Kurukshetra September 2023

1. Catalysing Growth of Students and Youth

Share of manufacturing in GDP is around 16%.
The National Manufacturing Policy was launched in 2011 followed by the ‘Make in India' initiative to make the country not only ‘Aatmanirbhar' but also job-rich.
The ‘Make in India' initiative was launched in September 2014 by Prime Minister Modi.
It aims to create and encourage companies to develop, manufacture, and assemble products made in India and also incentivize dedicated investments in the manufacturing space.
Through this initiative, 27 major economic sectors for job creation and skill enhancement have been considered to increase the manufacturing sector's growth; create additional manufacturing jobs in the economy, and ensure that the manufacturing sector's contribution to GDP has increased.

The Challenges

India, with its diverse population and rapidly growing economy, presents a mix of opportunities and obstacles for its youth.
Indian system has faced criticism for its emphasis on rote learning and grades, rather than nurturing creativity and critical thinking.
Many educational institutions lack access to advanced technology, practical training, and exposure to industries, restricting students' ability to apply their knowledge practically.
India's investment in research and development falls short compared to other nations.
In terms of infrastructure and access, inadequate facilities, particularly in rural areas, pose significant challenges for students and innovators who require reliable internet connectivity, electricity, and other basic amenities.
In the regulatory and business environment, securing intellectual property rights and patents can be complex and time-consuming, deterring some innovators from protecting their ideas.
Students often face immense pressure from their families to pursue conventional career paths, discouraging risk-taking and exploration of unconventional fields.
Gender disparities persist, with female students and innovators facing unique challenges due to biases and limited opportunities.
Steps towards Nurturing Young Talents to Make in India
There have been multiple efforts by the Government to solve these problems-

Addressing the Challenge of Rote Learning

It is important to nurture the workforce better in mathematics, data science, computer science, etc. in conjunction with multidisciplinary abilities across social sciences and humanities.
NEP 2020 aims at recognising and identifying the unique skills and capabilities of each and every student and also promoting creativity and critical thinking, which are important to develop in students at a young age.
The introduction of reforms in the education system is promoting experiential learning, critical thinking, and problem-solving skills and encouraging project-based learning, practical training, and collaborations with industries to bridge the gap between theory and application.

Instilling Behavioral Change at a Young Age

Government of India, through the Atal Innovation Mission (AIM), established the Atal Tinkering Labs (ATL).
These 10,000 labs established across India has coverage in 60% of government schools and 40% in private schools.
The idea behind establishing these labs was to foster curiosity, creativity, and imagination amongst these young kids so that they could tinker using the do-it-yourself and get a chance to work with tools and equipment to understand the concepts of STEM (Science, Technology, Engineering and Math).
Developing Infrastructure for Innovation and Access to Resources
Government has provided support for the establishment of new incubators that focus on nurturing innovative start-ups and helping them grow into scalable and sustainable businesses.
To provide support to young innovators on their journey, the ‘Mentor India' initiative was launched, with the support from professionals and academicians who are well-equipped with innovation, marketing, product development, patenting, etc.
Ease of Doing Business and Protection of Intellectual Property Rights
The “Start-up India” initiative was launched with the aim of fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive to the growth of startups.
Since then, the number of startups in the country has increased from 452 in 2016 to 84,012 by November 2022, which is higher than the rest of the world.

Addressing Local Needs by States

Each state has the flexibility to design and implement its own programmes based on local needs and opportunities.
These state-level initiatives may include additional funding schemes, incubators, skill development programmes, and innovation challenges specific to their respective regions.
A survey on the degree of innovation, also known as the Indian Manufacturing Innovation Index (IMIl), among manufacturing firms found that Karnataka, overall, is the most ‘Innovative' State, followed by Telangana, and Tamil Nadu.
Nine years of ‘Make in India' represent a transformative vision that has set India on a path of economic resurgence and self-reliance.
As we move forward, it is crucial for all stakeholders, including the Government, industries, educational institutions, and citizens, to collaborate synergistically to build a resilient, sustainable, and inclusive manufacturing ecosystem.
With unwavering determination and continuous efforts, ‘Make in India' can pave the way for a brighter, prosperous, and self-sufficient India for generations to come.

2. Make in India- Challenges, Opportunities and Outcomes

‘Make in India' initiative was launched on 25 September 2014.
It aims at encouraging companies and individuals across the globe to facilitate investment, foster innovation, build world-class infrastructure, and build a hub for manufacturing, design, and innovation in India.
‘Vocal for Local' interventions within the activities of this initiative envisaged promoting India's manufacturing domain to transform the nation into a global manufacturing centre.
It not only promoted labour- and capital-intensive industries with a different stance and safeguarded their sustainability but also tried to bring in timely and adequate Research and Development (R&D) into manufacturing firms and modern services.

