Narendra Modi’s tri-nation visit has opened up new avenues. It has given a major boost to the manufacturing sector through Make in India. In monetary terms, the gains are limited. But the visit has given a new look to India
Prime Minister Narendra Modi has taken the right decision to sell the Make in India dream to France, Germany and Canada, to bolster their (and our) economies. By doing so, he has ensured the success of Make in India. Despite a sagging economy, the countries warmly accepted the invitation of Mr Modi, who rolled out a roadmap for hassle-free investment.
During his nine-day tri-nation tour, Mr Modi sought to boost trade through the Make in India campaign with an aim to persuade companies to establish manufacturing plants in India. At the Hannover Messe, Mr Modi urged business leaders to start manufacturing in India, saying that his Government was cutting regulations and reducing red tape to make it easier for companies to work there. “For me, Make in India is not a brand; it is a new national movement”, Mr Modi said.
The visit has opened up new vistas and held made many promises. It was a remarkable achievement to get assurances from French President François Hollande and German Chancellor Angela Merkel. The French deal for the purchase of parts by Airbus will be a two billion dollar gain for India. Also, Ms Merkel is trying to make the free-trade agreement between EU and India a reality.
The $283 million uranium deal with Canada for Indian nuclear plants may be insignificant for many, but it is a remarkable one. It ends the 40-year ban Canada had imposed on India since the Pokhran I testing in 1974. The deal shows that Canada is once more keen on doing business with India.
The supply of uranium will help Indian nuclear plants to sustain. Also, it will ensure supplies for the new ones being set up. This is the second major uranium deal after a similar pact Mr Modi reached with Australia.
Ms Merkel and Mr Hollande may have problems, as Europe is going through a recession period. The European Central Bank is under pressure from all European Governments for easing monetary policy. Ms Merkel is seen as the queen. And Europe expects her to lead towards better days and job creation. She has invited more investments from business houses in India. Mr Modi did not keep this a secret when he implored Germany to increase investments in India to balance the Indian gesture.
However, for India, it is a tough deal with Germany. India has 1,600 collaborations and 60 joint ventures with German companies. For long, Germany, has set up tool rooms to generate a workforce of skilled workers in India. Even the Siemens Technical Institute, which the Prime Minister recently visited, has a unit in Bangalore. Germany has collaborations in science and technology. But, of late, there has been a reduction in the funding of Deutscher Akademischer Austauschdienst fellowship programmes. Even the trade with Germany has slumped to 16 billion euros.
Germany acts slowly when it has to open up its purse. Baba Kalyani of Bharat Forge aptly summed it up: “Whatever private discussions that I have had with a number of my friends in the German industry, they are impressed, they are motivated. But nobody is going to jump in and open the floodgates, and I don’t think that is desirable. However, I think everybody is going to start looking at India in a new and a different way. Everybody is going to start looking at the areas where they can invest, whether it is infrastructure or power. There was a lot of discussion on power and infrastructure. The Germans, rightly believe that unless you have high quality and 100 per cent power, you really can’t develop business. Unless you have good infrastructure you really can’t make business productive.”
Even France is not keen to do business without conditions attached. For French companies like Areva, India is a good destination to do business, but it has reservations. The aim is to maximise profits. Companies may invest in nuclear energy because Europe and the US have stopped adding to the nuclear power capacity.
Apart from being expensive, nuclear energy radiation and waste management are considered to be expensive. The market in Europe is closed and the shutting down of plants is an expensive proposition. Hazardous radiated waste needs to be securely managed.
France also does not want to end its monopoly in strategic technology. So, it went slow and puts many conditions for the production of Rafale fighter planes. India found the manufacturing of Rafale at Hindustan Aeronautics limited, to be highly expensive, as Dassault Aviation imposed conditions.
Mr Modi took the right decision to settle for the purchase of 36 Rafale planes for two Indian Air Force squadrons. It gives India the advantage of being less dependent on a few sets of planes. Strategically, it suits the IAF to have varied technological wonders.
In immediate monetary terms, the gains are limited. But it opens up avenues. The three countries are likely to look at India in a new way. The free-trade agreement with Europe is not easy. The visit has opened up India’s vision to boost manufacturing, so that new destinations can be conquered.