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The “Make in India” Experience to Boost Development and Self-Reliance

This article was initially published in the Revista Seguridad y Poder Terrestre
Vol. 3 No. 3 (2024): July to September
https://doi.org/10.56221/spt.v3i3.64


Summary

In 2014, the government of India launched the “Make in India” initiative in a context of crisis that gradually permeated the sentiments of the Indian citizen, becoming the flagship program of the nation. It provided a sure north and a guiding path to realize its ambitions of regional leadership, growth and security. Moreover, statistics show a favorable and remarkable trend in the region. The change towards the opening of investments, never seen before in the territory, as well as the schemes developed for its better implementation, are part of the details described in this article. It also explains the main strategies to achieve the proposed objectives, the need to be self-sufficient in a scenario of permanent threats and how, through the national and defense industry, part of the national power and potential is consolidated. Finally, the national reality and the current context in which the country lives require assuming clear positions regarding the emergence of this new power and trying to outline ideas and projects to take advantage of and benefit from its growth. It also stresses the importance of always moving forward hand in hand in matters related to development and security.

Keywords: “Make in India”, Defense Industry, Self-Reliance, Regional Leadership, Foreign Investment, Economic Growth.

Introduction

In the early 2010s, Varuni Sahni,[1] a renowned professor of international relations as well as a researcher and scientist, wondered why India is important and why it is so interesting in the world order. In those years, descriptions of India were not very encouraging, since, in order to keep its borders safe from existing threats, the country depended on arms imports, being a recurrent victim of terrorism, high levels of violence and internal division. At the time, reports pointed to poor performance in socio-economic development, both in absolute and relative terms, making it difficult to build a leading nation in the region.[2]

The author mentions four different but interconnected key issues related to its security that prevented India from looking promisingly into the future, as if they were major burdens that immobilized the country. These include: the task of working on nuclear deterrence, unstable borders, dependence on arms imports and terrorism;[3] ack of infrastructure such as ports, airports, roads, hospitals and schools; and technological limitations and energy dependence, which further complicated the situation.

Since then, ten years have passed since the official launch of the “Make in India” initiative. The country has undergone many economic and social changes that mark its destiny towards a much better future, carrying in its conscience the yearning and the need to lead in the Indo-Pacific region. In this sense, the economic figures support this trajectory, strengthening the nation’s security.

This article analyzes in detail India’s achievements in ten years under the “Make in India” project. It also describes the most important strategies and schemes implemented, as well as the relevance that the defense industry is taking, based on forward-looking policy decisions, which ensure the country’s prominent presence and influence in the South Asian and Indo-Pacific region.

To this end, first of all, relevant characteristics of India, the background of the proposal and the strategic scope of its implementation, as well as the obstacles and barriers it faced, will be presented. Subsequently, some approaches that justify the implementation of the initiative in this geographical area will be presented. Finally, the regional and local situation will be analyzed in relation to the project, with the aim of strengthening relations with the country and developing capabilities to promote the defense industry as a support for national security, highlighting its impact on the territory from the perspective of national interests.

Relevant Data and Background

Factors such as its territorial extension of 3,287,263 km², geographical location that positions it as a subcontinent on the main commercial maritime route between Asia and Europe, a population of 1,399,179,585 inhabitants,[4] the Hindu religion that comprises more than 79.8% of the population, and a millenary culture with more than 4,600 years of antiquity, continuously orient towards the achievement of the desired regional leadership and the strengthening of strategic autonomy.[5] These also represent a challenge for the nation’s rulers and leaders, who must design appropriate public policies. The importance of these elements ensures that India is considered a middle power. In this regard, India has already directly expressed its aspiration for a permanent seat on the Security Council with veto power.[6]

With the assumption of office by Prime Minister Narendra Modi, the foreign policy of Non-Alignment has been replaced by Multilateralism, effectively addressing threats such as terrorism, territorial disputes with its neighbors, as well as issues related to climate change and disaster prevention. In this way, it has forged a relevant, power-balancing presence in the Asian region.[7]

The economic progress achieved is very remarkable and has caught the attention,[8] given that the last fiscal year grew by 8.2% in the period from April 1, 2023 to March 31, 2024, surpassing all governmental and international organizations’ estimates, which foresaw an increase of 7.6%.[9] In addition, industrial development has received full support and impetus from the government, reaching 9.9% in the same period, the highest growth recorded in the industrial sector globally. According to International Monetary Fund (IMF) projections,[10] since 2022 India has positioned itself as the fifth largest economy in the world, displacing the United Kingdom and being surpassed only by the United States (US), China, Japan and Germany.

