Almost a month after RBI Governor Raghuram Rajan had criticised the 'Make In India' programme of the NDA Government by saying that it would lead to a China-like export led growth path, Finance Minister Arun Jaitley on Monday said that the initiative is about manufacturing of quality products at low costs and it was not relevant whether they are sold in India or abroad.
"Whether Make in India is made for consumers within India or outside is not so relevant. The principle today says that consumers across the world like to purchase products which are cheaper and are of good quality. They hire services which are cheaper and good quality," Jaitley said at a 'Make In India' workshop.
Stressing on the importance of domestic manufacturing, Jaitley said, "if we lose out on cost, quality then we would be threatened with a situation where in we would become nation of of traders rather than nation of manufacturers."
The Finance Minister said that the manufacturing sector will continue to face challenges unless it transitions itself while keeping the quality and price in mind.
Earlier this month, Rajan had sounded a word of caution about the new Government's 'Make in India' campaign, saying it assumes an export-led growth path of China and it should rather be 'Make for India' with a focus on manufacturing products for the domestic market.
The Governor had said he was "cautioning against picking a particular sector such as manufacturing for encouragement, simply because it has worked well for China. India is different, and developing at a different time, and we should be agnostic about what will work".
Meanwhile addressing the workshop, Jaitley said the Government was determined to remove entry barriers to business and ensure a competitive tax regime to push manufacturing growth under its 'Make in India' programme.
The programme, he said, is aimed at manufacturing low-cost quality products both for domestic as well as export market.
Stressing on the need for stability in tax laws, Jaitley said India cannot afford to have polices which "rotationally change and half way through our business we find that there is a different policy from what we had planned. And that is why the retrospective taxation became the absence of stability of policy, became a defining moment against India globally".
The Finance Minister, who would be presenting the first full fledged budget of the new government in February, also said India's economic growth is expected to pick up in the current fiscal and will be "much better" in 2015-16.
"The last two years witnessed an economic slowdown. This year may be somewhat better, and next year will be much better," he said.
The Government expects the GDP growth to be 5.5 per cent in 2014-15, up from 4.7 per cent recorded last year.
On ease of doing business, Jaitley said, "what is it that has happened in the last few years that added to complication of doing business (in India). Was it the uncertainty over the tax administration (that) has scared investors awayIJ Has it not resulted in close down of plants which were comparable to global competitorsIJ"