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Make In India Vs Make For India: What Is India's Stand? A kind of hybrid, holistic model will require a quintessential pre-requisite in the form of domestic legal/financial as well as industrial reforms

By Arjun Bajaaj

Opinions expressed by Entrepreneur contributors are their own.

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Make in India is a major national programme of the government of India designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure in the country. The primary objective of this initiative is to attract investments from across the globe and strengthen India's manufacturing sector for export.

However, this ambitious plan was criticized by economists, one of whom was former RBI governor Raghuram Rajan. In a famous speech he warned against the possible liabilities and exposures in pursuing an export-led growth model. "Make in India' pushes the standpoint of an export-oriented growth. Leveraging India's inexpensive labour and other resources to keep costs low, will boost exports to improve the domestic production base.

At the same time, "Make for India' involves production for consumption in India itself. Given that India is one of the largest consumer markets especially in consumer durables and electronics, the concept of "Make for India' could be a gamechanger. It gives our growth an independence from the international economic dependence and also helps manage India's specific needs with respect to poverty levels in the country. It furthers the idea of constructing a synergetic production-consumption cycle in India itself.

"Make For India' would be the shot in the arm the manufacturing sector needs. It would be the ground swell by which "Make in India' would succeed. By manufacturing essential technologies in India, the dependance on foreign players and companies would decrease, products would become cheaper in India, several home-grown companies could take up leading manufacturing positions and portfolios for companies around the world. Research and development—which is a severely underdeveloped segment of the Indian market as of now—would increase and use all the young, brilliant minds that the Indian education system produces but exports, due to lack of research & development opportunities. It would also generate millions of jobs, both skilled and labor intensive, and would increase India's economic stature and overall self-reliance.

A good example of this might be seen in the consumer durables market itself. India is a huge consumer of electronic gadgets and products such as mobile phones, televisions, laptops and other several homes appliance white good. The market reached INR 76,400 crore as of 2019. Almost all of this money is being pocketed by the international companies who manufacture the components of these products and send them to India, where they are only assembled. If the components were to be manufactured in India, this money would not only stay within the country, it would enable manufacturing for several other large south-east Asian markets as well.

Components and tools manufactured for India would mean they need to be stress tested for Indian conditions, which includes a wide range of use cases and environmental changes. India is a vast country with topical climate, desert heat as well as icy cold mountainous regions. Components and products manufactured for Indian conditions would automatically imply they would be applicable for a large number of countries around the world. This would further increase the capability of the manufacturing sector and produce globally renowned Indian manufacturing companies, feeding back into the Make In India programme.

Economies do not grow linearly based on just a singular, specific model, however hard we try. India needs to create a hybrid, symbiotic model, starting with Make for India, which gratifies the domestic developmental shortfall, while offering significant space for dynamically modifying to the global economic atmosphere. If India truly wants to achieve its $5 trillion economy goal, it needs to start making its own brands of popular electronic goods categories, that go on to make a mark in global markets. Our evolving industrial revolution, essentially requires a strong blend of Make for India and Make in India.

This kind of hybrid, holistic model will require a quintessential pre-requisite in the form of domestic legal/financial as well as industrial reforms. It will also require amendments in ease of manufacturing. India has deterring tax structures which have an oppositional bureaucratic environment. The monitoring and governing organizations for businesses in India, is still not expansion and innovation friendly, neither for Make in India nor Make for India. The reforms needed to smoothen the processes for both these models will be the key contributing factor to India becoming a global industrial power.

Arjun Bajaaj

CEO & founder, Daiwa

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