This economic boom strengthens India’s regional influence, making it an active player in promoting peace and mediating the stability and prosperity of its neighbors. Its strategic geographical position in the Indian Ocean gives it a significant role in the regional sphere and has aroused the interest of world powers in the Indo-Pacific, such as the US, with which it maintains a strategic partnership in security and defense, joint efforts for democracy and a growing economic exchange,[11] with the obvious intention of balancing the influence of the Chinese giant.

The remarkable achievements of the last decade are largely due to the commitment to “Make in India”,[12] an initiative proposed and presented by Prime Minister Narendra Modi in September 2014 to boost economic development in various sectors. The concept is to turn India into the global epicenter of design and manufacturing, aspiring to be the main factory in the world.[13] According to economic experts, 2014 was the right time to do something different for India in the face of the impending crisis, taking advantage of its huge young workforce and available resources. Profound reforms were needed to facilitate investment and boost confidence.

The initiative adopted combines the urgency of initiating reforms for sustained economic growth through foreign and domestic investment with the need for long-term thinking to consolidate regional leadership. This vision is based on India’s rich history as one of the oldest civilizations on the planet, with a millennia-old culture and traditions and a unique philosophy of life, aspects that drive the participation and support of the population. The changes have been profound and include actions ranging from breaking paradigms and bureaucratic barriers to the adoption of a new mindset by Indian citizens.

To begin with, “Make in India” was disseminated and presented to all sectors, developing an overall three-pronged strategy.[14] First, it sought to inspire confidence in the nation’s capabilities among potential overseas partners, the Indian community and citizens at large. Second, a framework was established to manage a large amount of technical information on 25 sectors initially identified. Finally, the third strategy focused on reaching out to a broad local and global audience through social media, keeping them continuously informed about opportunities, reforms, among others. Special attention and detail was given to building a new support structure for interested investors, offering permanent personalized assistance and ensuring the availability of information on all types of electronic devices, with an emphasis on mobile devices.

The initial proposal was to attract domestic and foreign investors who would bet on India, obtaining profits and facilities that they would not find in other markets. The number of inhabitants made a substantial difference and an advantage in profits, due to low-cost labor, in addition to a potential growing domestic market. All this was done in a decentralized manner, taking advantage of the vastness of its territory. With the implementation of “Make in India”, the largest manufacturing transformation the world has seen in recent years was achieved in the first instance. India was stepping up to create the right mechanisms to drive investment, foster innovation, develop skills, protect intellectual property and create the best manufacturing infrastructure in every sector and in every class.

For the first time since its inception, India was opening its doors to investment in unthinkable sectors such as railroads, defense, insurance and medical device technology, among others, making a total of 25.

Foreign direct investments (FDI) during 2022 and 2023 were $70.97 billion, with total FDI capital inflows amounting to $46.03 billion. In 2023, India marked global dominance by becoming the world’s seventh largest exporter of services, registering a growth of 32.7% between April and September.[15] According to the Ministry of Finance, it experienced a GDP (Gross Domestic Product) growth of 6 % in 2023 and is expected to grow by 6.8 % in 2024,[16] being one of the few economies to grow at that rate.

Objectives, Reforms and Strategies of “Make in India”.

Jawaharlal Nehru decía:[17] “The enterprise of understanding and describing the India of today would be a task for a brave man; to say anything about the India of tomorrow will already border on foolhardiness.” The country is now very different from what it was 10 years ago. The “Make in India” initiative has set its future on course with no turning back. Expansion of the manufacturing and fabrication sector at a rate of 12% and/or 14% per annum, generating 100 million manufacturing jobs in the economy by 2022 target and ensuring manufacturing’s share in GDP growth by increasing it by 25% by 2022 target (then revised to 2025),[18] are being achieved. The government is focusing on strengthening four key aspects: new processes, new infrastructure, new sectors and new mentality.

New processes involve the reform, publication of norms and provisions for attracting foreign direct investment and the promotion of business partnerships, which are aligned with World Bank (WB) parameters. New infrastructure focuses on developing industrial corridors and building smart cities, with high-speed communication technology and services, in parallel with aggressive training of the labor force to acquire skills and capabilities in line with the requirements of the new investments. New production and investment sectors, authorizing, for the first time in history, 100% foreign direct investment in areas such as railroads and various constructions, as well as 100% investment in defense and the pharmaceutical industry. And New Mentality implies a change, acquiring a new way of thinking about the role of the government as a regulator in a market of free competition.

