi is thinking somewhat in those lines where he needs to take immense careful decisions that are functional, implementable and deliverable to create an India that is ‘India indigenous’ and which is difficult to replicate. However, India model shouldn’t be viewed as ‘Services model’ whose demand is short-lived and largely external dependent. It is desirable that ‘Make in India’ should start from the agricultural sector where India has competitiveness in producing a large number of globally tradable products and create huge employment, which is one of Modi’s major mandate to coming into power. Agriculture will provide sustenance to India’s model of ‘Make in India’ by generating employment, reducing poverty and becoming socially inclusive.

It is equally desirable to push manufacturing sector as India has a well spread-out horizontal base in manufacturing including SMEs, which is quite robust and resilient. If sequencing is important, then agriculture should have the first taste of ‘Make in India’ followed by manufacturing. Somehow, the campaign has swung in favour of manufacturing identifying plethora of sectors such as food processing, tourism, FMCG sectors, real estate, heavy industry etc as the catchment areas of ‘Make in India’. By making Lion as the symbol of ‘Make in India’, straight from the Gir forest in Gujarat, Modi at the back of his mind has a kind of ‘Gujarat India’ model that he has already envisaged.
How far will he succeed is difficult to say in so short a time. Looks like his intentions are clear, but delivery is what matters.

Of late, he has been talking too much at the same time; so many schemes and so many proposal one doesn’t remember what he said on the first day. He must remember the same people can remove him in drop of a hat.

(The writer is former senior faculty, Indian Institute of Foreign Trade and currently Professor, Lal Bahadur Shastri Institute of Management, New Delhi)