Make-in-India : Modi's $222 Billion
Modi's $222 Billion Make-in-India
Prime Minister Narendra Modi's glitzy campaign this week to showcase
India as the world's next manufacturing hub met with a few unpleasant
realities of life in Mumbai: a fire engulfed one of the event stages and
a strike by rickshaw drivers paralyzed traffic in the financial hub.
More worrying is the conflicting data and vague timelines that raise questions about Modi's "Make in India" drive, which on Saturday he called "the biggest brand created in India."
The tally for investment pledges soared on the final day to 15.2 trillion rupees ($222 billion) - more than triple what India has attracted through foreign direct investment since Modi came to office in May 2014.
Whether any of that will materialize remains to be seen. Right now the campaign launched in 2014 is best known for its logo - a lion made of cogs - that has shown up on billboards from Hannover to San Francisco.
"It hasn't really taken off," Radhicka Kapoor, a fellow at the Indian Council for Research on International Economic Relations, said of the campaign. "It'll take a lot more than a flashy new website, a new lion symbol, and catchy phrases to make India a manufacturing powerhouse and create productive jobs for its rapidly rising workforce."
Modi is pushing to lure manufacturers that can create millions of jobs, allowing India to take advantage of a demographic dividend as its population surpasses China in the next decade. While India's 1.3 billion people and high growth rate make it a stand-out among emerging markets, other indicators are grim: Investment remains weak, exports have fallen for 14 straight months, borrowing costs are relatively high and trade deals have stalled.
Modi's efforts to make it easier to operate in Asia's third-biggest economy have yet to show up in key external indicators. In the World Bank's Doing Business index, for instance, India still ranks 130 of 189 economies - well short of Modi's goal to crack the top 50 in two years.
One of the problems of Make in India, Kapoor said, is that it fails to address the outsized influence of states - many governed by Modi's opponents - on regulatory environments. Unions have opposed changes to some of the world's most rigid labor laws, and a fractious parliament has blocked a goods-and-services tax that would create a single market in India for the first time.
"India is a difficult place to govern, and one needs to have patience," said Nilmadhab Mohanty, a former civil servant and honorary senior fellow at the Institute for Studies in Industrial Development in Delhi. "But we don't have much time - other countries are competing for this and investors will go elsewhere."
Some relief for manufacturers may be coming in Modi's budget on Feb. 29. Reports say the government is considering a range of tax incentives to allow exporters to add more workers, particularly in labor-intensive industries like leather, gems and jewelry.
"Under the pressure of this campaign, the government machinery will be required to make a number of corrections on the policy front," Modi said in the speech on Saturday, speaking to an audience that included his Swedish and Finnish counterparts. "We are committed to make India an easy place to do business."
Since Modi took office in 2014, foreign direct investment has increased 33 percent to $64 billion from the previous 20-month period, according to data from the central bank. Yet that mostly went into an e-commerce sector that heavily imports consumer electronics, while job-intensive sectors like construction and energy have either seen declining investments or muted flows, according to Emkay Global Financial Services.
"The headline numbers gloss over the message emanating from the details," the brokerage said in an October report.
The event this week elicited 15.2 trillion rupees in investment pledges, Amitabh Kant, secretary of the Department of Industrial Policy and Promotion, told reporters in Mumbai. At least 80 percent of those are expected to lead to actual investments within three years, he said.
Added to promises Modi has drummed up from foreign leaders, total investment pledges come to at least $421 billion since he took power - more than what has come in during the past 14 years for which data is available.
There's reason to be skeptical that India will see the money. About 8 percent of nearly 40 trillion rupees proposed at investment summits during Modi's 11-year tenure as Gujarat chief minister was actually implemented, according to data from the state's Directorate of Economics and Statistics.
Modi, for one, knows the pressure is on to deliver.
"There is no time for incremental changes," he said last week. "We want a quantum jump."
More worrying is the conflicting data and vague timelines that raise questions about Modi's "Make in India" drive, which on Saturday he called "the biggest brand created in India."
