Make in India implications on manufacturing sector

2. Introduction
• ‘Make in India’ is a major new national program. designed to
facilitate investment. foster innovation. enhance skill
development. protect intellectual property. and build best-in-class
manufacturing infrastructure.
• Key thrust of the programme would be on cutting down in delays in
manufacturing projects clearance, develop adequate infrastructure
and make it easier for companies to do business in India.
• The objective of the mega programme is to ensure that
manufacturing sector which contributes around 15% of the
country’s Gross Domestic Products is increased to 25% in next few
years.

3. Global Manufacturing Index
• India, Indonesia, the Netherlands, and the UK have held their cost
competitiveness relatively steady since 2004 compared with the
U.S. and have emerged as low-cost manufacturing economies in
their regions.

4. Country Level Ratings for
key drivers of competitiveness

5. Recent Manufacturing Performance
• From a trajectory of 8–9%, manufacturing GDP growth has slowed
down to a CAGR of 2.5% over FY 2010–12 and has almost flattened
(0.5%) in FY 2012–13. In fact, share of manufacturing sector in GDP
has slipped below 15%, its lowest level since FY 1993–94.

6. Issues in Manufacturing Industry
• Regulatory burden has increased
• Industrial relations perceived to be a major challenge
• Land acquisition is as difficult as ever

7. Action items to make India conducive for
large-scale manufacturing
• Streamlining investment approval
• Facilitating land acquisition processes
• Efficient and effective enforcement of laws
• Facilitating greater cross-border transactions
• Creating clear exit guidelines
• Rationalizing taxation regimes
• Technology enablement of the government.

8. Manufacturing and Employment

9. Contribution of manufacturing to employment in
India
• The manufacturing sector is critical for the economy’s growth as it
employs 12% of the country’s labour force as well as provides a
transitional opportunity to the labour force in agriculture.
• In addition, the sector has a multiplier effect for job creation in the
services sector.

10. Capital Efficiency v/s Labour Efficiency
• According to a CII-BCG report on manufacturing, the average capital
efficiency (revenues/invested capital) in the manufacturing sector is
nearly 2.4.
• The average labour efficiency (revenues in INR10 million/ 1,000
workers) is nearly INR480 million/1,000 workers.
• There has been a rising perception that growth in the manufacturing
sector has not been accompanied by growth in employment, as the
sector exhibits lower employment elasticity. However, according to the
Economic Survey FY11, there has been a continuous increase in
employment in the organized manufacturing sector since FY05.

11. Boosting employment in manufacturing:
Agenda for action
• Manufacturing sector is critical for the growth of the economy. This
is because the sector tends to have a multiplier effect on other
sectors in the economy.
• The manufacturing sector avails raw materials and services from
other sectors in the economy and in turn supplies them with
finished products. Hence stimulating demand for everything from
raw materials to intermediate goods. Its area of influence includes
sectors like software, health, and transportation.
• As envisaged in National Manufacturing Policy, the manufacturing
sector has the potential to provide employment to 100 million
people by 2022.

12. Manufacturing and Innovation

13. Innovate in India
• Innovation is the key to sustained industrial growth and major
source of competitive advantage to industry for penetrating and
capturing the global market.
• Creating a robust national innovation system is one of the key
elements listed in the Science Technology Innovation Policy 2013
(STIP 2013) of Government of India.
• India is not fulfilling its potential when it comes to innovation, and
there seems to be a gap between its capabilities and results.
• One of the challenges holding India back likely is the less-than-full
development of its intellectual property system.
• Innovators and creators need to be able to secure their investment
in developing their creations — or they often simply won’t create,
and they surely won’t invest in commercializing and bringing
products to market.

14. Target R&D and Innovation as a source of sustainable
competitive advantage
• Most R&D spending in India happens by government (60% of total R&D
spend) unlike global peers, where industry leads R&D spending, this needs
to be changed in order to make India a hub of manufacturing activities
• Further, there is need for greater collaboration between industry and
academia, which is currently confined (largely) to publishing papers, and
hence resulting in inadequate generation of Intellectual Property (IP).

15. Work Culture in Manufacturing

16. How to improve Work Culture for ‘Make in India’
• Top Management Commitment
• Focus on Customer Satisfaction
• Process Orientation
• Transparent Management Culture
• Quality Improvement initiatives
• Dedicated team for Improvements
• Employee training
• Develop Problem Solving skills

17. Manufacturing Productivity

18. Productivity: Zero Defect Zero Effect
• Productivity is the key to Prosperity, which in turn is an indicator of a
country's potential for economic growth in the short to medium term.
• Productivity in its new manifestation, as a culture of accepting and
bringing about continuous achievements incorporating environment
concern is an inescapable imperative.
• Environment protection is the major challenge being faced by all the
countries in the world.
• Though there has been unprecedented technological development in
different fields but such technological developments along with them
have, side by side, brought about the degradation of the
environment.
• Any kind of development could not be sustainable unless & until the
development activities do not take care of environmental protection.

