In terms of potential, Prime Minister Narendra Modi’s ‘Make in India’ programme can be as transformational as the Green Revolution was for agriculture and the White Revolution for milk production in India. These transformed India from a country with a begging bowl to one with surpluses of foodgrains and milk. The overarching theme of ‘Make in India’ is to keep things simple. It proposes to do away with many ponderous and time-consuming procedures that delay decisions and cascade into major cost and time overruns. These can, potentially, make India an easier place to do business in, thus, making it more attractive for investors.
The government has identified 25 industries in which India can become a world leader. The logic can’t be faulted. A manufacturing boost in these industries will create well-paying jobs. This will improve purchasing power, boost consumption and create a larger market for manufacturers, thus, setting off a virtuous cycle of growth and prosperity. What’s surprising is that this simple logic escaped most previous governments.
There’s no denying that Indian industry — the manufacturing sector in particular — desperately needs a big push. The time is also right. Many western and Japanese
companies in China are looking for alternative investment destinations to diversify their risks. So, India is once again on their radars. But to translate this interest into actual investments, the government will have to cut through the red tape that scares away foreigners and improve the ease of doing business here.
India ranks a lowly 134 out of 182 countries in the World Bank’s ‘Ease of Doing Business’ index. “The responsibility of improving this ranking lies squarely with the government. We can easily improve our ranking by 50 places by taking the right steps,” Mr Modi said, while inviting CEOs to invest in India. He pointed to his government’s decision to allow citizens to self-certify documents. Trusting citizens and businesses, he indicated, would be the guiding principle of his government. Implemented well, this can significantly ease pain, harassment and expenses while interacting with government agencies. Then, investors will also welcome the system of time-bound, single window clearances via an e-portal.
But transforming the business climate in India will need a buy-in from the states, which are responsible for giving many of the clearances — and most of the delays. That’s the big challenge. Implementation is key to the success of ‘Make in India’. If he can pull it off, Mr Modi will have succeeded in taking India’s economic development to the next level.