Is the Lion of ‘Make in India’ Still Fast Asleep?

Unlike voters, investors don’t take govt promises at face value – they want assurances of good returns on investment

(Photo: Altered by The Quint)

Video Editor: Ashutosh Bhardwaj & Vishal Kumar

25 September 2014. A confident Prime Minister of a new government delivered a 40-minute speech. At the core of his speech was the symbol of a mechanical lion.

This is how PM Modi had launched his ‘Make in India’ program. The prime minister made sure that this program was advertised heavily, both within and outside India. A vision was created. Many multinational companies (MNCs) would be driven to India and set up their manufacturing units. This would create employment for the youth and also open up the possibilities of self-employment. The common man was lost in dreams of India being turned into a manufacturing hub.

Foreign Investors Lack Confidence in Indian Markets

To turn this dream into reality, heavy investment was needed – both foreign and domestic. But India hasn’t achieved much success on either of those fronts. First, let’s discuss Foreign Direct Investment (FDI). The latest FDI figures aren’t very inspiring.

According to Department of Industrial Policy and Promotion (DIPP), in FY 2017-18, FDI grew at only 3 percent. This is the lowest FDI growth rate in last 5 years. A mere 1.6 percent of fresh FDI was recorded between October 2014 and May 2016.

In total, 25 sectors were shortlisted under the ‘Make in India’ program. But investors didn’t show interest in almost all of them. This is a clear indicator that foreign investors, as of now, aren’t able to exude confidence in the Indian market. Unlike voters, they don’t take government’s promises on face value. They need some assurance that they will get good return on investment.

Private Investment Isn’t Faring Better Either

Now, let’s talk about domestic investment or private investment. According to the Centre For Monitoring Indian Economy (CMIE), in 2017, private investment reduced by 40 percent as compared to the previous year. This downward trend has continued since 2015. Due to this slump in investment, the manufacturing sector, on which success of ‘Make in India’ depends, is practically stagnant.

When PM Modi took charge, the manufacturing sector growth was recorded at 2.8 percent between FY 2014-15 and FY 2015-16. During this period, ‘Make in India’ was being advertised with full vigour.

In the following year, the growth rate increased to about 4.5 percent and we all thought that the situation is improving. But then, the growth rate between FY 2016-17 and FY 2017-18 slipped to 3 percent.

Dismal Employment Situation

Now, let us take a look at the employment situation. You find different figures everyday. But to see how bad the situation is, let us consider this example. Recently, a Indian Railways had announced 90,000 vacancies for locomotive pilot and several other posts.

The eligibility criteria for applicants varied from 10th standard to BA, B.Tech, BE, B.Com and PhD. As many as 3 crore people ended up applying for those vacancies.

I rest my case.

(The story was originally published on Quint Hindi and has been translated by Anubhav Mishra.)