Sunday, November 16, 2014

Goodbye to Jugaad: How Modi government plans to roll out 'Make in India' to revive manufacturing

The Economic Times
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Goodbye to Jugaad: How Modi government plans to roll out 'Make in India' to revive manufacturing

By , ET Bureau | 16 Nov, 2014, 06.34AM IST
 That pulse has of course quickened since the Narendra Modi sarkar picked up the reins, and on it are the fingers of moneybag investors, both foreign and Indian.  That pulse has of course quickened since the Narendra Modi sarkar picked up the reins, and on it are the fingers of moneybag investors, both foreign and Indian. 
Since the second half of 2014, Indian CEOs have almost magically transformed into an upbeat and zealous lot, spotting along with hope on the nottoo-distant horizon those inevitable green shoots sprouting on what at the beginning of the year resembled distinctly parched land.

In line with that bubbly and breezy mood are the results of an online survey of a little over 100 head honchos of India Inc conducted jointly by industry lobby CII and the Boston Consulting Group (BCG), and whose results were released a couple of days ago. In their own words, "the CII-BCG Manufacturing Leadership Survey 2014 was launched to gauge the pulse of industry leaders on the current scenario and future prospects for the Indian manufacturing sector". That pulse has of course quickened since the Narendra Modi sarkar picked up the reins, and on it are the fingers of moneybag investors, both foreign and Indian. The survey for its part displayed in abundance the optimism of domestic CEOs: for instance, 85% of those surveyed expect manufacturing growth of between 5% and 10% in the next five years (against 3.4% in the past five).

That's the headline number. But it gets better. One of the posers shot at the corporate chieftains was what would they like Indian manufacturing to be known for by 2020. The options: The 'next Germany' (most preferred for top-quality manufacturing), the 'next China' (most preferred for low-cost manufacturing), global leader in low-cost innovation, or jugaad, or tech and process leader in select manufacturing sectors, like Thailand.

New-found Ambition

The most popular answer was not unpredictably a reflection of the new-found ambition and optimism — a year ago if CEOs said they expect India to be the next Germany in six to seven years, they would have been considered delusive, and would even be in real danger of getting the boot; not any longer. All of 37% of those surveyed want India to be known as the next Germany; only 21% wanted India to usurp China's position as a low-cost manufacturing hub; and best of all, less than a fifth reckoned India should pursue the path of jugaad.

The confidence that India Inc exudes — and which is captured succinctly by the CII-BCG survey — stems to a large extent from an initiative Goodbye to Jugaad: How Modi government plans to roll out 'Make in India' to revive manufacturingGoodbye to Jugaad: How Modi government plans to roll out 'Make in India' to revive manufacturingprime minister Modi announced from the ramparts of Red Fort on Independence Day: Make in India, a programme that aims to boost investments and encourage innovation by creating world-class manufacturing infrastructure and making it easier to do business in transparent and credit-friendly environs. And, yes, if India has to get there, jugaad has to go out of the window.

In the next few months, the government will roll out the Make in Indiacampaign state by state, following a hub and spoke model (the hub being Delhi). Each state would be accorded a sector that it has earned its spurs in. For instance, automobiles could well be the focus sector in Tamil Nadu (home to factories of Ashok Leyland, Ford,Nissan and Hyundai, amongst others) or Haryana (Hero MotoCorp, Honda Motorcycle & Scooter India and Maruti Suzuki). "The challenge is to make this manufacturing campaign exciting. As we go to the states, the campaign will be blended with cultural and other entertainment programmes so that the locals get on board," says a team member working on the campaign on the condition of anonymity.

Also, roadshows are being planned in 12 industrial towns, including Coimbatore, Pune and Indore. Here, the focus would be to woo small and medium enter-prises (SMEs). As ET Magazine has learnt, there will be a special effort to spot "smart makers". The idea, according to the plan, is to motivate young people to turn manufacturers. "The next generation of factory owners are well-educated but they are moving away from their fathers' or grandfathers' factories. Our aim will be to bring them back to manufacturing," says the team member.

The lion symbol, which Modi himself chose for its tenacity and courage, is also being developed for language markets in India and abroad. The symbol will remain the same, but local fonts — both Indian and foreign languages — would be used for the words Make in India. So, in Japan, it would be in Japanese and in Germany, it will be in German.

"In Make in India, there is a huge emphasis on quality and sustainability. While India has been a reluctant manufacturing nation and a late urbanizer, there are huge advantages. We can today learn from the rest of the world, use the latest technology and leapfrog," saysAmitabh Kant, secretary, department of industrial policy and promotion (DIPP), the nodal government agency managing the Make in India campaign (see This is just the beginning).

