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How the Modi government’s ‘Make In India’ is steadily growing India’s manufacturing capability

From 1960’s to 1990’s, under Congress’s socialist policies, India’s GDP growth continued at a tardy 3%, which was mocked by the West as “Hindu rate of growth”. This is the same period during which East Asian economies like South Korea, Taiwan, Hong Kong and Singapore galloped at more than 7% on the back of their growing manufacturing capabilities and evolved into “developed economies”.

In that perspective, “Make in India” is a much-needed step in the right direction. It increases the focus on manufacturing sector to create a powerful growth engine to propel India’s economy. Since its launch in 2014, “Make in India” has attracted some of the most prominent global manufacturers in heavy machinery, defence equipment, automobiles and electronics to name just a few.

For electric locomotives, Alstom (France) has set up its manufacturing factory in Madhepura, Bihar with maintenance depots in Saharanpur (UP) and Nagpur (Maharashtra). They are producing strong 12,000 HP train engines to enable faster transfer of freight by Indian Railways. For Diesel locomotives, General Electric (GE) of USA is setting up the factory in Marhowra, Bihar with maintenance centres at Roza (UP) and Gandhidham (Gujarat). They will be manufacturing strong 4,500 HP and 6,000 HP locomotives with production planned to start by end of 2018

Hanwha-Techwin (HTW) of South Korea has set up Greenfield Manufacturing facility in Hazira, Gujarat. They are manufacturing Mobile K9 Self-Propelled VAJRA-T9 Artillery guns in collaboration with India’s Larsen & Toubro (L&T). Boeing (USA) has started manufacturing Apache Military Helicopters in collaboration with India’s Tata Aerospace Ltd. Their factory in Hyderabad is producing fuselages for AH-64 Apache helicopters for its global customers including US Army. Boeing (USA) has also tied up with India’s HAL and Mahindra Defence for manufacturing F/A-18 Fighter Jets in Bengaluru.

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In addition, Saab (Sweden) has offered to manufacture Gripen fighter jets in India (with Adani) while Lockheed Martin (USA) has offered to manufacture F16 fighter jets in India (with Tata). Lockheed Martin has also offered to manufacture third generation Javelin missiles in India. Russia is in the final stages of starting the production of AK-103 Kalashnikov Assault Rifles in collaboration with Ordinance Factory Board in India.

In Automobiles sector, Volvo (Sweden) has already started manufacturing XC90 cars in Bengaluru. Volvo also plans to use its Bengaluru plant for its S90 sedan and the XC60 SUV in the near future. In addition, Lexus (Japan) is about to be the next luxury car maker to set up their plant in India shortly.

Image source: here

Gionee and Xiaomi (China) have started manufacturing their mobile handsets at Foxconn plant in Andhra Pradesh. Last one year has seen investment from 37 mobile manufacturing companies in India. In 2017, India became world’s second largest mobile phone producer after global handsets produced in India increased from 3% in 2014 to 11% in 2017. With this milestone, Mobile production in India crossed 100-million units and may cross 500 million units in the next two years. Apple (USA) is about to start manufacturing in Bengaluru. Gionee (China) plans to invest Rs. 300 crore over the next three years and Taiwan’s Foxconn, is planning to build seven to eight new units in India. (source: here)

In 2016-17, electronics worth $50 billion were manufactured locally in India compared to $43 billion in Imports. For the first time in history, Electronic goods made in India exceeded the imports from outside (source: here). In another significant move, Electronics Manufacturing Corridor may come up shortly in UP. This will provide a significant boost to the local electronics industry in India.

In other industries, Hyosung (South Korea) has acquired land on Delhi Mumbai Industrial Corridor to set up a factory, with manufacturing planned to start by 2019. 37 other companies have already acquired land along DMIC to start local manufacturing.

These are just a few early successes. India’s potential as “world’s fastest-growing major economy” along with a jump of 42 places in “Ease of Doing Business” rankings has made India an attractive investment destination. A survey of global multinational companies in the 2017 World Investment Report by UNCTAD (United Nations Conference on Trade & Development) ranked India as the third most favoured destination for FDI after USA and China. This is likely to result in even higher investment in India in the coming years.

Slowly but surely, the fruits of a sustained campaign are becoming visible.

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Shashank Goyal
IIM-A alumnus, Software Sales Professional, Writes about business, economy and politics; Passionate about numbers, facts and analysis Tweets @shashankgoyal01

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