Key Initiatives To Accelerate Manufacturing

As Make in India gets a boost with the recent Foxconn and Xiaomi MoUs, India needs to further reinvigorate its focus on manufacturing. Here are the key initiatives that the Government should undertake to accelerate manufacturing sector in India.  

Prime Minister Modi’s flagship “Make in India” got shots in the arm recently with Foxconn and Xiaomi signing MoUs to setting up manufacturing facilities in India.

These might turn out to be the “0 to 1” moments for the initiative. What is noteworthy about these MoUs is that these firms have sensed an advantage while others are waiting for something “big bang”.

Nevertheless, the Government should not take the foot off the pedal in labor reforms, FDI reforms, land reforms, taxation reforms, trade reforms and infrastructure (power, roads, ports mainly) reforms.

Following could be some specific initiatives the Government could undertake to catalyze the manufacturing sector:

Create hubs of manufacturing excellence

Setting up of Institutes for Manufacturing Innovation to serve as regional hubs of manufacturing excellence to encourage investments. Innovation in manufacturing will be a key source of competitive advantage in the future. The Rs. 100 crore Defence Technology Development Fund could be expanded to provide special thrust for defence production related initiatives under this program.

Repair in India

“Repair in India” should be an integral part of “Make in India”. Labor-intensive sectors such as ship breaking and repair industries, Maintenance, Repair and Overhaul (MRO) facilities for aircraft should be promoted.

Create national manufacturing regions

To expand on the ideas of Special Economic Zone (SEZ) and National Manufacturing Investment Zone (NMIZ), creation of National Manufacturing Region on the coasts of India similar to Guangdong in China could be considered.

Financial allocation for feasibility studies for one location each in the east coast and the west coast could be considered. The National Industrial Corridor Authority, Pune being set up can be entrusted with this task.

MSME CoEs

A Micro, Small & Medium Enterprise (MSME) Center of Excellence in partnership with state governments, industry bodies and academia could be created in each state. The centers would encompass skill institutes, technology assistance centers, marketing assistance and innovation and incubation centers. Financial allocation for seeding such institutes in a few states especially in the eastern part of India could be considered.

Agro Parks

“Make in India” could also be a launchpad for agriculture reforms in our country. Allocation for Food Processing initiatives could include setting up of mega food parks, cold chain, value addition and preservation infrastructure. Anchor unit subsidy for agro parks to encourage private participation in high value agribusiness enterprises. Tax incentives for agro based industries in poor districts and for agro MSMEs and Export Oriented Units.

As the regulatory mess starts clearing, existing initiatives start flowering, global factors of production keep churning and PM Modi’s road shows keep going, the “1 to 100” of “Make in India” can arrive sooner than what many expect.