The tally for investment pledges soared on the final day to 15.2 trillion rupees ($222 billion) - more than triple what India has attracted through foreign direct investment since Modi came to office in May 2014.
Whether any of that will materialize remains to be seen. Right now the campaign launched in 2014 is best known for its logo - a lion made of cogs - that has shown up on billboards from Hannover to San Francisco.
"It hasn't really taken off," Radhicka Kapoor, a fellow at the Indian Council for Research on International Economic Relations, said of the campaign. "It'll take a lot more than a flashy new website, a new lion symbol, and catchy phrases to make India a manufacturing powerhouse and create productive jobs for its rapidly rising workforce."
Modi is pushing to lure manufacturers that can create millions of jobs, allowing India to take advantage of a demographic dividend as its population surpasses China in the next decade. While India's 1.3 billion people and high growth rate make it a stand-out among emerging markets, other indicators are grim: Investment remains weak, exports have fallen for 14 straight months, borrowing costs are relatively high and trade deals have stalled.
Modi's efforts to make it easier to operate in Asia's third-biggest economy have yet to show up in key external indicators. In the World Bank's Doing Business index, for instance, India still ranks 130 of 189 economies - well short of Modi's goal to crack the top 50 in two years.
One of the problems of Make in India, Kapoor said, is that it fails to address the outsized influence of states - many governed by Modi's opponents - on regulatory environments. Unions have opposed changes to some of the world's most rigid labor laws, and a fractious parliament has blocked a goods-and-services tax that would create a single market in India for the first time.
"India is a difficult place to govern, and one needs to have patience," said Nilmadhab Mohanty, a former civil servant and honorary senior fellow at the Institute for Studies in Industrial Development in Delhi. "But we don't have much time - other countries are competing for this and investors will go elsewhere."
Some relief for manufacturers may be coming in Modi's budget on Feb. 29. Reports say the government is considering a range of tax incentives to allow exporters to add more workers, particularly in labor-intensive industries like leather, gems and jewelry.
"Under the pressure of this campaign, the government machinery will be required to make a number of corrections on the policy front," Modi said in the speech on Saturday, speaking to an audience that included his Swedish and Finnish counterparts. "We are committed to make India an easy place to do business."
Since Modi took office in 2014, foreign direct investment has increased 33 percent to $64 billion from the previous 20-month period, according to data from the central bank. Yet that mostly went into an e-commerce sector that heavily imports consumer electronics, while job-intensive sectors like construction and energy have either seen declining investments or muted flows, according to Emkay Global Financial Services.
"The headline numbers gloss over the message emanating from the details," the brokerage said in an October report.
The event this week elicited 15.2 trillion rupees in investment pledges, Amitabh Kant, secretary of the Department of Industrial Policy and Promotion, told reporters in Mumbai. At least 80 percent of those are expected to lead to actual investments within three years, he said.
Added to promises Modi has drummed up from foreign leaders, total investment pledges come to at least $421 billion since he took power - more than what has come in during the past 14 years for which data is available.
There's reason to be skeptical that India will see the money. About 8 percent of nearly 40 trillion rupees proposed at investment summits during Modi's 11-year tenure as Gujarat chief minister was actually implemented, according to data from the state's Directorate of Economics and Statistics.
Modi, for one, knows the pressure is on to deliver.
"There is no time for incremental changes," he said last week. "We want a quantum jump."
PM Modi's 'Make In India' Racks Up $222 Billion in Pledges
The "Make in India" summit in Mumbai that was inaugurated by Prime
Minister Narendra Modi on the weekend has closed with $222 billion or Rs. 15.2 lakh crore in investment pledges.
Amitabh Kant, Secretary of India's Department of Industrial Policy and Promotion (DIPP), said he expected 80-85 per cent of the pledges to convert into serious business, much of it from foreign investors. It can take 18 months to three years for a memorandum of understanding to yield a final investment, he added.
