This article was first published on Sept 26, 2014
Prime Minister Narendra Modi yesterday launched "Make in India", an ambitious campaign to turn India into a manufacturing hub, promising top foreign and home-grown corporates that he would improve the ease of doing business in the country.
"I tell businesses, India is an opportunity for foreign direct investment," said Mr Modi, quipping that FDI also stood for "First Develop India". Top chief executive officers, including India's richest businessman Mukesh Ambani, Maruti Suzuki's Kenichi Ayukawa and Lockheed Martin India's Phil Shaw, attended the launch.
The event was shown live at Indian missions overseas, including in Singapore.
Representatives of some 15 companies from Singapore, including Ascendas and YCH Logistics, were also present at the event in New Delhi.
The government has initiated a relook at the system of multiple regulations and licences, and identified 25 sectors from mining to media where investment would be encouraged, he announced.
Mr Modi said he wanted to dissuade industrialists from leaving India to seek opportunities elsewhere. "For the last two years, they would tell me - we want to move out our business and industry houses. I don't want any industrialist being forced to leave India."
India needed to look East but also establish links with the West, he added.
Mr Modi was speaking hours before leaving for his official visit to the United States where his key focus is attracting US investment and enhancing economic ties. In New York, he is set to meet a host of top CEOs including Google's Eric Schmidt and PepsiCo's Indra Nooyi.
A nationalist leader from the Bharatiya Janata Party which came to power after a landslide win in elections in May, Mr Modi has promised to revive India's slowing growth and create jobs.
With India's growth at 5.7 per cent in the quarter ending June while unemployment hovers at 12 per cent, he has his work cut out for him. While he has opened up the economy in sectors like defence and construction, he still needs to carry out labour reforms, a politically sensitive issue, and clean up land acquisition rules.
Turning the country into a manufacturing hub is seen as an ambitious task. The sector contributes only 15 per cent to India's gross domestic product. Commerce Minister Nirmala Sitaraman said the aim was to make the sector contribute 25 per cent.
While top corporates appreciate the new focus, which comes as countries like Japan are looking for a manufacturing base in Asia, they also noted the challenges.
"There are a lot of challenges like bureaucratic red tape and there is corruption," said Mr Lars-Olof Lindgren, chairman and managing director of SAAB. Tata Sons chairman Cyrus Mistry cited the challenges of building critical infrastructure supported by a stable tax and duty structure, increasing the employability of people and reforming labour laws.
Analysts noted that while Mr Modi focused on manufacturing, no enabling policies were announced at the launch of the campaign. Said Mr Rishi Sahai, managing director of Delhi-based consultancy Cogence Advisors: "He has articulated his vision - now we need to see a real road map about how he intends to implement this policy. It's all about how he translates vision into action."