Why "Make In India" Will Not Make India
By Ajmal Khan
31 December, 2014
Countercurrents.org
After many development (Ache din) promises that was made in the 16th Lok Sabha election campaigns, the BJP government under the leadership of Prime Minister Naredra modi has started implementing the development agendas. The direction of development, however was clear from the different policies that government has adopted soon after it took over the office. Huge environmental clearances, decisions taken to soften the provisions in forest rights and conservation acts, suggestions to make amendments in the land acquisition act, huge cuts in in the allocation for public health and education so on have shown the nature and direction of the development that is going to come. Make in India has been one of the flag ship programmes that the new government has initiated now, “Make in India” has been at the center of the new government's development campaigns, it’s a campaign to make India to manufacturing hub attracting the foreign direct investment. Make in India is defined as a “Major new national program designed to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure. There's never been a better time to Make In India”.
The inauguration of the programme was held in a meeting with 500 business tycoons from across the globe who are looking forward to invest in India. The idea of making in India is to make most out of the manufacturing sector that currently contributes 15% to the GDP and 13.4 % of the labor force is involved in. There are 25 prominent sectors within manufacturing to which government is seeking foreign investments by the programme, automobiles and automobile components, aviation, biotechnology, chemicals, construction, defense manufacturing, electrical machinery and electronic systems, food processing, IT and BPM, leather, media and entertainment, mining, oil and gas, pharmaceuticals, oil and railways, renewable energy, roads and highways, space, textiles and garments, thermal power, tourism hospitality and wellness are the broadly defined sectors. Firstly, most or all the above sectors are directly or indirectly open for hundred percent foreign direct investments, including the sectors that are strategic and have national importance.
There were restrictions for FDI in a few sectors which have also been either removed or the percentage for FDI limits increased. Mining is a potential sector that seeks investment and the foreign investors are popular for their “good will” across the globe, first come Vedanta Resources, the mining corporation that Tribals in the state of Orissa are still fighting with, they have already violated a number of regulations and human rights of the tribals in India. Second is Rio Tinto, an Australian International mining giant that is known for displacing indigenous people in Australia and elsewhere. Rio Tinto also faces a number of cases of human right and other violation of laws in the countries that is in operation. BHP Billiton is another Australian mining corporation , its a company that has not even accepted the UN Declaration on the Rights of Indigenous Peoples and continued mining in Colombia and Philippines despite the strong resistance from the indigenous populations in those countries. Hence one need not to wait and see the India that will be made by them.
In the defense manufacturing sector where the relationship between the US and Israeli corporations are the high priority is also seeking investment for the “The country’s extensive modernization plans, an increased focus on “homeland” security and India’s growing attractiveness as a defense sourcing hub”, which also give indications of the army deployment in the states where AFSPA and other draconian laws are enacted as well in the central Indian tribal belt, the security in making here. Soon after the new government came into power, the department of railways had given the green signal for the hundred percent FDI in the sector, according to the make in India website” 100% FDI in the railway infrastructure segment has been allowed recently which has opened up opportunities for participation in infrastructure projects such as high-speed railways, railway lines to and from coal mines and ports, projects relating to electrification, high-speed tracks and suburban corridors. Indian Railways has begun exploring the PPP mode of delivery and aims to award projects worth USD 1,000 Billion through the PPP route”.
This is going to have far reaching impacts on the whole railway system, unlike other countries the poor are more dependent on railways in India. Other sectors have also welcome for hundred percent of foreign direct investment which also promises attractions like exemption from income taxes, exemption from tax and levies for investors and exemptions from other governmental regulations. Indeed manufacturing has to be promoted to have a better employment for an economy that has one of the biggest unemployment rate as well as about 8-9 million people who join the workforce every year. However, concentrating much on manufacturing will help much?. The governor of RBI, Raguram Rajan has made it clear that "I am 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, " (i) Rajan was pointing out about the difficulties of economy when it depends on export led growth that involves subsidizing exporters with cheap inputs as well as an undervalued exchange rate, it might not work at this juncture for the economy. Even the governor of the Reserve Bank of India has to caution about the moves that Make in India is trying to make arguing that it will not do anything on even the most pressing issues concerning the economy such as inflation.
