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Why ‘Make in India’ needs a makeover

October 03, 2018

Why ‘Make in India’ needs a makeover

By Manoj Bhan, Executive VP, Corporate Affairs, Vihaan Networks Limited

Launched with much fanfare in September 2014, the centre’s flagship manufacturing programme, ‘Make in India’, is yet to garner the expected traction. Its primary aim is encouraging multinational corporations (MNCs) and domestic companies to manufacture products in India meant for the Indian and global markets. Additionally, it sought to target 25 sectors, seeking to enhance employment generation and giving a fillip to innovation and skill development while simultaneously protecting intellectual property rights.

Four years down the line, much of this remains work in progress. The most notable success has been that of Samsung India doubling its production capacity and opening the world’s largest mobile phone manufacturing facility in Noida, UP. But stray successes are the exception, not the norm.

Roadmap for Manufacturing

Make in India was also meant for finding novel processes, creating new infrastructure, increasing the overall production in the country, encouraging research and development as well as moving towards self-sufficiency in manufacturing. The final frontier: transforming India into a global manufacturing hub. On all the aforementioned parameters, the flagship initiative has been found wanting.

That more needs to be done to ensure Make in India is a success has been acknowledged even by top bureaucrats and MNCs.  One of the weak links cited has been the enforcement of contracts, which needs improvement. It is clear, however, that a bits-and-pieces approach will not work. Instead, a roadmap is required that addresses shortfalls in policies, human resources, skilling, capital infusion, demand sourcing, etc.

Moreover, a one-size-fits-all perspective won’t work either. Therefore, attention should be paid to separate sectors, which have select requirements. For instance, industries such as telecom, automotive and defence, among others, all have a presence in varying degrees across India. Some of these companies include Samsung, Foxconn, Apple, BMW, Mercedes Benz, ATC, Ericsson, Huawei, Xiaomi, etc. Yet, most of them largely assemble their products in India and do not entirely manufacture within the country.

CKD or SKD assembling of products cannot masquerade as ‘manufacturing’ and militates against the Make in India ethos. Rather, manufacturing within the country is the need of the hour if jobs are to be created and GDP growth augmented, apart from meeting the other metrics mentioned earlier.

Consider telecom. This is one industry where robust growth and nationwide penetration can lead to overall benefits for the economy at large, as attested by empirical evidence globally. Yet, an ad-hoc approach and midstream policy changes have affected the industry’s survival, triggering cutthroat competition and slashing margins. As telecom players struggle to make operations viable, domestic manufacturing plans won’t move as seamlessly as in an enabling environment.

Again, it needs reiteration that the expansion plans of one or two entities cannot be taken as being representative of the overall industry’s health. As the adage goes, ‘One swallow does not a summer make’.

Driving Domestic Design

Indeed, it has been imperative to create national champions in the telecom equipment domain while curtailing (if not eliminating) reliance on imports, especially from China. The security threat from a country under global scrutiny from multiple nations because of its hegemonistic policies cannot be ignored. Against this backdrop, India has failed singularly despite framing policies meant to support domestic manufacturing. This failure could harm the nation in the long run, particularly from the security standpoint, given the heavy import of telecom equipment from China.

In telecom, it’s pivotal to promote the development of indigenous design-led entities. The sector confronts challenges in two categories: service delivery and technology. But simply focussing on services cannot generate the type of jobs required to bolster Make in India. Although the National Digital Communications Policy refers to the creation of four million additional jobs in the digital communications sector, a major proportion of this is expected to emerge from the services segment. In the present service model, most of the technology development work ends up being outsourced by the service providers. The resulting jobs generation leaves minimal opportunity for skilled engineering resources. This unwanted trend can only be reversed when India has a strong domestic industry focussing mainly on high value-addition engineering within the country.

Nonetheless, the policy does envisage design-led telecom manufacturing in India. But for this to succeed, institutional support is needed along with robust funding for industry-led R&D as well as product development. Such a strategy will enable the country to create national champions in diverse segments, thereby becoming self-reliant while meeting the needs of a secure national telecom network. Meanwhile, the Centre’s launch of the Phased Manufacturing Programme placing additional smartphone components under Make in India is a step in the right direction, ensuring a boost for the domestic manufacture of mobile handsets.

Given the above and backed by a Make in India roadmap, both institutional and industry stakeholders could work jointly in transforming the nation into a global manufacturing hub for telecom and a core cog in the global supply chain…



 

 
 

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