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 Advances in Economics and Business Management (AEBM)
Volume 2, Number 4; April-June, 2015

Contents
COMPARITIVE ANALYSIS OF PRADHAN MANTRI JAN DHAN YOJANA 336-340
Aditi Awasthi

India and its Increasing Income Disparity after New Economic Policy 341-345
Amar Moorjani

Assessing Tourism Potential in Sivasagar District, Assam, India 346-351

Ramen Borah and M.A. Ahmed

Factors Affecting Consumer Preference for Brands over Generic Brands in Online Versus Offline 352-358
Shopping for Apparel Segment: An Empirical Study
Abhishek Malik, Anshruta Srivastava, Shailendra Kumar and Ankrish Prajapati

J.USK.MANAGEMENT OF CO-OPERATIVE BANK THROUGH BASEL 359-362

Bhabani Sankar Rout

A 1\ 11.. ,piTical Analysis of Investment Behaviour-A Case Study of Kerala 363-367

CiCOTi:,: Varghese

Crowt', and Development of Manufacturing Sector in India under 'Make in India' Mission - A 368-373
Case Study of Making and Implementing Right Policies
Rajiv R Thakur and Jitender Sharma

Opportunities and Challenges of Wellness Tourism in India 374-378

Mandeep Bharti

Nature of Volatility in Indian Stock Market - An Empirical Analysis 379-382

Mohammad Irshad VK and George Varghese

PARADIGM SHIFT IN CHOICE OF ORGANIC COSMETICS: A CASE STUDY ON 383-385

PROMINENT FACTORS
Navita Mahajan
 Contents

Handicrafts in Hyderabad State; a Case Study of Bidri Art Work (1724-1956) 386-389
P. Siva Sankara Reddy and P. Apama

Energy Cooperation between India and Russia: Splendid Sojourn with Security 390-392
Rasmita Sahoo

Application of Dual Stochastic Production Function in Estimating Technical Efficiency in Cotton 393-397
Production in Kano State, Nigeria
Sadiq, M.S.

Aquaculture Production and Economic Development in Niger State, Nigeria: Sustainable 398-402
Development of Catfish Production
Sadiq, Mohammed Sanusi and Maude, Abubakar Mohammed

Future Strategies of Agricultural Development of Bihar 403-407

Saroj Kumar Singh

A Study on Effect of Promotion Mix on Consumer Behavior in Organized Retailing 408-411

Satnam Kour Ubeja and Anukool Manish Hyde

Review of International Financial Reporting Standards (IFRS) -A Tool of Financial Reporting 412-414
Shipra Saxena

"Impact Analysis of Faculty Job Satisfaction on Boosting Students Enrollment in Higher 415-418
Education Institutions" A Case Study
Sukanya Roy

Determinants of Competitiveness of Small-Scale Industries 419-422

Vidushi Sharma

Green Consciousness of Consumers 423-429

Vineeta Jha

Role of FDI on Employment Generation in India 430-433

Mohd. Azam Khan and Aditi Agrawal
Advances in Economics and Business Management (AEBM)
Print ISSN: 2394-1545; Online ISSN: 2394-1553; Volume 2, Number 4; April-June, 2015 pp. 368-373
© Krishi Sanskriti Publications
http://www.krishisanskriti.org/aebm.html

Growth and Development of Manufacturing Sector

in India under 'Make in India' Mission - A Case
Study of Making and Implementing Right Policies
Rajiv R Thakur! and Jitender Sharma2
1,2Jaipuria Institute of Management, Noida
E-mail.·[email protected].)[email protected]