The Challenges

As a bureaucrat, Kant was the key driver in some of India's most successful tourism campaigns of the past, like God's Own Country and Incredible India. He was also CEO of the Delhi Mumbai Industrial Corridor Development Corporation, the nodal entity entrusted with the task of developing one of India's most ambitious projects, the almost 1,500-km Delhi-Mumbai Industrial Corridor, which will run through six states, which in turn will house seven smart cities.

Make in India, in comparison, is even more challenging — and to that extent Kant's most ambitious project yet. Consider the enormity of the task against this backdrop. Last month, India's position dropped further by two places to 142 out of 189 nations in the World Bank's global ranking on ease of doing business. A clutch of African nations (from Sierra Leone to Ethiopia to Mozambique), Kiribati (google it) and even Pakistan are ahead of India. As Godrej Group chairman Adi Godrej says: "India must improve on the ease of doing business. Giving permissions has to be quicker and there should be no delay in setting up of businesses."

Here's a gist of the mindboggling challenges ahead, which would have to involve multiple ministries, departments, consultants and experts: For starters, basic transport, power and such infrastructure have to be created, in many places virtually from scratch; then go for investment-led infrastructure creation, like industrial corridors, smart cities and export-oriented infrastructure; initiate labour reforms to improve productivity; hasten approvals and clearances, and make access to credit's a long, long to-do list. To sum up the grand objective of Make in India in one line: revive manufacturing, become globally-competitive and then stake a claim for global leadership. Goodbye to Jugaad: How Modi government plans to roll out 'Make in India' to revive manufacturingGoodbye to Jugaad: How Modi government plans to roll out 'Make in India' to revive manufacturingIt's a dream Modi, Kant and a slew of India Inc CEOs are now daring to dream. For now, however, as Godrej puts it, Make in India is an effective "motivational" campaign, and that itself is strikingly different from the lacklustre initiatives of previous regimes to boost manufacturing. "The campaign has already attracted attention of a large number of foreign companies," he adds. To be sure, Make in India today is still a blueprint — an attractive one created by advertising hot shop Widen+Kennedy, whose executive creative director V Sunil has worked with Kant in the past (see Made in W+K). The challenge is to get the lion roaring and striding into at least 25 industrial sectors — sectors that can lean on India's core strengths and those that can benefit from import substitution, from defence and railways to food processing and wellness; into all states; and into all manufacturing firms, from the Ambanis and Adanis to the smallest of SMEs.

India Inc Excited

"India should be comparable at least to any other Asian or neighbouring countries in terms of time taken to establish a business," says Maruti Suzuki chairman RC Bhargava. In the near term, perhaps Bhutan, Maldives, Nepal and Sri Lanka would be good benchmarks, ranked as they are 125, 116 and 108 and 99, respectively, on the Ease of Doing Business parameter. Bhargava adds that tax laws too need to be fixed.

"After all, India today has the highest number of tax litigations in the world." Microsoft IT India MD Raj Biyani feels this is the opportune time for the government to act in a bold manner, be willing to make radical changes — all the way from laws and regulations at the macro level down to execution at the grassroots. And that's because, as Biyani argues, there has now been a confluence of factors: like a decisive mandate, political will and an alignment of bureaucracy with passionate officers driving the Make in India campaign; and, finally, the support from industry.

"Manufacturing multinationals can be early adopters of the Make in India campaign by sharing best practices from their experiences operating in other countries.

Technology MNCs can be enablers of the backbone and infrastructure needs," Biyani adds.

Early global response and reaction are encouraging. Naoyoshi Noguchi, chief director general of Japan External Trade Organization (JETRO), says he has begun receiving a larger number of queries from Japanese companies asking about India's business environment after the launch of the Make in India campaign and prime minister Modi's strong pitch during his visit to Japan two months ago.

MNCs Game for It, Too

Also, if the log-in data of Make in India's official website is any indication (ET Magazine has reviewed it till October 20), interest has been generated across the world, more specifically in countries such as Spain, the UK, the UAE, Singapore and the US. And as much as 95% of the 3,056 queries on the Make in India campaign emanated from SMEs.

Amongst the big boys taking a close look at the Modi-led initiative is German engineering and electronics giant Bosch. "There is a need for a substantial change if India has to catch up and become more competitive in manufacturing," says Bosch Group India president Steffen Berns.

One way to do that is by getting companies like Bosch to commit more resources to India. And Berns seems to be in a mood to do that now. "Bosch wants to manufacture more in India and supports PM Modi's Make in India initiative." Modi and Kant will need many more like Berns in the days and years ahead to meet their ambition of pitchforking India into a global leadership position in manufacturing.

With inputs from Malini Goyal and Suman Layak

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