'Make in India' scheme rolls out r-ed carpet for investors

Cheap labour was one of the keys to the success of many emerging economies such as the Asean countries and China to woo foreign investment. But that is not the case with the ‘Make in India’ programme launched by Prime Minister Narenda Modi’s government.

Labour cost in India is not high with average wages at Rs8,000-Rs9,000 (Bt4,000-4,500) a month, but it is not the selling point, said the Ministry of Commerce and Industry’s Director of Industry Policy and Promotion Ravinder IAS.

“There are 3 Ds the government is showcasing to woo investments: democracy, demography and demand,” he said. “Democracy means good governance, transparency and rule of law in doing business. India is the world’s largest democracy, which has been functioning as a democracy for a long time,” he said.

Demography contributes to the investment in many aspects, providing an active and well-educated labour force. India has a very young population with more than 62 per cent in the age group of 15-59 years and also has the third-largest technical and scientific manpower pool in the world, he said.

Demand is apparently available due to the growing economy and the huge size of the population, he added. India will be the fifth-largest consumer market by 2025 and per capita consumption of all major items is much below the world average currently, thus providing ample opportunities for growth, he said.

“These environments are more important to investors. No country can sustain low wages for the sake of competitiveness,” Ravinder said.

Launched since September last year, the Indian government has adjusted policies to promote a good business environment for investment both foreign and domestic.

The “Make in India” programme included major new initiatives designed to facilitate investment, foster innovation, protect intellectual property, and build best-in-class manufacturing infrastructure, he said.

The policy is based on new initiatives – new process to ease business atmosphere; de-licensing and deregulation; new infrastructure such as the industrial corridor from New Delhi to Mumbai and smart cities along the way; opening new sectors such as defence, rail and construction for foreign investment; and a new mindset for new perception on investment, he said.

The government has opened opportunities for investment in nearly all sectors from automobile to tourism and wellness (health), Ravinder said, and noted that even the defence industry is now open to investment with the government now allowing 49 per cent equity to foreign investors, he said.

The programme has already yielded good results, as foreign direct investment has increased from US$36 billion last year to 44.8 billion this year, he said.

There are many potential sectors which are attractive for foreign investors notably automobile and defence manufacturing, he said.

Defence manufacturing has good prospects for the domestic market, as the Indian armed forces are the third-largest in the world, as well as the overseas market, he said.

“We have received proposals from many foreign investors in the sector, including the United Kingdom, Japan, United Arab Emirates, Singapore and the United States,” Ravinder said.

Well-known companies engaging in defence manufacturing include Lockheed Martin and Raytheon from the US as well as Airbus from France and Rafael from Israel.

“In fact, we welcome proposals from all over the world for manufacturing in the defence sector with our only requirement being high technology and our security conditions,” he said.