Making ‘Make in India’ happen in traffic industry

Giving Boost to Indian Manufacturers

The present government has set up an ambitious target and intends to push the growth in manufacturing sector to 13-15% and increase the share of manufacturing to 25% of GDP by 2022. The government is also aiming to improve the ease of doing business ranking of India from current 142 to 50.

Similar attempts have been made in the past without much success and, as a result, the share of manufacturing is stagnated at about 15% of GDP for the last three decades. The previous government set up NMCC (National Manufacturing Competitiveness Council) to enhance attractiveness of the sector. But no improvement was observed. The manufacturing output, since 2005, as reflected by the Index of Industrial Production, has only increased by the rate of about 6% and is roughly at the same level in July 2014 as was in June 2011.

If the present government has to conquer all these challenges, there is a need to take concrete initiatives at three levels of policy making. At the very first level, a reassuring fiscal framework will be required to improve the overall business environment. A single window project clearance system and a strong grievance redressal mechanism will help in achieving success at this level. At the next level, there is a need to create an ecosystem that encourages innovation. Finally, the government has to take steps to motivate entrepreneurs and SMEs.

Almost a month after the new policy was announced; the government amended some of the labour laws. Under the new system, inspectors will no longer be able to visit companies of their choice and stay there for as long as they want. But a computerized database system will decide who goes where. There is also a time limit for filing reports. An online Shram Suvidha portal has been unveiled for employers to submit one compliance report for 16 labor laws and few other measures.

Improving the Infrastructure

One of the key challenges in front of the current government is rapidly developing the country’s infrastructure. This is because infrastructure is not only critical for the movement of labour and capital across the length and breadth of the country but also is instrumental for bringing in basic development. If one compares infrastructure development of the country with China, we find that we have lagged in recent years. China had close to 23,000 route km of railways in 1951 compared with the commensurate figure of 53,500 m for India.

According to the latest statistics of World Bank, China has surpassed the country and had close to 66,000 route km of railways compared to 64,000 for India in 2012. The golden quadrilateral was an endeavor that helped India bridge the rural-urban divide. However, till today, national and state highways constitute less than five per cent of the total roads in the country. India’s industrial policy must recognise where we have important competitive advantages. Necessities like electricity supply, affordable housing with adequate sanitation facilities, as well as proper roads should be looked at holistically.

In the present scenario, if India has to compete with the world economies, if initiatives like ‘Make in India’ and ‘Smart Cities’ are to become a success, the states will have to be made partners in the infrastructure development process.

Preeti Swaminathan