Today's Letter IEDI studies recent industrial policy initiatives in India. Unlike other countries, India has not yet developed a national plan to leverage the industry of the future, which, nonetheless, does not mean the country hasn't established programs aimed at developing and disseminating the technologies underlying Industry 4.0.

The present study is part of a series of IEDI publications on Industry 4.0. Some policy experiences of other important industrial countries, including Brazil, to promote the industry of the future can be found in Letters IEDI n. 797 of Jul 21, 2017; n. 803, Sep 1, 2017; n. 807, Sep 29, 2017; n. 820, Dec 11, 2017; n. 823, Dec 29, 2017; n. 827, Jan 26, 2018; n. 831, Feb 16, 2018; n. 841, Mar 29, 2018 and n. 847 of May 11, 2018, among other works.

Over the past few decades, the core of India's economy has shifted from agriculture to the service sector (information technology and process management especially). At the same time, the manufacturing industry, with the exception of a few sectors (automotive, electronics and pharmaceuticals), has developed little. In addition to its low productivity, Indian manufacturing contributed with only 16% to GDP, unlike other Asian countries at similar stages of development.

This is a reality that the country has been trying to change in recent years. Since its inauguration in May 2014, the government of Prime Minister Narendra Modi has launched a number of initiatives to convert manufacturing into the driving force of Indian economic growth, making the country a world center of industrial production.

The Indian government is aware of the importance of the industry to the generation of innovations and technical progress that spread to other economic activities (raising the productivity of the economic system as a whole), as well as of the profound transformations worldwide that are associated with the technologies of Industry 4.0. Thus, in September 2014, it announced the 'Make in India' initiative, with a view to transforming the country into an advanced center of global industrial production.

In addition to policies aimed at developing the manufacturing industry, Make in India also includes new initiatives, whose goals are: stimulate foreign direct investment (FDI), protect intellectual property (Creative India), facilitate business and improve India's position in the World Bank's Ease of Doing Business ranking, and promote the creation of technology-based industrial start-ups (Start-up India).

Other initiatives, in turn, seek to facilitate job creation, promote innovation, improve the skills of Indian workers, and strengthen infrastructure by developing industrial corridors and building smart cities with state-of-the-art technology and high speed communication.

With the new FDI law, consolidated in 2016, the Indian government opened new sectors to foreign direct investment, increased the cap on investments in which foreign capital was already allowed, and simplified the conditions for the entry of resources. Foreign investment in various sectors no longer need previous approval (automatic route). In others, as in the areas of defense, telecommunication and petroleum refining, for example, foreign investments of up to 49% can be made through the automatic route.

However, India must overcome a number of challenges so that Make in India can be successful and the country can become an industrial power amid the profound transformations that the emergence of Industry 4.0 will bring. Such challenges include: the lack of a culture of quality in processes, products and services, especially among micro and small enterprises; deficiencies in infrastructure; little penetration of information technology in the industry; low digital inclusion in society, insufficient educational level of a significant part of the population; shortage of qualified and skilled professionals to operate in a Industry 4.0 production environment and low private sector investment in R&D activities.

In order to overcome these shortcomings, India's Government has been adopting several proactive measures like: the Digital India program, the National Skill Development Mission (Skilled India), the New National Education Policy and the Zero Defect Zero Effect (ZED) program. The government also reaffirmed its commitment to the objectives of the 2013 National Science, Technology and Innovation Policy, which include: expanding the role of the private sector in the national science, technology and innovation system through public-private partnerships to achieve the goal of 2% of GDP in R&D.

The full text is available in Portuguese.