19. • Our business organizations will have to improve their performance to
ensure their survival and growth in a fiercely competitive world.
• This improvement will come about only if we focus on production of
zero defect quality goods, in a cost effective environment friendly
manner, and this must occur continuously, to create an advantage in
the market place, which is what productivity is all about.
• Productivity may be the outcome of various practices, but eventually
is the result of a mindset. The crucial ingredient is the preparedness
of the human mind to achieve zero defect, zero effect.
• Basic to this approach is the conviction that even the best can be
improved.
• Workers, managers, policy makers and others should be ready to
continuously and collectively work for inculcating this concept in
every economic activity for the prosperity of the society as well as the
country.

20. Important Sectors

21. Defence Sector: Make in India Growth Drivers
Defence Production Policy, 2011 to encourage indigenous manufacture
of defence equipment. Defence Procurement Procedure (DPP) has been
amended to provide for the following :
1. Preference to ‘Buy (Indian)’ and ‘Buy and Make (Indian)’ over ‘Buy
(Global)’.
2. Simplification of the procedure for ‘Buy and Make (Indian)’.
3. Clear and unambiguous definition of indigenous content.
4. Provision for Maintenance Trucks to Indian Industry partners.
• Defence products list for industrial licensing, has been articulated in
June 2014, wherein large numbers of parts/components,
castings/forgings etc. have been excluded from the purview of
industrial licensing.
• The MAKE procedure, which aims to promote R&D in the industry
with support from the government and the placement of orders is
also being revised to make it more attractive and unambiguous for
the private sector.

22. Agriculture: Growth Drivers

23. Infrastructure: Growth Drivers
• The power ministry has set a target for adding 76,000 MW of
electricity capacity in the 12th Plan (2012-17) and 93,000 MW in
the 13th Five-Year Plan (2017-2022).
• The opportunity for investment in Road Transport is based on the
up gradation project of 3700 kms of national highways under the
National Highways Interconnectivity Improvement Project (NHIIP,
project of USD 4.26 Bn).
• Almost 95% of the total international trade by volume is routed
through maritime method in India. As per the present utilization
statistics (2011-12), the 12 major and 200 non-major ports handled
971 Mn tonnes while the capacity was 1247.5 Mn tonnes.
• It is envisaged that by 2016-17, the total capacity should have been
elevated to 2301 Mn tonnes (as per the 12th Five Year Plan
document).

24. Healthcare: Growth Drivers
• The Government of India has set up a dedicated Department of
Ayurveda, Yoga and Naturopathy, Unani, Siddha and
Homoeopathy (AYUSH) with the aim of providing impetus to these
ancient healthcare systems with a targeted thrust.
• The Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha
and Homoeopathy provides ample opportunities for investment,
education and research, health services and training in the AYUSH
sector.
• One of the main reasons for the surge in demand for AYUSH is
concerns related to escalating costs of conventional health care
and the adverse effects of chemical-based drugs and increasing
lifestyle disorders.

25. Focus on MSMEs
• MSMEs are critical for the country’s economic and social
development. They significantly contribute to the GDP, manufacturing
output, exports and employment. In India, MSMEs account for 8% of
GDP, 45% of manufacturing output and 40% of exports.

26. Continued
• The labour-capital ratio is much higher in MSMEs than larger
industries. Furthermore, they are considered budding grounds for
entrepreneurs, thus encouraging innovation in the country.
• Hence, it is imperative to focus on growth in MSMEs that, in turn,
would provide a fillip to the manufacturing sector as well as raise
the level of employment.
• ‘Make in India’ has resulted in several opportunities, for SMEs and
MSMEs. However, for the sector to reap benefits from the fruits of
globalization, it is important to enhance the sector’s
competitiveness

27. Favourable Situation for Indian Manufacturing
• India has already marked its presence as one of the fastest growing
economies of the world.
• The country is expected to rank amongst the world’s top three
growth economies and amongst the top three manufacturing
destinations by 2020.
• Favourable demographic dividends for the next 2-3 decades.
Sustained availability of quality workforce.
• The cost of manpower is relatively low as compared to other
countries.
• Responsible business houses operating with credibility and
professionalism.
• Strong consumerism in the domestic market.
• Strong technical and engineering capabilities backed by top-notch
scientific and technical institutes.
• Well-regulated and stable financial markets open to foreign
investors.

28. Conclusion
• India, with its abundant engineering talent, depreciated currency
and strengthening quality systems is in a unique position to
leverage these trends favorably. However, some key enablers to set
the Indian manufacturing sector back on its growth track have been
found wanting. With a renewed thrust, our manufacturing sector
can rapidly regain its earlier trajectory and ‘Make in India’
campaign will become a reality.