Abstract-' Make in India' is the initiative launched by the new GOP since 1950s till the time services sector overpowered it
Government of India after assuming power in 2014. This initiative is after its tremendous growth in 1990s when liberalization
about inviting and encouraging global companies to establish their process was introduced in the country. Manufacturing sector
manufacturing base in India to boost its manufacturing sector and
growth rate has remained between 6 to 8 per cent after
generate large scale employment opportunity for Indian youth, In
independence till 1990s. It reached to negative growth rate in
comparison to the services sector which has been the major driver of
growth of Indian economy for over two decades now, manufacturing
financial year 1991-92, rose sharply to 15.46 per cent in 1995-
sector contribution has remained low despite the fact that India has 96 and then fell again during economic slowdown. In first
vast semi-skilled and literate manpower best suitable for decade of 2151 century it has remained around 8 per cent
manufacturing sector. Recognizing the potential of manufacturing except when second economic slowdown reduced the demand
sector for providing mass scale employment, growth of Indian to lowest.
economy and to achieve sustainable growth, Government of India has
framed new policies and is determinedfor their implementation. Services sector has remained a moderate constituent of Indian
Thispaper is a critical study of how 'Make in India' mission can help economy till 1990; however, after liberalization and opening
in growth and development of manufacturing sector in India and up of Indian economy, backed by huge skilled English
hence provide much desired mass scale employment and how speaking youth manpower, India established itself as a leading
government can play a significant role for the development of player in the services sector. This was a result of emergence
manufacturing sector through framing and implementing right and adoption of information technology to a massive scale in
policies.
1990s in India. Since then service industry of India has been
the real growth engine for Indian economy. Services sector
1. INTRODUCTION
contributed about 60 per cent to the Indian GOP in the
According to International Monetary Fund's World Economic financial year 2013-14. India services sector strength lies in
Outlook Databases figures released in October 2014, India's sectors like hospitality, tourism, health care, medical
GDP stands at US$2.048 trillion and India's GOP share transcription, consulting, construction, infrastructure, telecom,
adjusted for Purchasing Power Parity (PPP) is at US$7.277 software and information technology, customer care tele-
trillion. I As per latest· estimates of Finance Ministry, services, banking and other sectors of economy.
Government of India, Indian economy may achieve 7.4 per However, growth in a single sector alone is not sufficient for
cent growth rate by the end of current financial year', World India to achieve its objective of becoming largest economy in
Bank has projected this growth rate to be 7.2 per cent by the long run. India is currently facing stiff challenge from several
end of this financial year and projected a growth rate of 7.5 other developing countries such as Philippines, Indonesia,
per cent in the financial year 2015-163. Its' current rank as per Malaysia, Thailand, Mexico, Vietnam etc. in services sector
GDP stands at 10lh in the world4. Contributions of agriculture, and hence no longer can Indian economy afford to be based
industry and services sector were 13.7 per cent, 21.5 per cent upon services sector alone. Downfall of global economy over
and 64.8 per cent respectively to overall GDP in 20135. Sector last few years has resulted in lower demand of financial and
wise employment share as per 2012 available data for services sector. It is not able to generate enough employment
agriculture, industry and services sector is 49%, 20% and 31 % opportunities for huge population of India. In such a scenario,
respectively". it is imperative for countries like India to look beyond services
Indian economy since independence has primarily been sector and identify the sectors that have the potential of
agricultural based economy followed by manufacturing and generating large scale employment for the literate but low-
services. Agriculture sector has contributed most to India's skilled huge manpower ofIndia.
Growth and Development of Manufacturing Sector in India under 'Make in India' Mission - A Case Study of 369
Making and Implementing Right Policies

It is therefore highly important to ensure that the only sector that has capacity to provide employment
manufacturing sector not only grows significantly but comes. opportunity at such massive scale. Unfortunately, as indicated
at the forefront among all sectors. Manufacturing sector has above contrary to its large capacity, in last twenty years, only
had the potential to generate and provide employment about 53 million job opportunities could be developed with a
opportunities to a larger section of society. Generation of growth rate of about 1.87 per cent per year in manufacturing
employment opportunities will provide a chance of increased sector, whereas, services sector's contribution during this
incomes in hands of all sections of the society which shall period has been 150 million jobs with a 6.5 per cent growth
further increase the consumption demand in Indian markets. rate per year. Targets fixed under National Manufacturing
This increased demand will provide big opportunity to the Policy, 2012 also seem unattainable. As against target of 25
world. According to economic projections and calculations, it per cent contribution to GDP and about 100 million additional
is necessary for the manufacturing sector to grow at the rate of job creation by the year 2022, India has been able to reach
about 25 per cent if India aims for double-digit or minimum only up to 15 per cent contribution of manufacturing sector in
10 per cent GDP growth rate. total GDP and less than 5 million additional job creation has
taken place, which is highly disappointing.
2. CURRENT STATUS OF MANUFACTURING
SECTOR IN INDIA 3. 'MAKE IN INDIA' MISSION