The impact of the implementation of reforms and programs of facilities for investment and facilities for doing business is demonstrated in the jump to 63rd place from 130th place out of 190 countries in the world, according to 2019 WB data. This index of facilities is one of the most important to which foreign investors turn to when making decisions.

Accompanying Schemes

It is not only enough with reforms and granting facilities to investors; it is necessary to make a difference and present a country with the right conditions to receive the desired investments. In this sense, the Government of India designed 10 schemes to provide such support, first identifying the existing weaknesses and vulnerabilities:

1. Skill India: has the mission to help build job skills in at least 10 million Indian citizens, considering that only 2 % of the workforce has skilled labor training. This first scheme is fundamental to the initiative.

Start-up India: Seeks, under a sustainable ecosystem, to facilitate growth and enhance business initiatives, managing a sustainable economy for large-scale development.

3. Digital India: Focuses on the digital transformation of the country to empower the economy. Through this scheme, the Government implements the transformation of the Indian society, under parameters of digital empowerment, such as e-governance, emphasizing the central service to the citizen.

4. Pradhan Mantri Jan Dhan Yojana: It is a financial inclusion program and access to the financial system, insurance and affordable pension for the majority of the low-income population, so that they are not excluded from the benefits of “Make in India”.

5. Smart Cities: It directs the effort towards the transformation and rejuvenation of old Indian cities, with an ambitious target of building 100 smart cities. Along with this goes the AMRUT scheme, referred to as Mission for Rejuvenation and Transformation of Urbs, which seeks to improve basic public services and amenities offered by cities to foreign investors, making credible the offer of investment in spaces with facilities and without energy dependence for factories, with the goal of renovating 500 cities across India making them easier to live in and, above all, inclusive.

6. Swachh Bharat Abhiyan: Also known as Clean India Mission, it focuses on making India a sanitation nation, promoting cleanliness and hygiene, one of the weaknesses in the habits of the majority of the low-income population.

7. Port Development: Promotes the country’s port development, seeking to strategically lead maritime trade in the region. With 7,517 km of coastline and almost 14,500 km of potential navigable river waters, it is essential to have ports and shipyards prepared for international trade of indigenous production.

9. International Solar Alliance (ISA): India’s international relations approach and leadership are presented with an innovative project involving 121 countries located between the Tropic of Cancer and the Tropic of Capricorn. The goal is to promote research and development of technologies to harness solar energy. Called the International Solar Alliance (ISA), this initiative has the vision of getting all member countries to make the sun shine brighter together. Its mission is to bring light to every home, no matter how remote. This innovative idea seeks to harness and share solar technology to benefit countries that need it most due to their geographic location

10. Accelerating the Growth of India’s New Ideas and Innovations, known by its acronym AGNII: Aims to innovate the country’s ecosystem for people connectivity and assist in the commercialization of innovative products.

Development of the Defense Industry

In a speech delivered by Prime Minister Narendra Modi on August 15, 2014, on the occasion of Independence Day, a month before the official launch of Make in India, he expressed a message to all countries of the world, “…come to India and manufacture your products in India, go and sell your Indian made products in any country of the world.” Modi stressed that India has the skills, talent, discipline and the desire to get things done, offering the opportunity for them to come and manufacture in India.[19] He stressed that India has the skills, talent, discipline and the desire to get things done, offering the opportunity for them to come and manufacture in India. The following month, in September 2014, “Make in India” was officially launched, focusing on 25 sectors or clusters including automotive manufacturing and components, strategic aviation and defense sector, biotechnology, chemicals, construction, electrical machinery, electronics, processed food, information technology, business management, leather and footwear, media and entertainment, mining, oil and gas, pharmaceuticals, ports and shipping, railroads, renewable energy, roads and highways, space industry, textiles and garments, thermal power, tourism, hospitality and wellness.

The reforms immediately adopted focus on incentives and facilities, ranging from changing laws to liberalizing very old guidelines and updating regulations in line with the proposed objectives. In this way, the bureaucratic problem of setting up a company or manufacturing a product in the country had been unbureaucratized and reduced to just a documentary management of authorization at the national level. The costs of doing business were reduced, administrative simplification, digitalization and rationalization were achieved, as well as a decrease in the amount and quantity of taxes. In addition, domestic industry was encouraged through public procurement laws that oblige all state entities to purchase domestic products, providing additional benefits, among other incentives.

