Make-in-India: A Lost Opportunity

When Mr. Modi came to power in India in 2014, lot of hope was generated with newer ideas flowing from all corners of the world. Then on 25 September 2014 came the big announcement. The government of India launched the brand new initiative called "Make In India". It created a lot of buzz across India and across the world.

Anyone who had any direct or indirect business relations with India was keen to know what is this extravagant verve. Organizations globally showed interest in becoming a part of this festival.

The results were amazing. The government of India committed 16.4 Lakh crores (USD 240 Billion) to kick start manufacturing revolution within India. FDIs started flowing almost immediately overtaking even the US and China. Large enterprises decided to make India their home. Stock Markets took huge leaps. India was quickly being seen as the blue-eyed boy of investors.

Six years down the line, it has merely become a forced PR activity on manufacturers across India. Launching any new initiative, you are pushed by various agencies to include the lion's logo. PR agencies by default add the line "under the Prime Minister's Make in India Initiative" for every new product announced in media, irrespective of the company manufacturing similar products in India for ages.

Suddenly, manufacturing is a dying field and big names are pulling their hands out. 2019 has already seen the highest job losses in the manufacturing sector India has ever seen in its whole history. Unpublished leaked government reports put unemployment at 46years high. Major employers, including, automobile industry, pharmaceuticals, biotech, construction, food processing have all cut their manpower strengths by as high as 60-65%.

Startups have also failed to kick start with a lack of funds. Banking messed-up with scams leading to more cash crunches. Political in-acceptability of the seriousness of the situation, with the hurried implementation of GST and absolute disastrous De-monetization, made small entrepreneurs life, a nightmare.

Manufacturing industry growth hit the wall, with August 2019 PMI indexes hitting 15 months low with all major indices coming under pressure, even though the government has recently taken steps to help them out.

So what went wrong with such a fantastic concept. For starters, PM Modi has come after a successful stint as CM of Gujarat, where exports take center stage of business, while the rest of the country does not look that much beyond borders for business.

India has predominantly a self-producing and consuming country. Agriculture drives the economy supported by manufacturing. Ignoring Agriculture was one of the biggest mistakes which Modi government could not correct. This has directly impacted all ancillary manufacturing. This has lead to an increase in food prices and a fall in incomes.

Make in India concept was to increase manufacturing and thus provide large scale job opportunities to youth. For which international brands were invited to build their infrastructures in India. Unfortunately, the government completely forgot the existing manufacturers in India, who were already facing issues arising from slow down during UPA II. This has lead to an accelerated fall in local manufacturers' confidence.

Large enterprises have grabbed the opportunity given by Make in India and upgrade their businesses, but the Indian economy is more dependent on SMEs, who have failed to see any benefit for them.

While deciding to de-monetize, PM completely ignored the fact that as high as 95% of smaller businesses run on cash business. With most cash in hand wiped out, retailers and small manufacturers faced hardships including increasing credit limits to suppliers, finding it difficult to pay salaries to employees, pay utility bills and rents on time, as well as repayment of credits that they had taken for various reasons. Most small-time factory owners are still struggling to come to terms with what happened at that time.

According to Economic Times, as high as 3% of all manufacturing units stopped operations with 3 months of De-monetizations. Within a year, the bicycle industries in Ludhiana, the brass industry in Moradabad, the diamond industry in Surat, were completely devastated. The largest number of units shut operations in Jamshedpur.

In January 2017, All India Manufacturers' Organisation (AIMO), a body of 3,000 direct members and 70,000 indirect members reported a 30% fall in jobs and a 55% fall in production. Which continued to increase as the time pushed ahead.

Hurried implementation of Goods & Service Tax (GST) meant more suffering. Business Standard reported that with already bruised Plywood industry in Yamunanagar completely closed down.

As per AIMO, it is estimated that in 2018 alone 11 million jobs in unorganized sectors were wiped out and 2019 was yet to bring more shocks.

As IT companies started feeling the pressure and international trade war brewing between US and China showing ramifications on Indian exports. Indian Exports fell by 6.57% in September 2019 while imports also fell sharply by 13.87%.

Auto Industry to hit the wall recently after shedding 3.5 to 4 lakh jobs followed by Real Estate and Construction shedding more than 1 lakh jobs. Earlier in the year, more than 2 lakh jobs were wiped out from IT services industry, bringing the total for the organized sector job loss to touch 50 lakh since Demonetization and GST implementation.

Many large conglomerates have been struggling to stay afloat, and Aviation has taken the most severe blow cause of that. Second largest airline Jet Airways, suspended operations in April 2019 leaving its 35000 employees jobless.

Normally unaffected Jewellery Industry also is facing tough times, with an estimated fall of over 30% retail sales. Many large chains are pulling back their operations, while Niraj Modi scam added distrust among consumers towards the industry as a whole.

The worst thing to happen in all this mess is regular announcements of banking frauds. One after another, every bank is now having at least one major scam in its name since last 2 years.

India's last resort for survival came out from RBI, which has already funded record payout to the government to keep its machinery working. August 2019 payout of 1.76 Lakh crores from its coffers as contingency support.

How far will new reforms by our Finance Minister Ms. Sitaraman will go only time will tell? But for now, all this mess has left one dream hanging by the hook! "Make in India".

Media is struggling to showcase it as a best PR strategy, while manufacturers and traders think otherwise. Normal Indian can't really make a difference between Make in India and Made in India.

We have been producers and consumers of our own goods then what else is new?

Big question is will the government actually now help small unorganized sector companies start to rebuild and manufacture again and guide the organized sector companies towards better results.