Another important component of the Make in India are the live projects, where Delhi-Mumbai Industrial corridor is one of the most important and highlighted plan. “Delhi ¨C Mumbai Industrial Corridor (DMIC) is India’s most ambitious Infrastructure programme aiming to develop new industrial cities as “Smart Cities” and converging next generation technologies across infrastructure sectors. The objective is to expand India’s manufacturing and services base and develop DMIC as a “Global Manufacturing and Trading Hub”. The programme will provide a major impetus to planned urbanization in India with manufacturing as the key driver. In addition to new industrial cities, the programme envisages development of infrastructure linkages like power plants, assured water supply, high capacity transportation and logistics facilities as well as softer interventions like skill development programme for employment of the local populace. In the first phase seven new industrial cities are being developed”. The programme has been conceptualized in partnership and collaboration with Government of Japan. Government of Japan is a key partner in the building of DMIC which will cover six states across India. DMIC will need a gigantic land accumulation in the states of U.P, NCR of Delhi, Haryana, Rajasthan, Gujarat, Madhya Pradesh and Maharashtra which will displace thousands of tribals and farmers from their land and livelihoods, forceful land acquisition are already being carried on in many states in the name of DMIC and there are several examples where the land acquired for DMIC has been taken over by the private corporations.
Local people are already protesting in many ways against the forceful land acquisitions, the project land is also eyed by the real estate mafia and land grabbing by the real estate companies are also on in a big way. The ambitious DMIC is said to provide employments to the locals from whom the land and livelihoods will be taken over, one has to really wait and see how many displaced uneducated tribals and farmers will be able to get employments out of it. The rhetoric about the demographic dividend and the employment creations are one the important thing that the Prime minister has been highlighting about, if the youth has to be employed, they need to be educated and trained with quality skills, in India the states with highest proportion of youth concentration are also the states that ranks in bottom when it come to educational indicators, it need huge investments in primary and other fundamental costs of education by the government in training and vocational education, however the first budget of the current government has already made a trim of 6 percent for the educational sector spending in which school education expenditure is by 6 percent and the higher education by 9 percent, which will directly affect the public educational system,so the poor who are depended on the public system.
Make in India is nothing but an organized project to invite all the available private investment from across the globe to India giving tax, license, land and other attractive exemptions, liberal land acquisition programmes, and other benefits without even doing a background check of the investor or not making the investor responsible and accountable to whatever they do here in India.
Manufacturing may grow by leaps and bounds if government gives more tax exemptions, makes liberal labor laws, easy environment and license clearnances, but that is not going to have an impact on the existing real problems that the Indian economy is going through, The core of make in India programme, are the exceptions on existing investment regulations and a blind policy towards, land acquisition, environmental clearances, labor and protection laws. Would all these really Make India? More than half of the Indian population is still dependent on the primary sector, agriculture and more than 95% depends on the unorganized sector for their livelihood. Without reviving these sectors, nothing much will be possible in Indian economy. Dalits, Adivasis, other back ward castes, minorities and women in the country who are mostly dependent on these two sectors and no India will be made out of any reform and policy prescriptions which will not benefit these sections.
Still 40 percent of the Indian population lives under International poverty line criteria according to most conservative estimates and one of the five children below the age of five years are malnourished, around one-third of all adult women are underweight and anaemia affects 74 per cent of girl children under the age of three, to include all of them in to the make in India, the public spending on health, education, public distribution, and other basic sectors with out that, an India will never be made.
References
2. http://www.makeinindia.gov.in/sectors/
3. Make in India' should not merely focus on manufacturing: RBI Governor Raghuram Rajan, Economic times, http://economictimes.indiatimes.com/articleshow/45492356.cms?utm_source=
contentofinterest&utm_medium=text&utm_campaign=cppst.
4. Executive Summary of Report: Don’t Mine Us out of Existence: Bauxite Mine and Refinery Devastate Lives in India, Amnesty International (Index: ASA 20/001/2010)
Notes
(i). Rajan said while speaking at the Bharat Ram Memorial Lecture in Ficci.
Ajmal Khan is at Tata Institute of Social Sciences, Mumbai.
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