Through “Make in India”, self-sufficiency is also being pursued. Threats have been identified and are expected to protect the country’s territory and population. The defense industry plays a leading role in this objective, with policies aimed at promoting self-sufficiency in equipment and armaments. The acquisition of updated technology, products and services for the three Armed Forces and other Security Services is facilitated. In this process, small and medium-sized industries play a significant role along with large industry. All these initiatives are based on principles of public accountability, transparency and competition on a level playing field. The procurement of defense equipment for the Indian Armed Forces has been rationalized, giving preference to indigenously designed, developed and manufactured weapon systems.

The reservation of up to 100% investment for Indian vendors benefits those exporting defense products, technologies and spare parts, complemented by the creation of the Defense Innovation and Excellence Program to support emerging companies. Most of the manufacturing process of equipment, spare parts, maintenance or repair is required to be carried out in the country.

To facilitate business with foreign partners, a Project Management Unit was established as a strategy to promote self-sufficiency. This increases compensation for companies that fully manufacture defense equipment and weapons. In addition, the Government supports through the Armed Forces infrastructure, allowing for varied trials and testing and avoiding duplication of trials by Indian buyers. Testing scopes have been modified and repetitive bureaucratic inspections have been eliminated to improve the efficiency of the process.

India’s problems with its neighbors Pakistan and China over the Kashmir region, the imperative need to become a counterweight to China in the Indo-Pacific, despite major differences, and to ensure regional leadership through peacekeeping, compel this nation to design strategies of self-sufficiency in all sectors, especially in defense. In this way, India is consolidating its leadership at a crucial historical moment for its security and defense, marking a significant difference from ten years ago. The Government of India has clearly delineated its position and expanded its vision towards the aerospace industry. In addition, two defense industrial corridors have been announced as part of the 21 industrial corridors planned under “Make in India”.

The defense industrial corridors, located in two key federal states for national security, will act as economic development clusters, taking full advantage of the human resources and infrastructure to be provided by the government. Comprehensively, the approved public policies also involve the Indian private sector in the manufacture of high-tech defense equipment through long-term strategic partnerships with the country’s leading, pre-qualified companies. They can partner with foreign global OEMs for large-scale contracts, always seeking technology transfer and manufacturing know-how for their establishment and domestic production, integrating them into the supply chain.

Self-sufficiency in the defense industry sector generates an environment of tranquility and confidence not only for the Indian government and its citizens, but also for the domestic and, above all, foreign investors, who see in the country a backing for their investments. The strategic stature of a nation aspiring to regional or global leadership is based on the capabilities and strengths of its Armed Forces. Since the State is a living and dynamic entity, its welfare is supported by the Armed Forces it possesses. It is not possible to conceive of a powerful and leading State or country with a weakened and dependent Armed Forces, which is why the promotion of the defense industry in India, through regulations and practical measures, is a matter of concern.

“Make in India” is not just a plan or a dream; it is a reality that is being implemented and readjusted as needs warrant reorientation. What is certain is that strong relations have been established with the United States. Companies like Coca-Cola invest in India, and the latest iPhone models have been manufactured in India. The U.S. is interested in working with India to counter China’s influence in the region. Companies such as Amazon, Citibank, Ford India, Google, American Express, PepsiCo, Hewlett Packard, IBM, JP Morgan, Apple, Oracle, among others, are installed and employ local labor. There are strong ties with Japan, especially in sectors such as infrastructure and automotive, where Japanese brands such as Suzuki, Honda, Sony and Panasonic dominate the Indian market. In addition, globally recognized companies such as Hitachi, Mitsubishi, Toshiba, Canon, Toyota and Yamaha have a significant presence in India.

There is an established bilateral relationship with the United Arab Emirates, which is looking to establish India as its main agricultural producer for the future. This is achieved through investments in agricultural technology and modern infrastructure that will benefit the country, with the aim of becoming the leading exporter of food grains and horticultural products in the coming years. Well-known companies investing in India include DP World, the National Petroleum Company of Abu Dhabi and Abu Dhabi National Energy, among others.

On the European side, Germany stands out, a country that hosts 1600 foreign companies and more than 600 joint ventures such as BMW, Volkswagen, SAP and Siemens, among others. Finally, agreements have been signed with France for the joint development and production of defense equipment, such as the Scorpene submarine, and for the development of smart cities. In addition, France has committed a strong investment for the ISA, focused on technology for harnessing solar energy.

Conclusions

The change that has taken place in the country since the launch of the “Make in India” initiative is undeniable. The creation of jobs has generated economic growth, thus improving the living conditions of the population. The expectations of citizens in the success of the plan keep India’s rulers and politicians alert to its progress. “Make in India” has permeated the conscience of every Indian citizen, representing the hope of more than 1.4 billion inhabitants to consolidate regional leadership and feel proud of their millenary culture and traditions in a young country with a rich and extensive history.

