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MAKE IN INDIA
MAKE IN INDIA Make in India programme was launched by Mr. PM Modi in 2014 to encourage the country to invest in the manufacturing sector in India. The slogan coined by PM Modi was ‘zero defect , zero effect’, which means product which is created by manufacturing companies with zero or no effect and the process which is used for production and product is zero effect on the environment and ecological environment. The objective of this mega program is to ensure that the manufacturing countries which contributes around 15% if the country GDP is increased to 25% in next coming years. The government by their programme expects to generate jobs , attract much foreign direct investment transfer India to a manufacturing hub
MAJOR OBJECTIVES The major objective behind this programmes is to focus upon the heavy industries , public enterprises which generating employment in India. The programme is launched to facilitate investment. To Foster innovation. To enhance skill development. To protect intlectual property. To build best in class manufacturing infrastructure.
SECTOR IN FOCUS • AUTOMOBILES COMPONENTS • AVIATION • BIOTECHNOLOGY • CHEMICALS • DEFENCE MANUFACTURING • OIL AND GAS • ELECTRICAL MACHINERY • ELECTONIC SYSTEM • FOOD PROCESSING • INFORMATION TECHNOLOGY • LEATHER • MEDIA AND ENTERTAINMENT • MINING
STRENGTH OF INDIA MANUFACTURING • • INDIA HAS ALREADY MARKED ITS PRESENCE AS ONE OF THE FASTEST GROWING ECONOMICS OF THE WORLD. THE COUNTRY IS EXPECTED TO RANK AMONGST THE WORLD’S TOP THREE GROWTH ECONOMICS AND AMONGST THE TOP THREE MANUFACTURING DESTINATION BY 2020. THE COST OF MANPOWER IS RELATIVELY LOW AS COMPARED TO OTHER COUNTRIES. RESPONSIBLE BUSSINESS HOUSES ARE OPRATING WITH CREDIBILITY AND PROFESSIONALISM. THERE IS A PRESENCE OF STRONG CONSUMERISM IN THE DOMESTIC MARKET STRONG TECHNICAL AND ENGINEERING CAPABILITIES BACKED BY TOP NOTCH SCIENTIFIC AND TECHINICAL INSTITUTES ARE AVAILABLE THERE ARE WELL REGULATED AND STABLE FINANCIAL MARKET WHICH ARE AVAILABLE TO FOREIGNER INVESTOR
HOW IS INDIA PLACED ON MANUFACTURING FRONT? Though in the recent past year , the growth of the manufacturing sector has generally outpaced the over all growth rate of the economy at just over 16 percent of the GDP, the contribution of manufacturing in india is much below its potncial development of indian manufacturing sector calls for depening and recalibratinh of economic forms that would strengths the sector and it grow faster.
SECTOR SUPPORTING MANUFACTURING IN INDIA • Power sector to provide constant supply to run manufacturing units. • Road and transport infrastructure for a specific movement of raw materials and finished good. • Research and development to innovate product design. • Training and development to fuel a constant supply of skilled manpower.
INDUSTRIES TO BE GIVEN SPECIAL ATTENTION • EMPLOYMENT UNTENSIVE INDUSTRIES: Adequate support will be given to promote and strengthen employment introduce industries to ensure job creation • CAPITAL GOODS: The capital goods industry is the mother industry for manufacturing but has not grown as the desired pace. A special focus to be given to machines tools, heavy industries, heavy transport and mining equipment • RESEARCH AND DEVELOPMENT: Time based programmes will be initiated to building strong capabilities with R&D facilities and also to encourage the growth an development. • INDUSTRIES WITH SPECIAL SIGNIFICANCE: A strategic requirement of the country would warrant the launch of the program to build
• • • INDUSTRIES WHERE INDIA ENJOYS A COMPETITIVE ADVANTAGE: India is a large domestic market coupled with a strong engineering base has created indigeneous expertise and cost effective manufacturing in automobiles , pharmaceuticals and medical equipment. The concerned ministries will be formulating special programme to consolidate strong industry base to retain the global leadership. SMALL AND MEDIUM ENTERPRISES: The SME sector contributes about 45% to the manufacturing output, 40% of the total exports and offers employment opportunities both for self employment and jobs, across diverse geographic. A healthy rate of growth shall be ensured for the over all growth of the manufacturing sector. PUBLIC SECTOR ENTERPRISES: Public sector enterprises , especially those in defence and energy sectors continues to plat a major role in the growth of manufacturing as well as of the nation economy
Policy Measures The government is positive about the program and is aligning its goals to further its mission. Following are some of the policy measures in this regard : • 100% FDI has been allowed in medical devices, telecom sector & single brand retail. • FDI cap has been increased in insurance from 26% to 49%. • 49% FDI in Petroleum Refining by PSUs. • Satellites- establishment and operation (74%), commodity exchanges(49%), power exchanges(49)%.
• FDI in commodity exchanges, stock exchanges and depositories, power exchanges, courier services under the government route has now been brought under the automatic route. • Restriction in tea plantation sector has been removed. • FDI limit has been raised to 74% in credit information & 100% in asset reconstruction companies. • Construction, operation & maintenance of railway sector have been opened to 100% FDI under automatic route.
