Make in India and the PLI schemes will make India a manufacturing powerhouse

Pursuant to the Aatmanirbhar Bharat Abhiyan, Make in India and the Production-Linked Incentive (PLI) became fundamental stepping-stones to shaping India as an efficient, equitable, and resilient manufacturing hub. Make in India aims to promote investment, encourage innovation, enhance skill development, protect intellectual property and create best-in-class manufacturing infrastructure in the country. The PLI scheme, as its name reflects, is meant to provide companies incentives on incremental sales from products manufactured in domestic units.

[box type=”success” align=”” class=”” width=””]“The Make in India campaign by the Government has given manufacturing an impetus and the investments made in infrastructure, healthcare, electronics, amongst others, are already bearing fruit. This will help India being seen as one of the global manufacturing hubs producing world-class products,” says  S Sunil Kumar, President, Henkel, India.[/box]

The pandemic intensified the supply chain uncertainties, which made many organizations rethink their sourcing strategies. What is fast gaining preference is the concept of localizing for two-fold reasons – to be closer to the point of use and to minimize the risk of disruption. Ramesh Babu, Managing Director, Velan Valves India states that “Though the general perception is that FY21 was a bad year, most of the manufacturing organizations started doing well from Q2 through Q4. For most of us, it was a 9-month year. With overheads coming down, a majority of organizations fared well on the bottom line. This is especially true for manufacturing Industries.”

The factor aiding this shift is that India has rapidly embraced digitization and emerging technologies, which contribute to leaner operations. Rajen Vagadia, VP and President, Qualcomm India & SAARC states, “Historically, the cadence of technology innovation has had a deep impact on industrial growth. 5G has applications across enterprises for industrial connectivity, private networks, industrial IoT, and automotive, to name a few. 5G IoT solutions are vital for the manufacturing sector, as they will be the enabler of Industry 4.0.  

The aim is to create a robust manufacturing sector by not only inviting foreign companies to set up operations in India but also enhance India’s exports and manufacturing capabilities for high-quality, competitive products. In the Union Budget 2021-22, an outlay of INR 1.97 lakh crore for the PLI Schemes for 13 key sectors was announced, to create national manufacturing champions and generate employment opportunities for the country’s youth. This means that minimum production in India as a result of these Schemes is expected to be over US$ 500 billion in 5 years.

Both these initiatives also aim to improve India’s rank on the Ease of Doing Business index by eliminating unnecessary laws and regulations, making bureaucratic processes easier and making the government more transparent, responsive, and accountable. According to Ashok Ramachandran, Chief Executive Officer and President, Schindler India, “There is also a ubiquitous evolution of nationalist feelings, consumer preference for locally produced products coupled with a clear mandate from infrastructure development authorities to source from within India. Organizations with forward-looking strategies, ones who are agile, have been able to leverage this opportunity by accelerating localization of the production base.

India already has a massive domestic market, the largest pool of workers across diverse skill categories, and its industrial ecosystem is maturing which makes it a viable option for investment and growth. Both Make in India and PLI have the potential to be transformation multipliers.  However, for these to truly have an impact, they need to focus beyond the generic assembling of components and enable the generation of employment and a value-driven penetration of export markets.

India has a natural advantage around its farming base and emerging industries around food processing may be very relevant here.  Similar other examples like IT services could provide growth opportunities around electronics and semiconductor industry. On the cost competitive front, there is a lot of learning from the more matured services sector and their use of technology, AI and machine,” states Amit Lahoti, VP and GM, Ball Beverage Packaging – India and SE Asia.

In its effort to make India a manufacturing hub, the government is developing industrial corridors and smart cities to provide infrastructure based on state-of-the-art technology with modern high-speed communication and integrated logistic arrangements. Innovation and research activities are being supported through fast-paced registration systems, and accordingly, the Intellectual Property Rights registration set-up has been upgraded. A number of new initiatives have been launched in order to streamline and rationalise licensing rules at the state government level, aligning them with global best practices.

The requirement of skills for industries is being identified and accordingly, the development of the workforce is being taken up. Gaurav Malhotra, Managing Director, Hansgrohe India is of the opinion that “To make Make in India and the PLI initiatives come alive, what needs to improve is to develop talent and skills at the rural as well as the urban front. We need to set up institutions and emphasise academics that look at developing skills development. Skills need to be given dignity at all levels.

Make in India and PLI make for the single largest manufacturing initiative undertaken by a nation in recent history. It is important for Indian sectors to leverage this opportunity with vitality and optimism, and a global quality mindset to usher in a new economic era. It is also a call-out to global enterprises to sit up and take notice of India as an attractive destination.

Prime Minister of India, Narendra Modi has said, “I want to tell the people of the whole world: Come, make in India. Come and manufacture in India. Go and sell in any country of the world, but manufacture here. We have the skill, talent, discipline, and the desire to do something. We want to give the world an opportunity that come make in India.”

The initiatives provide a much-needed push to India’s manufacturing sector and when cumulative efforts combine, will also make India a superior domestic manufacturer and a favourable investment centre. This will create positive traction for the overall economic growth of the nation for a long time to come.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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