Research commissioned by the free-market Friedrich Naumann and Cato institutes has found the rate of conversion of such pledges into real investments in India has typically been far lower - with no state exceeding 20 per cent.
Among investments signed in the last seven days were a commitment by Oracle Corp for $400 million to set up nine business incubation centres.
The week-long event is the boldest since PM Modi launched the initiative to emulate China's export miracle back in 2014.
On buzz alone, the effort got off to a great start, with the prime ministers of Sweden and Finland attending Saturday's gala opening hosted by PM Modi. Nearly 50,000 delegates from 102 different countries attended the summit.
But 20 months after PM Modi swept to power with a promise of growth and jobs for India's 1.3 billion people, executives say more needs to be done, including improving infrastructure.
More pressingly, key legislation such as a goods and services tax and land acquisition bill are stuck in parliament.
"Make in India is a great initiative and has created a lot of positive sentiments," Vikas Agarwal, general manager of mobile phone maker OnePlus in India, told news agency Reuters. "Now the government needs to follow up with policies. That includes providing custom duty and export incentives, tax rationalisation and removal of ambiguous land acquisition policies."
Make In India has scored major wins, including a pledge by Taiwan's Foxconn to invest $5 billion in a new electronics manufacturing facility.
That has helped foreign direct investment to nearly double to $59 billion last year, the seventh highest level in the world, according to the United Nations Conference on Trade and Development.
Yet in critical aspects, India remains far behind its goals.
The proportion of manufacturing to gross domestic product has been stuck at around 17 per cent for five years, below the government's goal to ramp it up to 25 per cent, according to the Boston Consulting Group.
India has only created 4 million manufacturing jobs since 2010, according to Boston Consulting. At the current rate, India may only create 8 million jobs by 2022, well below the government's goal of 100 million. ($1 = 68.4550 rupees)
Amitabh Kant, Secretary of India's Department of Industrial Policy and Promotion (DIPP), said he expected 80-85 per cent of the pledges to convert into serious business, much of it from foreign investors. It can take 18 months to three years for a memorandum of understanding to yield a final investment, he added.
Research commissioned by the free-market Friedrich Naumann and Cato institutes has found the rate of conversion of such pledges into real investments in India has typically been far lower - with no state exceeding 20 per cent.
Among investments signed in the last seven days were a commitment by Oracle Corp for $400 million to set up nine business incubation centres.
The week-long event is the boldest since PM Modi launched the initiative to emulate China's export miracle back in 2014.
On buzz alone, the effort got off to a great start, with the prime ministers of Sweden and Finland attending Saturday's gala opening hosted by PM Modi. Nearly 50,000 delegates from 102 different countries attended the summit.
But 20 months after PM Modi swept to power with a promise of growth and jobs for India's 1.3 billion people, executives say more needs to be done, including improving infrastructure.
More pressingly, key legislation such as a goods and services tax and land acquisition bill are stuck in parliament.
"Make in India is a great initiative and has created a lot of positive sentiments," Vikas Agarwal, general manager of mobile phone maker OnePlus in India, told news agency Reuters. "Now the government needs to follow up with policies. That includes providing custom duty and export incentives, tax rationalisation and removal of ambiguous land acquisition policies."
Make In India has scored major wins, including a pledge by Taiwan's Foxconn to invest $5 billion in a new electronics manufacturing facility.
That has helped foreign direct investment to nearly double to $59 billion last year, the seventh highest level in the world, according to the United Nations Conference on Trade and Development.
Yet in critical aspects, India remains far behind its goals.
The proportion of manufacturing to gross domestic product has been stuck at around 17 per cent for five years, below the government's goal to ramp it up to 25 per cent, according to the Boston Consulting Group.
India has only created 4 million manufacturing jobs since 2010, according to Boston Consulting. At the current rate, India may only create 8 million jobs by 2022, well below the government's goal of 100 million. ($1 = 68.4550 rupees)
Make-in-India : Modi's $222 Billion
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