Manufacturing is largely challenged by stringent Indian labor laws that curb the fluid functioning of the industry. Archaic policies such as the Contract Labor Act & Minimum Wages Act need to be done away with.
According to a report by the Greyhound Research, the campaign which is aimed to boost the country’s domestic manufacturing industry with initiatives like easing the process of industrial licenses, development of new manufacturing cities and logistic hubs will also create immense employment opportunities for low skilled workers in the country. However, the groundwork needs to start from scratch.
As Sanchit Vir Gogia, Chief Analyst & Group CEO, Greyhound Research puts it, “We believe that for Make in India campaign to be successful, the government will have to focus on formation of effective regulatory framework for transparency in decision making and ensuring timely implementation of projects.”
‘Make in India,’ yes, but what will the industry make, for whom and how India will benefit in the long run are some of the questions that appear hanging. Are we looking at the goals and benefits – job creation, foreign investments, competition that is expected to churn out better quality and fair prices?
Surely these do paint a rosy picture but in the process are we failing to see the limitations and wearing off of the brush – the infrastructure, our Indian infrastructure.
And physical infrastructure such as roads, ports and power plants are not the only problem areas. Soft infrastructure is equally important and is in similar state of shambles and is the physical infrastructure. The case of Nokia plant in Tamil Nadu is a glaring example of this. The plant that employed thousands in 2009, had to offer voluntary retirements for its employees, in their early twenties, as it was to draw the shutters due to ‘differences with the government.’ POSCO and ArcelorMittal had to scrap their multi-billion dollar projects because of the regulatory and land acquisition hassles The flip side of the Make in India, as per extensive research by the Greyhound, is that the scheme will promote domestic manufacturing for International consumption, but what about our Indian markets? While the government has incentivized manufacturing for the economy, it has still not created any provisions to guarantee that majority output will quench the thirst for local demand. The purpose of Make in India is to give power to the small and medium manufacturing units; however it still lacks a framework which encourages domestic consumption.
Then there are ecological concerns which need to be addressed while making a dash for manufacturing. “India must learn from the mistakes made by China. Policy and regulations to better manage environmental impact is critical. Also, we need to use a Cherry pick approach i.e. focus on niche segments where China hasn’t done well,” says Gogia.
“Make in India campaign should now align with the Ministry of labor and employment that has come up with the Smart Cards with unique identification number under the purview of the Unorganized Workers Social Security Act 2008. Given the fact that majority of unorganized workers belong to depressed classes, the government has to be more effective in addressing this issue as it is as much social as economical,” suggests Gogia.
He further says that an efficient business environment will be possible only when the administrative machinery in the country is effective. Easier approval of projects and hassle free clearance mechanism will help create a business-friendly environment. To ensure small and medium business units are able to operate and conduct smooth operations, the government has launched the eBiz portal, which will be the one stop portal for requisite government approvals.
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