Cheered by some of India’s top billionaires, Prime Minister Narendra Modi unveiled a campaign on Thursday to turn India into a manufacturing powerhouse, vowing to remove bureaucratic sloth and make the country more investor friendly.
The "Make in India" campaign is as much an invitation to domestic and foreign companies as a promise to rectify everything that has kept the country at almost the bottom of World Bank’s ‘ease of doing business’ index.
“(The) mantra of our government is that we want to trust each and every Indian. The atmosphere of trust can change a lot of things,” Modi said at the launch of his government’s flagship programme that came with a new web portal www.makeinindia.com emblazoned with logo of a prowling lion.
Watch:Modi launches 'Make in India' scheme
“We don’t want any industrialist being forced to leave India. (I) can say that we have been able to bring about a change in last few months.”
The government wants to boost the share of manufacturing in country’s gross domestic product to 25% from about 15% now, roughly the same share of the economy as peers like Brazil and Russia but less than China’s 32%.
But in a diverse democracy of 1.2 billion people, that is easier said than done.
From energy shortages and land problems to ambiguous tax laws and byzantine labour rules, a barrage of hurdles have kept away large-scale private investments in what should otherwise count as a massive, attractive market, analysts said. Lack of cooperation between the federal and state governments also turns off investors.
“The real challenge lies in getting execution of projects right at the state level,” said Sunil Sinha, director India ratings at Fitch – a global rating agency. “States will have to come around to reform laws, even at the level of local bodies, and proactively facilitate implementation of plans and policies drawn up by the Centre.”
Populous, and strategic, neighbour China’s manufacturing capabilities have long overshadowed India and the government's push for manufacturing comes at a time when many big companies are seeking an alternative to the Asian giant as costs and risks there rise.
For 64-year-old Modi, however, at stake is a key election promise to lift the lowest living standards among emerging markets by creating jobs for about 100 million young Indians who will enter the workforce over the next decade or so.
Modi leaves for US, hopes visit will boost ties
During 2005-12, India added only 15 million jobs, a quarter of the figure added in the previous six years.
"We don't need to invite the world to India, they are ready to come,” Modi told an audience of some of the country’s wealthiest tycoons, including Reliance Industries head Mukesh Ambani, India's richest man, Tata Group chairman Cyrus Mistry and Wipro chairman Azim Premji.
It was a first-of-its kind assembly of top corporate leaders, who are pinning hopes on Modi and his government to steer the economy out of a prolonged slump.
Speaking before Modi, Ambani said the prime minister’s interactions “in Japan and anticipation of the visit to the USA (have) created a very positive environment,” adding that his company will hire 125,000 more people in the next 12-15 months.
AV Birla Group chairman Kumar Mangalam Birla said with the launch of the “Make in India” campaign India had embarked on a “landmark mission that coincides with the triumph in outer space.”
PM Narendra Modi unveils the "Make In India" logo pic.twitter.com/ldoQnEBpUw— ANI (@ANI_news) September 25, 2014
Modi, whose party opposes foreign direct investment (FDI) in multi-brand retail, articulated the contentious issue by saying that FDI also meant “first develop India” as much as it meant an opportunity for multinational companies to grow in India.
Read: Swaraj, Doval to be part of PM’s entourage
The government has identified 25 sectors, including automobile, aviation and construction that have potential to attract investment.
All ministries and state governments have been advised to introduce self-certification, while the home ministry will provide security clearances to investment proposals within 3 months.
The government plans to introduce a single labour law for small industries by December, while plans to initiate the other labour laws have already been initiated.
Read: Modi’s US visit could boost regional Asian ties
Asia's third-largest economy is showing signs of clawing out of its longest slump in a quarter century, and Modi’s landslide election victory has raised hopes that he will be able to engineer a quick turnaround.
Highlights of the mega launch event
Watch: 'Make In India' to bring govt and industry closer: India Inc