According to 2013-14 statistics, in India manufacturing sector Among various initiatives taken for the growth and
contributed 21.5 per cent whereas agriculture sector's development of manufacturing sector, the most important step
contribution was 13.7 per cent and services sector contribution in recent times is the 'Make in India' mission .Launched in
was the maximum with 64.8 per cent of overall GDP. To meet September 2014, 'Make in India' is the initiative of inviting
future needs, it is not desirable to have such a large inequality and encouraging global companies to establish their
in manufacturing sector contribution. Contribution of manufacturing base in India to boost its manufacturing sector
manufacturing sector in employment generation has remained and generate large scale employment opportunity for Indian
20 per cent by the year 2012. According to the McKinsey youth. Over 25 sectors of the economy have been identified
Quarterly Report, manufacturing sector has potential to under this mission for job creation and skills enhancement,
contribute US$I trillion to Indian economy by the year 2025 namely, automobiles, aviation, well ness, railways, electronics,
and creating 90 million job opportunities. renewable energy, chemicals, and information technology and
others8.
To achieve double digit growth for India, manufacturing
sector needs to contribute at least 25 per cent in overall GDP. 'Make in India' mission stated purpose is to establish India as
In comparison to other countries including China where a unique manufacturing hub at world level. 'Make in India'
manufacturing sector's contribution is about 40 per cent, India mission is aimed to generate more than 100 million
lags behind significantly. Even in lower income category employment opportunities and to achieve 25 per cent
countries like Pakistan and Bangladesh, manufacturing sector contribution of manufacturing sector to the country's GDP in
contributes 12 and 18 per cent respectively whereas in middle next one decade. 9Th is mission not only intends to raise
income category countries like Vietnam, Sri Lanka, Indonesia, competition but also offers a big market for products
Malaysia and Brazil, manufacturing sector contributes more manufactured by world's largest corporations out of increased
than India. Malaysia manufacturing sector contributed 24 per disposable income as a result of employment. In today's
cent to its GDP, whereas manufacturing contribution in Sri global economy, manufacturing sector is essential even for
Lanka and Vietnam contribution is about 17-18 per cent. increasing country's exports and make the country export-rich.
Among rich countries like Russia, Japan, US and European
Union Minister for Commerce and Industry Ms. Nirmala
Union manufacturing sector's contribution is more than India.
Sithararnan addressing at the ECGC Dun and Bradstreet
This scenario is a matter of great concem for policy makers. It Export Performance Award ceremony, as published in an
is highly undesirable especially when India has huge market, English Daily, DNA newspaper on March 8, 2015 also said
is rich in natural resources and have low cost labour in that exports playa key role in ensuring success of the 'Make in
abundance. Lagging in manufacturing sector has not only India' initiative. An Advisory Committee would suggest key
impacted growth and employment generation but has also reforms measures to boost export performance. 10
caused adversely on its market and demand. Not only this,
Government has assured to give special focus on de-licensing
India exports are also lower resulting in trade deficit
and de-regulation and provide Ease of Doing Business
significantly. Although services sector has tried to meet this
environment. It has committed to establish new industrial
deficit through its export orders and is also providing
clusters, industrial corridors, and smart cities, opening up of
employment opportunities significantly but for a country like
critical sectors like defence, construction and railways for
India where over 600 million people are educated only up to
foreign direct investment (FOI). It has assured simplification
secondary level, labour intensive manufacturing sector is the
and rationalization of the existing rules and establishing single

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370 Rajiv R Thakur and Jitender Sharma

