Promising, if reframed

While many would prefer indigenous efforts, it needs to be understood that manufacturing is not a stand-alone process. It also needs users or simply meaning buyers to make it a success. Production in the country by established foreign manufacturers ensure marketing as most offers are by large houses with established chains across the world. Finding buyers is an area of cut-throat competition. It is like riding piggy back to progress. One year is too short a time to make an assessment. During this period, the Government has got response from many

Prime Minister Narendra Modi’s ‘Make in India’ has generated dreams for the country becoming a manufacturing hub. Launched in September last year, people want to see a miracle. This is not happening. But it cannot be denied that offers are coming from investors across the world to start the process.

The Make in India is different from Swadeshi, indigenous production. The move is to increase production in the country of diverse goods. Manufacturing currently contributes just over 15 per cent to the national GDP. The aim of this campaign is to raise this to a 25 per cent contribution as seen with other developing nations of Asia.

In the process, the Government expects to generate jobs, attract much foreign direct investment, and transform India into a manufacturing hub, preferred around the globe. Manufacturing is a gradual process. While many would prefer indigenous efforts, it also needs to be understood that manufacturing is not a stand-alone process.

It also needs users or simply meaning buyers to make it a success. Production in the country by established foreign manufacturers ensure marketing as most offers are by large houses with established chains across the world. Finding buyers is an area of cut-throat competition. It is like riding piggy back to progress.

One year is too short a time to make an assessment. During this period, the Government has got response from many. European aircraft manufacturer Airbus is keen. General Motors India is to invest $ 1 billion (Rs 6,400 crore) to turn around its struggling Indian operations.

Fiat Chrysler Automobiles will invest about Rs 2,000 crore to manufacture a range of C-segment Jeep brand premium sports utility vehicles in India and export these SUVs to countries such as Australia, South Africa, and the United Kingdom. Hitachi has agreed to set up auto-component plant and some reports say that Huawei will invest $170 million for setting up a R&D centre.

Japan's Soryu-class conventional attack submarines, which are 4,200-tonne have garnered interest in India with Australia too in talks with the Japanese. Sony, Lenovo, Apple and Chinese company Oppo want to start smart phone manufacturing. Microsoft which had initially shown interest has withdrawn.

Smart phones constitute a mere one per cent of the global market. While it would certainly provide jobs, it will not give a major advantage to the country in the global market. India wants investment in 33 areas beginning from automobile to heavy engineering, power and energy, railways, space, steel, telecommunications to simple wellness. All those aspirations are yet to be fulfilled.

Apparently, the companies are not keen on transferring technology. It is evident from the refusal of Rafale to set up base in India. The deal to build 108 Rafale warplanes in India by Dassault Aviation had to be shelved and India had to satisfy itself with buying 36 French-made fighter jets. In cement, manufacturing has been indigenous. But during the UPA regime, Swiss company Holcim has taken over the two majors ACC and Gujarat Narmada.

Its repatriation on “technical fee” and profit is more than the real investment. This is called Coca Cola type investment, where the real investment is low but repatriation is high. Coca Cola imports concentrates from its parent company in the US. It pays almost five times the actual price. In business terms it is unethical and it is technically illegal. This should definitely be a concern.

China is also suffering. Its recent slowdown is attributed to such huge profit-taking by foreign investors. The growth of several successful hydrocarbon provinces in countries such as Angola, Azerbaijan and Iraq has resulted from strategic partnerships. In India too, there is a great opportunity to create such win-win partnerships in enhanced oil recovery, and difficult high-pressure, high-temperature and deep-water projects.

This will need over $250 billion in investment. Another $20 billion to $30 billion investment is possible in natural gas pipelines. It is a strategic area. Indian companies have virtual monopoly and there is circumspection of compromising on the strength.

India’s wine industry is expanding. Last year, the country’s wine production hit a record 17 million litres, with export sales rising 40 percent year-on touching over $40 million. This rapidly growing sector has further scope for expansion. Foreign investment norms have been eased and raised to 100 percent. But not many queries are coming from abroad.

Indian companies have made strides in pharmaceuticals, leather, and even automobiles. Foreign companies do not find it easy to compete with these. They adopt devious ways to prevent them by pressurizing their home governments. Indian diplomacy somehow has not been that pro-active to protect home growers.

The erstwhile colonial powers are in a new colonial mode through their MNCs to keep a check on real Indian growth. With their colonial loot they remain powerful to prevent countries like India becoming their competitors. University of Oxford in a study has found that they do not automatically transfer technology.

The UNCTAD too has found that technology transfer is largely limited to the developed countries. A World Bank study says that for having the maximum leverage of FDI, some checks are necessary. The MNCs transfer technology only under pressure.

Indeed, it is a difficult arena. If conditions are imposed then the little FDI that India is getting may elude it. If it is not done, the country may have to pay a heavy financial cost. There is also a threat that if allowed a free hand, the MNCs can wipe out Indian companies and ‘Make in India’ would become a domain of foreign giants. In fact, in some cases, it is evident that MNCs are in league for the fall of the rupee.

The Modi Government faces an enormous challenge. Industrial production remains stagnant. The number of job seekers, with rise in population, is growing. Most MNCs are virtually repatriating much more than they legally should. Inviting them is fine, but protecting indigenous interests is also the need. The investors cannot go on free run.

They should be told to state what technology they are bringing, how they are reducing energy consumption and their detailed method for investment and repatriation. They cannot become another black money producer through supposedly legal means.

Be it hi-speed trains, atomic reactor or green energy the road map has to be straight and just. Still the red carpet that has been rolled out should remain there and merely the fringes are needed to be mended. The world is keen on a new order. With all-out efforts India has to tell investors that they would also have to abide by it. Carefully reframed ‘Make in India’ is propitious.

By Shivaji Sarkar