Make In India: A success or a failure?

Written by Sagarika Mukhopadhyay

Prime Minister Narendra Modi in the year of 2014 on the month of September launched an initiative that aimed at building India as a global manufacturing hub. This move is expected to encour age both multinationals as well as the domestic companies to invest in India. This move also expects to raise 25% of the GDP on the basis of these companies’ assistance. Moreover, such a move has led to the ushering of new opportunities, promotion of FDI, development of the manufacturing sector, etc. Media outlets have shed a light that this move aims to involve “25 sectors of the economy which range from automobile to Information Technology (IT) & Business Process Management (BPM), the details of each can be viewed on the official site (

Following the launch, investments in the field sky-rocketed as commitments worth crores were announced. By 2015, India was considered as one of the most desirable destinations for FDI, surpassing the USA and China. Not only national but states too introduced their own initiatives in this arena. However, it must be noted that such a transition is not a new one. History will reveal that such modifications regarding factory production have been in place since always. Nonetheless, this initiative put forth an ambitious goal regarding making India a manufacturing hub.

The Government identified targets and put in place n number of policies to achieve this. The three major objectives were:
• An increase in the manufacturing sector’s rate to 12-14% per annum which would immediately increase the sector’s share in the economy
• Creation of million additional manufacturing jobs in the economy by 2022
• Ensure that the manufacturing sector’s contribution to GDP is increased to 25% by 2022 (revised to 2025) from the current 16%.

Nevertheless, it should be noted that such initiatives are usually bound to be a victim of several economic problems and casualness with regards to policies. Governments are often seen invoking that macro-economic problems are the root cause of the failure. Such an argument has also been used by the present Government. M. Suresh Babu writes in The Hindu that the present Government has been often seen to reiterate the point that they have inherited “an economy riddled with macroeconomic problems, and demand more time to set things right.” Moreover, he also points out that “the last five years witnessed slow growth of investment in the economy. This is more so when we consider capital investments in the manufacturing sector. Gross fixed capital formation of the private sector, a measure of aggregate investment, declined to 28.6% of GDP in 2017-18 from 31.3% in 2013-14 (Economic Survey 2018-19).” It should also be mentioned that during this period, the share of the public sector remained the same whereas the share of the private sector decreased almost from 24% to 21%.

It has been revealed that this initiative had two major lacunae:
• A large number of the schemes relied way too much on the FDI and global market for production. This created a problem in the sphere of production as it had to follow the demand system of elsewhere.
• Policy makers overlooked the third deficit of our economy, namely, implementation. M. Suresh Babu explains that “while economists worry mostly about the budget and fiscal deficit, policy implementers need to take into account the implications of implementation deficit in their decisions. The result of such a policy oversight is evident in a large number of stalled projects in India. The spate of policy announcements without having the preparedness to implement them is ‘policy casualness’. ‘Make in India’ has been plagued by a large number of under-prepared initiatives.

But, why did it fail?
Firstly, 12%-14% growth rate is a little too much to match up by the Industrial sector. Such a vision can be over-ambitious. Secondly, the policies devoid of any understanding of the domestic economy brought together several sectors of the economy thereby losing focus on the one it aimed to boost. Thirdly, the rise of trade protectionism and uncertainties of the global economy inevitably led to the failure of this move.

In such a situation, the Government needs to understand policies that do not intend to understand the Industrial sector will obviously not aid such a move. It should also modify its complete reliance on the foreign economy for an economic boost of the nation. Moreover, a quantum jump is very much utopian in nature and a more pragmatic target needs to be set for the success of such a scheme.

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