window clearances for setting up any business venture. 4. STRATEGIC IMPERATIVES FOR SUCCESS OF
Government has promised to make governance more efficient 'MAKE IN INDIA' MISSION
and effective. Recently an e-biz portal has been launched to
facilitate ease of doing business by manufacturers and Towards the success of 'Make in India' mission it is essential
exporters. to improve business environment by making regulations and
taxes less onerous, building infrastructure, reforming labour
Government has also taken major steps towards skill
laws, and enabling connectivity. These would reduce the cost
development to ensure that skilled manpower was available
of doing business, increase profitability, and hence encourage
for manufacturing. It has also undertaken Digital India mission
the private sector, both domestic and foreign, to increase
so as to ensure that government processes remain in tune with
investments. There is urgent need to redesign India's industrial
corporate processes. Government initiatives have opened up
policy that can boost manufacturing. Government can help
way to generate employment for the large pool of young
through lowering the cost of capital, and creating special
people joining the labour force every year.
economic zones. Government of India has taken three strategic
All past governments paid attention towards development of steps for success of 'Make in India' mission.
small and medium enterprises in India, however, 'Make in
I. To improve trade and industrial environment. Important
India' mission surpasses them and is -focused towards
steps like ease of doing business, easy licensing and
enhancing their scale, quality, branding and upgrading and
improvement in trade regulations have been taken up.
linking them to large industries.
Currently, India stands at a very lower rank of 142 among
The Union Budget 2015 takes stocks of work which are 182 nations in Ease of Doing Business Index Survey
already in progress based on last year budget proposals of conducted by the World Bank. Primary reasons cited are
building several industrial cities to generate new job casual approach in governance and changing policies. To
opportunities. The Budget 2015 hopes that there would be new improve this scenario, the government has adopted
openings in sectors such as infrastructure, power, transport, "Minimum Government & Maximum Governance"
etc. Infrastructure building and development is essential for principle which should result in positive outcomes.
success of 'Make in India' mission. To further strengthen and 2. Second step is in the direction of self-dependency of
enhance capacity level of SMEs among reserved classes of manufacturing sector i.e. creating structure of industrial
SC/ST, it is 'proposed in the budget to set up Mudra Bank for corridors, estimation and formation of industrial clusters,
enterprises led by SC/ST with an initial allocation of 200 designing and implementation of smart cities, recognition
billion rupees. Government is committed towards improving of innovation and skill development etc.
quality of employment under MNREGA. Setting up of 3. Third important step is opening up of FDI in special
National Investment and Infrastructure Fund, Tax free sectors like defense, construction and railways. This
infrastructure bonds for projects in the rail, road and irrigation should increase foreign investments.
sectors, setting up a Public Debt Management Agency
A comprehensive strategic view has to be taken to establish
(PDMA) to deepen the Indian Bond market to provide
India as one among leading manufacturing nations in the
additional fund raising avenues for infrastructure sector,
world. Increase in competitiveness of India at the world level
taxation benefits in respect of Real Estate Investment Trusts
should be one of the prime objectives. On one side, it is
(RElTs), Converting existing excise duty on petrol into Road
essential to improve the quality of products produced, on the
Cess will provide additional Rs. 400 billion to fund investment
other hand, exposure of its manufacturing capabilities all over
in roads and other infrastructure. Increased budgetary
the world, to connect with world and increase in exports is
allocation for the road sector, setting up 5 new Ultra Mega
also equally important. It will be very important to boost up
Power Projects (UMPPs)~ each of 4000 MWs, proposal for
'Brand India' image. It is necessary to bring forward micro,
generation capacity of renewable energy to 175.000 MW by
small and medium enterprises and make it integral part of
the year 2022, all these measures shall play a great role in
bigger industry.
boosting infrastructure required for the manufacturing sector
and for the success of 'Make in India' mission. Global current scenario offers possibilities for India to develop
its manufacturing capacity. On one hand, China is losing its
Further to boost manufacturing sector of India, government
advantageous position due to increase in labour and
has proposed to reduce corporate tax from existing 30 per cent
production costs. Russia too is losing its shine due to geo-
to 25 per cent over next four years. Reduction in corporate tax
political reasons and rise in labour and production costs.
will encourage corporate from world over establishing their
Countries like the US and Mexico however are increasing
manufacturing base in India. The budget also proposes to
their share in manufacturing due to the liberal economic and
launch National Skill Development Mission. National Rural
working environment. Hence, while India has chance to
Internet and Technology Mission for services in villages and
develop its manufacturing sector, it also has competition from
schools, training in IT skills and E-Kranti for government
the other countries like the US and Mexico.
service delivery has been proposed and 5 billion rupees have
been allocated.