On the other hand, ten years have passed since the launch of the “Make in India” initiative and statistics show a favorable trend since its implementation. In formulating strategies and schemes, key aspects of national power and potential, such as territory with its resources, technology generation and manufacturing, leadership and cooperation, as well as sustainable development, democracy and security, have been considered. These aspects have been successfully interpreted, managed and articulated to achieve the proposed objectives.

As for Peru’s geostrategic vision, it is oriented towards Asia, particularly towards the Chinese giant. However, it will not be long before India’s influence is felt in South America. India’s need for resources to sustain its growth compels us to design shared spaces, especially for trade and cooperation.

Finally, talks for the signing of the Free Trade Agreement (FTA) with India are in their Seventh Round of Negotiations, with the hope of reaching a successful conclusion this year. Prime Minister Narendra Modi’s recent democratic assumption of his third consecutive term in office ensures the continuity and momentum of “Make in India” and, in general, of all policies undertaken to date. This represents a valuable opportunity for Peru to showcase its potential in foreign investment, openness to cooperation in science and technology, as well as trade.

Endnotes

  1. Brahma Sahni, “India: a pesar de sus limitaciones una potencia emergente”, Revista Nueva Sociedad (Buenos Aires: Fundación Friedrich Ebert, 2013), 103.
  2. Ibid.
  3. Ibid., 106
  4. Brahmand Khumar, “World Defence Update 2024” (India: Pentagon Press LLT, 2024), 258.
  5. Brahma Sahni, “India: a pesar de sus limitaciones una potencia emergente”, Revista Nueva Sociedad (Buenos Aires: Fundación Friedrich Ebert, 2013), 103.
  6. Contreras, “India merece ser miembro del Consejo de Seguridad de la ONU: canciller Jaishankar” La W Radio Internacional , 27 de abril de 2023, consultado el 25 de mayo de 2024, https://www.wradio.com.co/2023/04/27/india-merece-ser-miembro-del-consejo-de-seguridad-de-la-onu-canciller-jaishankar/.
  7. María Malatesta, “India en América Latina: Propuesta de estrategias para el fortalecimiento de la relación bilateral Perú – India” (Tesis de Maestría, Lima, 2020).
  8. Ministerio de Finanzas. “India’s medium-term growth outlook: with optimism and hope” (India Economic Survey 2022- 2023): 29-31, consultado el 28 de mayo de 2024, https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap02.pdf.
  9. Ibid., 31.
  10. Unidad Empresarial de la Sociedad Suiza de Radio y Televisión SRG SSR (Suiza, SWI swissinfo.ch, 2023), consultado el 15 de mayo de 2024),  https://www.swissinfo.ch/spa/qui%C3%A9nes-somos/ 
  11. Rafael Barba, “China, India y EEUU: El Triángulo del Desafío en el Indo-Pacífico” (Universidad de Nueva Navarra, España, 2021), https://www.unav.edu/web/global-affairs/regiones/asia.
  12. Department for Promotion of Industry and Internal Trade (DPIIT), “About Us: Make in India” (India, Government of India, 2024), accessed April 12, 2024), https://www.makeinindia.com/about.
  13. Ibid.
  14. Ibid.
  15. World Intellectual Property Organization (WIPO), “India and the GII: An Innovation Success Story” (News story, July 24, 2019), accessed May 23, 2024), https://www.wipo.int/global_innovation_index/en/news/2019/news_0001.html.
  16. Ministry of Finance, India, “India’s Medium-Term Growth Outlook: With Optimism and Hope” (In Economic Survey 2022-2023, Chapter 2, (2023): 29-31, accesed May 28, 2024, https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap02.pdf.
  17. Jawaharlal Nehru, “La India de hoy y del mañana. Visión de la India” (Delhi, 1983): 203.
  18. “Make In India Programme – Government Scheme : Explained in Hindi” (YouTube, May 18, 2024), https://www.bing.com/videos/riverview/relatedvideo?q=make%20in%20india%20explained&mid=AA9AD4DF3000682C17D7AA9AD4DF3000682C17D7&ajaxhist=0.
  19. Narendra Modi, “Introducing the programme”. Discurso presentado en el Día de la Independencia en la explanada del Fuerte Rojo, Delhi, 15 de agosto de 2014.

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The ideas contained in this analysis are the sole responsibility of the author, without necessarily reflecting the thoughts of the CEEEP or the Peruvian Army.

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