One cannot rule out the possibility that if large multi-national corporations are allowed a free hand, they may wipe out Indian companies and industry. Make in India will then become a domain for foreign giants. The Government must take precautionary and protective steps
Prime Minister Narendra Modi’s Make in India campaign aims to make the country a manufacturing hub. It was launched in September 2014 but the people are waiting for a miracle to happen — which is not happening. But offers from investors across the world are coming so that the manufacturing process begins in India.
Make in India is different from swadeshi indigenous production. The aim is to increase diverse production of goods in India. Manufacturing contributes just over 15 per cent to the gross domestic product. Through Make in India, the aim is to increase this contribution to 25 per cent, as is the case with other developing nations of Asia. Through this process, the Government expects to generate jobs, attract foreign direct investment and transform India into a manufacturing hub.
While many would prefer indigenous efforts, it needs to be understood that manufacturing is not a stand-alone process — it is a gradual process. It needs buyers. Production in the country by established foreign manufactures will ensure marketing, as most offers are done by large houses with established chains across the world. Finding buyers is an area of cut-throat competition is like riding piggy-back to progress.
One year is too short a time to assess the programme. During this time, the campaign has got far-reaching responses. European aircraft manufacturer Airbus is keen to do business. General Motors has agreed to invest one billion dollars (Rs6,400 crore) to turn around its struggling Indian operations. Fiat Chrysler Automobiles will invest about Rs2,000 crore to manufacture a range of C-segment premium sports utility vehicles under the Jeep brand in India and export these SUVs to countries such as Australia, South Africa, and the United Kingdom.
Hitachi has agreed to set up auto-component plant in Chennai and reports say that Huawei will invest $170 million for setting up a Research and Development centre. Japan’s Soryu-class conventional attack submarines have garnered interest in India with Australia too in talks with the Japanese.
Sony, lenovo, Apple and Chinese company Oppo want to start smart phone manufacturing in India. Microsoft that had initially shown interest has withdrawn. Smart phones constitute a mere one percent of the global market. While it would certainly provide jobs, it will not give a major advantage to the country in the global market.
India wants investment in 33 areas beginning from automobile to heavy engineering, power and energy, railways, space, steel, telecommunications etc to simple wellness. All those aspirations are yet to be fulfilled. The companies are not yet keen on transferring technology. It is evident from the refusal of Rafale to set up a base in India. The deal to build 108 Rafale warplanes in India by Dassault Aviation had to be shelved and India had to satisfy with buying 36 French-made fighter jets.
In cement, manufacturing was indigenous. But during the UPA regime, Swiss company Holcim has taken over the two majors Associated Cement Companies and Gujarat Narmada Valley Fertilizers & Chemicals. Its repatriation on ‘technical fee’ and profit is more than the real investment. This is called Coca-Cola-type investment, where the real investment is low but repatriation is high. Coca-Cola imports concentrates from its parent company in the US. It pays almost five times the actual price. In business terms, it is unethical and it is technically illegal. That should be a matter of concern. China is also suffering from this. Its recent slowdown is attributed to huge profit-taking by foreign investors.
The growth of several successful hydrocarbon provinces in countries like Angola, Azerbaijan and Iraq has resulted from strategic partnerships. In India too, there is a large opportunity to create such win-win partnerships in enhanced oil recovery, and difficult high-pressure, high-temperature and deep-water projects. This will need over $250 billion in investment. Another $20 to $30 billion investment is possible in natural gas pipelines. It is a strategic area. Indian companies have virtual monopoly and there is circumspection of compromising on the strength.
India’s wine industry is expanding. last year, the country’s wine production hit a record 17 million litres, with export sales rising 40 per cent year-on-year touching over $40 million. This rapidly growing sector has further scope for expansion. Foreign investment norms have been eased and raised to 100 per cent. But not many queries are there from abroad.
Indian companies have made strides in pharmaceuticals, leather, and even automobiles. Foreign companies do not find it easy to compete with them. They adopt devious ways to scuttle them by pressurising their home Governments. Indian diplomacy somehow has not been that pro-active in protecting home growers.
The erstwhile colonial powers are in a new colonial mode through their multinational corporations to keep a check on real Indian growth. With their colonial loot, they remain powerful to prevent countries like India from becoming their competitors. Oxford University in a study has found that they do not automatically transfer technology. The United Nations Conference on Trade and Development has found that technology transfer is largely limited to the developed countries. World Bank study says that for having the maximum leverage of foreign direct investment, some checks are necessary. The MNCs transfer technology only under pressure.
It is a difficult arena. If conditions are imposed, the little FDI that India is getting may disappear. If it is not done, the country may have to pay a heavy financial cost. There is also a threat that if allowed a free hand, the MNCs can wipe out Indian companies and Make in India can become a domain of foreign giants. In some cases, it is evident that MNCs are in league for the fall of the rupee.
The Modi Government faces enormous challenge. Industrial production remains stagnant. The number of job seekers, with rise in population, is growing. Most MNCs are virtually repatriating much more than they legally should. Inviting them is fine, but protecting indigenous interests is also the need of the hour. The investors cannot go on free-run. They should be told to state what technology they are bringing, how they are reducing energy consumption and their detailed method for investment and repatriation. They cannot become another black money producer through supposedly legal means.
Be it hi-speed trains, atomic reactor or green energy, the road map has to be straight and just. Still the red carpet that has been rolled out should remain there and merely the fringes are needed to be mended. The world is keen on a new order; India has to tell investors that they would also have to abide by it. Carefully re-framed Make in India is propitious.