Government Incentives The central government & state governments provides a number of incentives. some of the incentives are as follows: Central Government Incentives (a)Investment allowance at the rate of 15% to manufacturing companies that invest more than 1 billion in plant & machinery available till to 31. 3. 2015. (b)Incentives to units set-up in SEZ. NIMZ. (c)Exports incentives like duty drawback, duty exemption, focus products& market schemes. (d)Sector specific incentives like M-SIPS in electronics.
State Government Incentives The incentives differ from state to state and are generally laid down in each states’ industrial policy. The broad categories of state incentives include: (a)Stamp duty exemption for land acquisition (b)Refund of VAT (c)Exemption from payment of electricity duty etc, .
NATIONAL INVESTMENT & MANUFACTURING ZONES(NIMZ) These are being conceived as giant industrial greenfield townships to promote world-class manufacturing activities. The central govt. will be responsible for bearing the cost of master planning, improving external infrastructure linkages including rail, road, ports, telecom etc. The identification of land will be undertaken be state government. The state government will also play a role in its acquisition if necessary.
There are some direct & indirect financial benefits for making Make In India a reality. 1. Transfer of Assets • In case a unit declared sick, the transfer of assets will be facilitated by the company managing the affairs of NIMZ. • Relief from capital gains tax on the sale of plant & machinery of a unit located in NIMZ will be granted in case of re-investment of sale consideration within a period of 3 years.
2. Green Technology and Practices • A grant of 25% to SMEs for expenditure incurred on audit subject to a maximum of Rs 1, 000. • A 10% one-time capital subsidy for unit practicing zero water discharge. • A rebate on water cess for setting up wastewater recycling facilities. 3. Technology Development • Incentives for the production of machines for controlling pollution, reducing energy consumption etc.
• SMEs will be given access part of reimbursement of technology acquisition costs up to a maximum of Rs. 2, 000 for the purpose of acquiring appropriate technologies up to maximum 5 years. 4. Special Benefits to SMEs • Rollover relief from long term capital gains tax to individual on sale of plant & machinery. • Liberalization of RBI norms for banks investing in venture capitals funds with a focus on SMEs , in consultation of RBI. • The inclusion of lending to SMEs in manufacturing as part of priority sector lending.
5. Government Procurement • The policy will also consider use of public procurement with stipulation of local value addition in specified sectors. These include areas of critical techonologies such as solar energy equipments, electronics hardware, fuel efficient transport, it based security system, power, roads& highways etc. 6. Industrial Training & Skill Upgradation Measures • The creation of a multiple tier structure for skill development, namely: 1. Skill-building among large numbers of a minimally educated workforce.
2. Relevent vocational & skill training through establishment of ITI in PPP mode. 3. Specialised skill development through the establishment of polytechnics. 3. Establishment of instructors’training centre in each NIMZ. 7. Exit Mechanism • It envisages an alternate exit mechanism through job loss policy and a sinking fund or a combination of both.
CONTRIBUTION OF FINANCIAL SECTOR TO BOOST MANUFACTURING BASE Organized financial sector has been a strong contribution of credit to MSME sector with 32% of the total lending going to this sector in the year 2011.
THE MSME MARKET There about 30 million MSMEs in India which contributes upto 8% towards India's GDP, 45% of the total manufacturing output, employing over 60 million. GDP has been steadily growing over the years The govt. has also planned to locally manufacture 181 products at a cost of US$ 18. 1 billion. This is also boosting the infrastructure sector such as gas, oil, power etc. Separate set of labour laws has been made to govern MSMEs. The proposed new labour laws will be applicable to industrial units that employee 40 or less in their workforce. LACK OF ADQUETE FINANCE IS ONE OF THE BIGGEST CHALLENGES FACED BY MSME SECTOR. Financial institutions have limited their exposure to the sector due to a higher risk perception.
NPA (non-performing assets ) LEVEL AS A MOJOR CHALLENGE FACED BY FINANCIAL INSTITUTIONS The major challenge faced by financial institutions by lending to MSME sector is to maintain NPA level. High NPA level in specific sector results in avoiding the lending by the financial institutions to the Micro Small And Medium Enterprise sector. FOLLOWING ARE THE REASONS FOR HIGH NPA LEVEL: 1). Non availability of risk rating tools. 2). Govt. interference in doling loans.
RECOMNDATIONS TO MAKE ‘MAKE IN INDIA’ A SUCCESS 1. Efficient administrative machinery. 2. Bureaucrats need to change. 3. Need of educated workforce of thinkers. 4. Address issues of taxations, trait policy, land acquisition etc. . 5. Strong partnership between govt. and private sector.
CHALLENGES The governments Make In India Campaign has till early October, 2014 attracted two thousand crores worth investment proposal. The following are the critics faced by this campaign: 1. The labour reform and policies have not been implemented properly. 2. India's ailing infrastructure facilities make it difficult to make a manufacturing hub. 3. Widespread corruption is one of the challenges. 4. Delay in getting regulatory clearances lead to rise in cost of production.