Opportunity in the Making
Make in India continues to be a catalyst for far-reaching foreign direct investment, with the likes of the UK and Africa representing just two countries keen to get a slice of the pie
With India’s manufacturing sector now contributing an impressive 16 percent towards the country’s GDP, Prime Minister, Narendra Modi has made a promising start to the Make in India initiative, and is on-track to achieve the ambitious long-term target that will see the country’s manufacturing output contribute 25 percent – or US$1 trillion – to the GDP by 2025.
Implemented in September, 2014, the initiative outlined by Modi will foster greater multinational as well as domestic cooperation in order to boost the country’s reputation as a manufacturing hub across 25 key subsectors. Moreover, this big Governmental push has placed concerted focus on the environment, boosting job creation, fostering innovation, enhancing skills development and protecting intellectual property rights in a bid to subvert the traditional perception of the Government as a regulator rather than a facilitator.
Placing emphasis on sustainability and the environment is another pillar of this initiative that is helping to draw all eyes towards India, with the phrase “zero defect, zero effect” having come to be associated with Make in India.
In applying this honest and transparent approach to business, the country already received an overwhelming response from international investors during Make in India Week held earlier this year in Mumbai. The event closed its doors having achieved US$222 billion worth of investment commitments; with global giants such as GE, Siemens, HTC, Xiaomi, Toshiba, Coca-Cola Beverages, Pepsi, IKEA, Airbus, and Boeing having either set-up or in the process of setting up manufacturing facilities in India.
Attracted by India’s market of more than a billion consumers and increasing purchasing power, the country is quickly gaining a vote of confidence among the industry elite as a strategic, business-friendly location that welcomes foreign manufacturers and directly addresses the all-important environmental considerations. The world’s core economies – including the likes of the US, UK, Africa and the Middle East – are paying close attention to the Government reforms taking place that better align with the parameters of the World Bank’s Ease of Doing Business index to improve India’s economic worth on the world stage.
Strengthening UK ties
India has become an increasingly critical market for the UK in terms of inward investment, outbound export, education and tourism. Manchester has long held ties with India and recognises its importance as a key partner and as a key market for foreign direct investment. More than 30 of India’s key companies have invested in the region; including Aegis, Vistaar Productions, Hero Cycles, State Bank of India and HCL Technologies’ innovation partnership with Manchester United Football Club.
The Greater Manchester region has been recognised as the European City of Science 2016, which makes it the ideal partner for Make in India. Local universities have expertise in areas such as advanced materials and manufacturing, 3D printing and life sciences provides unparalleled research and development (R&D) opportunities for both industry and educational establishments.
According to MIDAS, Manchester’s inward investment agency, the region’s capabilities within these key sectors complement those developing in India, like R&D and advanced manufacturing; and India’s economic policy is the perfect bridge to strengthening existing ties with Indian partners.
Demonstrating a commitment to Prime Minister Modi’s Make in India initiative, MIDAS recently partnered with the High Commission of India to deliver an event which provided a platform for delegates to better understand the bilateral trade, export and R&D collaboration opportunities presented by the initiative, and how the Greater Manchester region is strengthening ties; with the aim of attracting FDI and boosting India’s thriving economy.
Make in India, Innovate with Manchester – held in June, 2016 and supported by the Confederation of Indian Industry, UKTI and Deloitte – presented a real opportunity for both parties. It was targeted at professionals and academics from the creative, digital and tech, advanced manufacturing, life sciences and aviation sectors from India, London, and across the Greater Manchester region.
“With Prime Minister Modi highlighting the importance of boosting India’s economy by attracting international investment, working jointly to support Make in India will encourage partnership between our regions. This is integral to further developing Greater Manchester’s growth and provides opportunities for businesses to internationalise,” Tim Newns, Chief Executive of MIDAS summarised.
Export opportunities in Africa
Africa has also reared its head to capitalise on opportunities in the South Asian country, with one such example being the recent signing of a memorandum of understanding (MoU) between defence and security Company, Saab Grintek Defence (SGD) and Tata Power Strategic Engineering Division (Tata Power SED) designed to create new export opportunities for South Africa.
The MoU, signed during Modi’s visit to South Africa in July, reinforces the long-term potential for defence and security collaboration between India and South Africa.
“We are excited about the signing of this MoU as it is our strategy to take South Africa’s indigenous technology and products beyond local markets with well-established expert partners that add value to our supply chain and open new markets,” said Trevor Raman, President and CEO at Saab Grintek Defence in a recent press release.
“The transfer of technology for production of initial orders for Saab’s global customers has already commenced at Tata Power SED’s facility in Bangalore. This collaboration proactively positions SGD solutions for the future Indian land-based platforms self-protection market.”
SGD is responsible for the transfer of technology for production in India, and Tata Power SED will manufacture a large part of the defence system in India, manage final assembly and be responsible for marketing the system locally.
“Given the long-term potential for self-protection systems for combat vehicles, both in India and abroad, we see this collaboration for joint development and manufacturing with Saab Grintek Defence as an important milestone in boosting India’s capabilities in building defence systems and is perfectly aligned with the actual essence of ‘Make In India’ initiatives being implemented by the Indian Government,” commented Rahul Chaudhry, CEO, Tata Power SED.
With almost 75 percent of SGD’s total turnover represented by the exporting of products, the MoU boasts further scope for expansion.
Since the launch of Make in India in 2014, foreign direct investment (FDI) inflows of US$ 77 billion – including equity inflows of US$56 billion – have been received for the period October, 2014 to March, 2016; the latter representing an approximate FDI equity inflow increase of 44 percent over the same period.
“Today, India’s credibility is stronger than ever. There is visible momentum, energy and optimism. Make in India is opening investment doors. Multiple enterprises are adopting its mantra. The world’s largest democracy is well on its way to becoming the world’s most powerful economy,” the initiative says on its website.
The Indian Government has ambitious plans to locally manufacture as many as 181 products, a move which is set to help boost the country’s infrastructure sectors including those which require large capital expenditure such as power, oil & gas and automobile manufacturing.
Furthermore, with impetus on developing these industrial corridors comes a smart city vision which Modi hopes will ensure the holistic development of the nation.
“Come make in India. Sell anywhere, [but] make in India,” Modi said while introducing his vision to the public; and it seems that the world is more than ready to embrace this vision, which is already well on its way to becoming a reality.
Read the full and illustrated version of this article in the latest issue of Asia Outlook here.