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Growth and Development of Manufacturing Sector in India under 'Make in India' Mission - A Case Study of 371
Making and Implementing Right Policies

In today's global economy, big industrial corporations and employment opportunities resulting in rise in income level of
companies continuously keep searching and changing their society in general. However, it is equally essential that other
manufacturing bases in different countries depending upon sectors contributing significantly to the Indian economy are
various factors like political stability, labour-cost, energy not overlooked in order to boost manufacturing sector.
price, productivity and fluctuation in foreign currency Kamath, KV (2015), Independent Director at InfoSys and ex-
markets. 'It has been observed that due to changing banker cautions not overlooking the services sector over the
environment, many corporations have shifted their manufacturing sector. According to him, "While
manufacturing locations over the years from the countries manufacturing will add another dimension to our growth,
where they were in profits in past years. the services sector will continue to be strong, given its robust
contribution in the last 15 years and enormous potential to
For India this pattern of relocation across the globe by the
drive growth by meeting the aspirations of a growing
companies can be an advantageous proposition. According to
consuming class". Post liberalization, services sector had
BCG Manufacturing Index 2014, India stands second among
made significant contribution to India's GDP. Its share rose
top 25 exporting nations measured on low manufacturing
from 42.55 per cent in 1990191 to 60 per cent in 2013114.
costs. Indonesia ranks first with lowest manufacturing costs.
During this period, the services sector grew at a compound
Although labour costs have increased in these countries also,
annual growth rate (CAGR) of 8.1 per cent compared to 6.5
but due to increase in productivity and change in foreign
per cent overall economic growth 11 •
currency rates, negative impact of increasing labour-cost has
been neutralized. In other countries labour and other costs 5. IMPACT OF 'MAKE IN INDIA' MISSION ON
have comparatively increased more than India and hence India MA:NUFACTURING SECTOR
has the advantage. Rising manufacturing prices in China and
their vast impact is a case in point. In order to make 'Make in India' mission successful and
meaningful Government of India has already identified some
Countries like Mexico, however, are in a good position due to
priority areas like Defence, Railways, Power especially
low cost and better working environment and is benefitted
Renewable Energy and Construction in addition to other
with foreign investment. The US is also successful in
sectors with high consumption demand and dependent upon
attracting companies due to falling gas and shell gas prices.
imports e.g. Electronics. India can encourage home production
Due to success in technological development and research, it
of these items to lower imports bill. In addition for a natural
has been able to attract technology centered manufacturing.
resources rich country like India, sectors like cotton, steel,
Industries like additive manufacturing, nano-technology,
coal, and petro-chemicals can contribute significantly to
artificial intelligence, and robotics etc. are mushrooming there.
manufacturing. These sectors have lesser manpower costs with
From Indian perspective, these are bigger challenges. It is
easy and plentiful availability of the same. Also, technical
therefore necessary for India that it takes concrete decisions
know-how of these sectors to the work-force is also an added
and steps about costs and other related issues like political,
advantage. India competitive advantage lies in its abundant
financial and Ease of Doing Business policies in order to
unskilled and low-skilled labor, as of now.
strengthen its position as a leading manufacturing hub.
India's manufacturing sector has potential to touch US$ I
In addition to production cost, some more important issues
trillion by 2025. There is potential for the sector to account for
need to be paid urgent attention, viz. infrastructure especially
25-30 per cent of the country's GDP and create up to 90
highways, port and power sector, reforms in labour-sector,
million domestic jobs, by 2025. 'Make in India' mission can
simple tax system, easy capital sources and a better worldwide
playa catalytic role in achieving these targets. After launching
image. Simultaneously government should pay special
of 'Make in India' mission, investment in manufacturing
attention on labour-reforms, and facilitating ease of doing
sector is growing continuously. Following table displays some
business.
of the major investments received or committed in
Finally, it is essential to put right policies in place to achieve manufacturing sector. This list is not exhaustive but just
leading position in the world. China has established its leading indicative only and is continuously growing each day.
position in manufacturing and demonstrated to the world
Table 1: Big investments in manufacturing sector in India
through its right policies those boost manufacturing. Initially,
China established itself in the category of simple technology
S. Name of Sector Company Name Investment
developer nations but slowly and gradually established its
No. (Country) Amount (In
supremacy among technology-led sectors. India too will have Rupees)
to do some similar attempts. I Electronics .Huawei (China) 10.37 billionl2
'Make in India' mission has ambitious targets to achieve. It 2 "Electronics Samsung (South 5.17 billionl3
Korea)
has full policy support of the Government of India and
3 Electronics Spice Group (India) 5 billionl4
undoubtedly it has great potential also of generating mass
4 Electronics Lava .5 billion15

