Re-Making Make in India

Aakanksha Shrawan 19th April 2018

Data released by Ministry of Commerce shows a worsening of India’s trade deficit by almost 45%, rising from USD 106.2 billion in FY 17 to USD 156.83 billion in FY 18. While imports during the fiscal grew at around 19.59%, exports showed a muted growth rate of less than 10%. This slowdown in India’s foreign trade, especially after an 11% improvement in trade balance during FY16 and FY17, is worrying worrisome . If we dig a little deeper, we find that the sectors that bore the bulk of the blow is manufacturing and more specifically the labour-intensive units. This also comes at a time when the current Government’s singular focus is on its flagship scheme - Make in India which aims at making India a major manufacturing giant apart from promoting India’s exports. As per latest data, while exports of auto components increased by 21.72% during Apr-Jan 2017 and Apr-Jan 2018, imports went up by 25.7%. During the same time leather and leather product exports recorded a meagre increase of 2.10% and export growth for drugs and pharmaceuticals was restricted to only 1.21%. A major sector that has received a quantum of incentives from the government in the recent past, textiles and apparels, is also under stress. The apparel exports of India also witnessed a steep decline of around 4% during FY 17 and FY 18. According to Apparel Export Promotion Council (AEPC) Chairman HKL Magu, “… apparel exports are not only stagnating but are heading towards regression.”1 The above quoted instances provide us with three distinct reasons to believe that there is a need to overhaul the ambitious Make in India programme. First, there is a dire need to reform the rigid and multiple labour laws existing in the country. These laws force MSMEs to remain small which, in turn, doesn’t allow them to take advantage of economies of scale. While the government is already working on a uniform labour code on minimum wages, there is a dire need to expedite its imp...

Note: Views expressed in this blog are those of the author.