February 2, 2015

Make- in-India could well turn out to be Fake-in- India

The Bush-Singh Nuclear Deal between USA & India have several objectives, but chiefly it led to the end of moratorium on transfer of technology, imposed on India due to its nuclear program.  Technology is the critical economic resource in 21st century, way more precious than the capital. The recent renewal of faith in the deal by President Obama & PM Modi is a welcome step in right direction.  Although the BJP had objected to the Bush-Singh Nuclear Deal but Modi who wish to make India a manufacturing hub, like China, has moved ahead signing the deal with USA. Modi has launches a program titled Make -in-India to provide fillip to industry in India.

Although Modi government has taken many steps to attract big ticket industry in India, there have been almost no movements on providing similar assistance and promotion to the micro & small scale enterprises in India. Most economists and politicians agree that India being a large diverse country needs millions of small scale projects capable of sustaining on their own and making India a developed country. Make in India targeted at large projects could divide the social fabric of India by making the rich more rich at the cost of average Indian citizens. Thomas Piketty has already warned the global community about need to correct the imbalance in incomes and India must take lesson.

In order to make India Inc happy, Modi government has moved with speed to persuade RBI to cut the interest rate-as the FM had viewed it as the major bottleneck- amended the land acquisition act to profit the industry and also relaxed the already unimplemented labour laws. But It has done nothing targeted at the MSME sector. The author would be delighted if any Modi men could challenge the ignorance on this issue. There is general agreement amongst economists than promotion of MSME sector could result in more job creation as against the large projects development.  Let’s enumerate the steps needed to promote MSMEs for the economic and social progress of India.

Amendments to land acquisition act help the large units alone but if the government creates SEZs particularly aimed at MSMEs it would help the sector enormously. As the capital is a major bottleneck for the MSME sector, not so for the large projects, it would be logical if land be leased to the entrepreneurs than sold. This would free the funds for working capital and marketing activities.
While working in, Udyog Sahayak, a single window industry facilitation cell of the department of industries Punjab Government at Chandigarh, I realized that though majority investors had finds but no clear idea about suitability of new project. Management consulting firms exist in India but are too expensive for the small investors. The government must advise the Industry and Commerce ministry to prepare brief project reports and make them available free of charge on the websites. These reports must be revised periodically depending upon the priority and market demand.

Though India as several schemes targeted at promotion of MSMEs, including free travel & participation in trade fairs abroad, cluster promotion and quality promotion administered through several export promotion infrastructure, but still India lacks a portal of the quality of alibaba dot com which could provide access to digital marketing to MSME sector.  If Modi government is serious about make-in-India and do not wish it to degenerate into a fake- in-India farce then it must focus on MSME sector to accord it the absolute priority, as the large projects have vast resources and skills to promote themselves. 

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