Where India was once known only for its population and unruly infrastructure, ‘Make in India’ initiative is set to reinvent this image by positioning India as a manufacturing powerhouse able to match the dominance of the developed countries on the world stage. Deeba Kazi
Indian economy is rising encouragingly with signs of vigorous growth and development in the overall outlook of business and investment. With that, there has been a significant improvement in the manufacturing sector through new efforts and initiatives by the government. One such initiative is the ‘Make in India’ programme. Launched by Prime Minister Narendra Modi in September 2014, it is a flagship programme aimed at making India a global hub for manufacturing, innovation and design; thereby seeking to generate millions of job opportunities in the country. Announcing several steps to improve the business environment by easing processes to do business in the country, the government in the last one year has attracted several foreign investments. Be it capital goods, auto parts, electronics, logistics, ports, roadways or railways, all may benefit directly or indirectly from ‘Make in India’ push. 'Make in India' encourages not just foreign companies to set up shop in India, but also domestic companies to increase production within the country. Countries like the US, Japan, China, France and South Korea have shown their support to invest in India in various industrial and infrastructural projects. The major objective behind the initiative is to focus on 25 sectors of the economy for job creation and skill enhancement. Some of these sectors are: automobiles, chemicals, IT, pharmaceuticals, textiles, ports, aviation, tourism and hospitality, railways, auto components, design manufacturing, renewable energy, mining, bio-technology, and electronics. Make in India aims at increasing the GDP and tax revenues in the country by producing products that meet high-quality standards thereby minimising the impact on the environment. Fostering innovation, protecting intellectual property, and enhancing skill development are the other aims of the programme. Quite recently, the Indian government became the first non-US based brand to have a Twitter emoji. The emoji consists of a black lion on an orange background and will appear next to the #MakeInIndia hashtag in any Tweet worldwide. Promotion of air cargo is a key objective of the government in relevance to the ‘Make in India’ initiative. Air cargo has a high employment potential, especially for semi-skilled workers. Currently air cargo volumes in India are extremely low as compared to other leading countries due to high charges and high turnaround time. At the 42 annual convention of the Air Cargo Agents Association of India (ACAAI), held recently in Ho Chi Minh City of Vietnam, the focus was on ‘Make in India’ and how local is now going global; amply emphasizing that the campaign has the potential to transform Indian business and industry into a global enterprise where India’s air cargo industry has a crucial role to play in it. “There are multiple challenges that have to be tackled on a war footing to expeditiously implement this programme. The elimination of regulatory impediments; simplification of rules, regulations, and procedures; abolition of obsolete practices; and development of infrastructure are only a few of the changes which will be essential in this regard,” said Hemant Bhatia, president of ACAAI. For Bhatia the convention was a meeting point for air cargo agents to deliberate and evaluate how the industry could capitalise on this unique opportunity for growth. One of the factors that India’s air cargo industry should strive for is global benchmarking. To achieve it there has to be integrated and sustained efforts from all stakeholders including the policy makers and regulators. “If we have to achieve high ambitious goals like transforming India as a global destination for manufacturing through ‘Make in India’, we have to reduce transit bottlenecks and prepare for good distribution practices,” said Huned Gandhi, managing director for Dachser India. The Air Cargo Logistics Promotion Board (ACLPB) has been constituted to promote growth in air cargo by way of cost reduction, efficiency improvement and better interministerial coordination. The Board and the industry are to submit a detailed action plan after stakeholder consultation, with the objective of reducing dwell time of air cargo from ‘aircraft to truck’ to below 24 hours by 31 December, 2016 and to six hours by 31 December, 2017. ACLPB’s action plan is supposed to ensure a shift to paper-less air-cargo processing by 1 April, 2017. The space allocated for cargo on the air-side and city side at most Indian airports is inadequate. ACLPB will lay down norms for space allocation for air-cargo for all greenfield airports. The action plan for space-augmentation at existing airports will be developed by ACLPB on a case by case basis. The Government of India envisions airport infrastructure investment of $11.4 billion under the Twelfth Five Year Plan (2012-17). It has opened airport sector to private participation, six airports across major cities are being developed under the Public Private Partnership (PPP) model. The Airports Authority of India (AAI) aims to bring around 250 airports under operation across the country by 2020. Few months ago, the ‘Make in India' campaign got a major boost with the US-based aircraft manufacturer Boeing joining the bandwagon. Boeing plans to assemble one of its two helicopters namely, Chinook (heavy-lift) or Apache (attack type) in India making Boeing the biggest global company to commit to the 'Make in India' programme. Another top aircraft manufacturer Airbus SAS plans to open aircraft maintenance and repair overhaul (MRO) facility in India. Airbus expects India’s aviation industry to grow at over 10 per cent annually in the next decade, almost double the average growth rate of the global aviation industry. Eyeing large orders from Indian airlines, Airbus has committed to source products worth $2 billion cumulatively over the next five years from India; the company plans to provide customised maintenance and other services closer to the base for all its airline customers in India. According to India Brand Equity Foundation (IBEF), India aims to become the third-largest aviation market by 2020 and the largest by 2030. The Civil Aviation industry has ushered in a new era of expansion, driven by factors such as low-cost carriers, modern airports, Foreign Direct Investment in domestic airlines, advanced information technology interventions and growing emphasis on regional connectivity. India is the ninth-largest civil aviation market in the world, with a market size of around $16 billion. According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI inflows in air transport (including air freight) between April 2000 and June 2015 stood at $573.12 million. In a boost to the government's 'Make In India' drive, Rostec, a Russian state corporation which promotes development, production and export of hi-tech industrial products for civil and defense sectors will form a joint venture with Indian PSU Hindustan Aeronautics Limited (HAL) for manufacturing Kamov 226T military helicopters in India. During Prime Minister Narendra Modi's recent Russia visit an agreement was signed between the Russian Federation and the Republic of India on cooperation in the field of helicopter manufacturing. The document was signed in the presence of Russian President Vladimir Putin and Prime Minister Narendra Modi. According to the document, the State Corporation Rostec will organize in India the production of the Russian Ka-226T and its modifications in the amount of not less than 200 units. The agreement also provides for the maintenance, operation and repair of helicopters and providing them with technical support. Making the most of the rising opportunities in India is French drone-maker LH Aviation having signed a Memorandum of Understanding (MoU) with India’s OIS Advanced Technologies in June 2015 to manufacture tactical drones in India through an industrial license. Seeking to step up bilateral cooperation, Japan has set up a 'Make in India' fund of about Rs 83,000 crore to devise a special package for attracting investments in 'Japan Industrial Townships'. This initiative aims to promote direct investment from Japan to India to support their business activities and counterparts in India including development of necessary infrastructure, and to help materialise 'Make-in-India'. Narendra Modi said the 'Make in India' initiative has become a movement in Japan and the island nation has created a fund of about $12 billion for it. Few challenges are bound to appear when looking at the ‘Make in India’ campaign to be successful. The government is said to be devising a strategy to close off a loophole in the proposed goods and services tax (GST) that could hurt its ‘Make in India’ initiative to turn the country into a manufacturing hub to generate jobs and boost economic growth. Profit margins on imported goods are set to rise as GST would allow a larger share of input credit to importers compared with the current regulations. Indian manufacturers would be at the receiving end and the Indian market will be flooded with imported goods, which will be cheaper than made-in-India goods. This will strike at the root of the ‘Make in India’ campaign. Currently, imports of most goods attract customs duty of 29.44 percent at the standard rate. This includes basic customs duty (10 percent), plus additional duty or countervailing duty (CVD) equal to excise duty at 12.5 percent, plus 4 percent special additional duty (SAD) and an education cess at 3 percent. Under the GST regime, only basic customs duty will remain. Additional duty and SAD will be abolished and IGST (inter-state GST) is expected in their place. The Department of Industrial Policy and Promotion (DIPP) is hoping that the 'Make in India' initiative will provide momentum to the domestic companies as well as increase the share of manufacturing in India's GDP to 25 percent from 17 percent at present. Taking it further, the government plans to hold a 'Make in India week' in Mumbai from 13-18 February, 2016. Prime Minister Modi will inaugurate the Make in India Week, a mega event in which the government expects participation of over a 1,000 companies and delegates from over 60 countries. It will focus on ten key sectors, including aerospace and defense, automobile, construction, food processing, infrastructure, pharmaceuticals, information technology and textiles. It will feature exhibition of innovative products and manufacturing processes, a hackathon and sessions on urban planning, among other events.