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372 Rajiv R Thakur and Jitender Sharma

5 Power Toshiba (Japan) 18.8 billionl6 per cent. Government is putting its efforts to remove all
6 Vehicles Hero MotoCorp 5 billion17 obstacles hindering right investment climate in India. It is
i (India) essential that India maintain its momentum of focusing
7 Jewellery Kalyan Jewellers 12 billion18 comprehensively on encouraging areas like industries growth
i (India)
and development; education and skills development,
8 Paints Asian Paints (India) 17.50 billion 19
knowledge management; research and development;
9 Chemicals Pidilite Industries 2.64 billion20
innovation; boosting power and electricity generation
(India)
10 Solar Energy Danfoss (India) capacity, infrastructure and logistics. Framing right policies
5 Billion21
II Electronic Intex (India) 10 billion22 and implementing them will help India to reach the league of
12 Defence ADAG (India) 8.19 billion23 developed economies and becoming world's largest economy
acquired Pipavav subsequently and India is destined to reach there in the times
Defence and to come.
Offshore Engineering
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[II] http://businesstoday.intoday .in/story/services-sector-growth-to-
India has the potential to become world's largest economy. drive-manufacturing-kv-kamath-20 15/ 1/213477.hunl [Accessed
March 5, 2015]
However, to achieve the same, it has to walk a long way.
[12] http://www.lirstpost.comlbusiness/huawei- technologies-makes-
Dependency on agriculture or services sector alone won't be
rs-I037-cr-make-india-invesunent-2081827.html [Accessed
enough to reach this goal. Agriculture sector development is March 12, 2015]
prone to the monsoon. Moreover, employment in this sector is [13] http://www.dnaindia.com/money/report -samsung-to-expand-
continuously shrinking due to modern cultivation methods noida-facility-invests-rs-517-crore-2055992 [Accessed March
where human intervention and role is minimized. Services 14,2015]
sector growth depends largely upon performance of global [14] http://articles.economictimes.indiatimes.comI2015-01-
economy. Hence, India has to necessarily ensure higher 28/news/58546839_1_digital-india-spice-group-indian-cellular-
growth of its manufacturing sector so that it contributes at association [Accessed March 9, 2015]
[15] Ibid
least 25 per cent to overall GDP and meet the employment
[16] http://businesstoday .intoday.inlstory/toshiba- invest -in-india-
targets set up under Manufacturing Policy, 2012. To achieve
indian-power-sector/11212170.html [Accessed March 12, 2015]
the same, India has to pledge for resurgence of its industry and [17] http://www .ibef.org/industry/manufacturing-sector- india.aspx
focus on establishing internationally accepted quality [Accessed March 5, 2015]
standards for the industry, so that Indian goods can be [18] Ibid
exported and accepted in international markets. [19] Ibid
[20] Ibid
Government of India has initiated framing policies conducive [21] Ibid
for investment as visible from the Union Budget 2015-16. It [22] http://www.ibef.org/news/intex-to-set-up-manufacturing-unit-in-
has opened up many important sectors like insurance and rajasthan [Accessed March 12, 2015]
pension for higher foreign direct investment (FDI) up to 49

Advances in Economics and Business Management (AEBM)

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Growth and Development of Manufacturing Sector in India under 'Make in India' Mission - A Case Study of 373
Making and Implementing Right Policies

[23} http://businesstoday .intoday.inlstory/reliance- infra-buys-

pipavav-defence-for-rs-819-crore/1/216558.html [Accessed
March 12,2015]
[24] http://www.ibef.org/industry/manu£acturing-sector-india.aspx
[Accessed March 12,2015]
[25] Ibid
[26] http://www.thehindu.com/news/national/germany-eager-to-join-
make-in-india-initiative/article6802663.ece [Accessed March
14,2015}

Advances in Economics and Business Management (AEBM)

Print ISSN: 2394-1545; Online ISSN: 2394-1553; Volume 2, Number 4; April-June, 2015