Letter IEDI n. 709 – Do as India Does
Letter IEDI n. 709 – Do as India Does
In 2011, the Indian government adopted an industrial development policy, the National Manufacturing Policy, in order to accelerate the growth of manufacturing industry and raise the share of the industry in GDP from the then 16% to 25% by 2022, increase the national value added, encourage technological development and make the industry more competitive. It also aims to generate direct and indirect jobs and provide vocational training for rural migrants and the urban poor, in order to make economic growth more inclusive, and to ensure the sustainability of growth through energy efficiency, optimal use of natural resources and the restoration of degraded ecosystems.
The National Manufacturing Policy involved the recognition of the industry's importance for the country's economic development and the creation of formal jobs of good quality, and was the result of extensive consultations and discussions involving the different levels of government, business and industry and technology experts.
In 2014, the Make in India Program sought to strengthen the national commitment to industrial development, and to adopt additional measures to the National Manufacturing Policy. The measures taken under the program can be grouped into four classes of actions:
- Simplification of processes and regulations to improve the business environment, such as the creation of an online interface (E-Biz) that centralizes all necessary regulatory procedures and processes for investments, and the improvement of the rules associated with intellectual property rights.
- Opening of certain sectors to foreign capital, by raising the limits on foreign ownership or extinctiing them, with the intention of attracting investment in sectors such as defense, construction and highways.
- Creating new infrastructure that facilitates investment, with the establishment of industrial clusters and smart cities connected by high-speed transport routes, forming corridors where quality infrastructure will support industrial development.
- Development of a new mentality so that the government and the private sector see one another as partners and behave as such.
The IEDI sees as accurate the recognition by the Indian government of the industry as a factor that induces economic development and believes that the effort to be made through the National Manufacturing Policy and the Make in India Program is an example to Brazil. Hence the title of our Letter: Do as India Does.
Nonetheless, it is not the case of neglecting the difficulties and challenges to be overcame during the process of industrial development, especially when it occurs in a less favorable international environment, such as the one that has been seen in recent years. It is with this in mind that one should read the Indian industrial indicators gathered here.
Since 2007, the dynamism of the Indian economy has been relevant to the world economy, being even higher than the aggregate GDP growth of the emerging economies (except in 2012, by a small difference). Between 2013 and 2015, industrial production accelerated, from 0.9% to 3.4% in the first seven months of each year. And Foreign Direct Investments were up 73.4% in January-July 2015 compared to the same period in 2014. Nevertheless, the share of the manufacturing industry in GDP has fallen (from 16.3% in the fiscal year 2011-2012 to 14.9% in 2013-2014). It is this process that the Indian government intends to reverse.