Why ‘Make in India'

It lays focus on employment creation and skill upgradation in 27 sectors of the economy.
Increase contribution of the manufacturing sector to overall GDP growth.
Enhance tax revenues of the nation by positively enhancing business activity through the manufacturing revolution.
Eliminate unnecessary laws, controls and bureaucratic procedural hurdles.
Ensure and adopt higher quality standards for manufacturing products with reduced impact on environment.
Attract FDI for capital financing and technological investment in the different economic schemes of the country.
Identify and promote the growing services and industrial sector in the Indian economy.

Pillars of Make in India

New Process- The Government of India introduced several reform measures to ensure an enabling environment for growth by creating possibilities for attracting both domestic as well as foreign investment.
New Infrastructure- To develop well-equipped industrial corridors with all necessary facilities for the expansion of industrial activities, build smart cities to provide citizen services with ease, and create world class infrastructure.
New Sectors- Keeping this in view, the ‘Make in India' initiative identified 25 sectors to begin with, followed by two additional sectors.
New Mindset- Efforts were made to review the Government's interaction with various core and dynamic entities of the economy. Attempts were made to transform the Government's outlook towards the industrial growth by making it a partner in the economic development of the country along with the development of the corporate sector.

Carrying out Reforms

Since 2014, the Government brought several reforms so as to identify, review and address the complexities of business growth, simplify the existing taxation system, and remove price rigidities.
Attempts were made towards attracting Foreign Direct Investments (FDI) and enhancing economic efficiency and the country's global competitiveness.
With a view to increase India's manufacturing capabilities and exportability, an outlay of Rs. 1.97 lakh crore was announced in the Union Budget 2021-22 for production linked incentive (PLI) schemes for 14 key sectors of manufacturing, starting from Fiscal Year 2021-22.
Attracting FDI into India- The Government has taken various steps to boostdomestic and foreign investment in India, which includes

Introduction of Goods and Services Tax
Reduction in Corporate Tax
Innovation to improve EoDB
FDI policy reforms
Measures for reduction in compliance burden
Policy measures to boost domestic manufacturing through public procurement orders
Phased manufacturing programmes

Advantages of Make in India

It will have a positive impact on the overall socioeconomic growth of India, especially in manufacturing growth and the creation of employment opportunities.
enhance the purchasing power of the citizen, expand the consumer base for companies, and address the problem of poverty.
Emphasis on improved education and training infrastructure to ensure a skilled workforce for each of the focused sectors will help reduce brain drain.
The export-oriented growth model of this initiative will positively impact India's balance of payments position and support in accumulating foreign exchange reserves.
Increased flow of foreign investment and bringing in technical expertise and creative skills into India.
Higher credit ratings for the country, and making India a global manufacturing hub so as to attract more and more investors to invest in India.

Challenges to Make in India-

Need to facilitate the land acquisition process.
Create an appropriate labour development ecosystem for efficient and effective enforcement of laws/rules.
Rationalization of the taxation regime, and enable technology acquisition and dissemination.
Networking of capacity building institutions.
The procedural and regulatory clearances need to be reviewed and creating a healthy business environment in India.
The world class research and development infrastructure need to be created on.

Fostering Balanced Regional Development

The ‘One- District One-Product' (ODOP) initiative is an important manifestation of the ‘Make in India' vision.
It aims to facilitate promotion and production of the indigenous products from each district of the country and to provide a global platform to the farmers, artisans, and manufacturers of textiles, handloom, handicrafts, agricultural, and processed products.
The success of this initiative depends on the effectiveness of the following activities-
Need-based and regular capacity building initiatives.
Onboarding onto e-commerce platforms, including Government e-Market (GeM).
Identify market players and conduct physical/virtual buyer-seller meets.
Promoting a brand image and propelling an international marketing for local products.
Channelizing the potential and diverse identity in each District by setting up District Export Hubs (DEH).
Impact of Make in India- The following are some of the major achievements of the last 8 years:

In World Bank's EoDB parameters the country's rank was 142 in 2014 and 63 in 2022, indicating a rank improvement of 79 positions.
Gross FDI in India has increased from an average of 2.2 per cent of GDP during Financial Years 2005 and 2014 to 2.6 percent in Financial Years 2015 and 2022.
FDI inflows in India which stood at US $ 45.15 billion in 2014-15 have increased continuously since then. The highest ever annual FDI inflow of 84.84 billion US $ was recorded in the financial year 2022.
Indian agriculture sector has been growing at an average annual growth rate of 4.6 per cent during 2014-15 and 2021-22.
In 2020-21, exports of agriculture and allied products from India grew by 18% over 2019-20, and agricultural exports reached a high of US $ 50.2 billion in 2021-22.
The total employment in manufacturing sector has increased from 57 million in the year 2017-18 to 62.4 million in the 2019-20, in spite of the disruptions caused by Covid-19.
total services exports grew by 48.4 billion US § in 2021-22 over 2020-21 from 206.1 US $ billion to 254.5 US $ billion.

Conclusion

Being a long-term sectoral intervention, the ‘Make in India' initiative has the potential of transforming India into a world manufacturing hub. There is a lot to do through this initiative to ensure balanced regional growth and address issues of poverty, unemployment, and disparities of income and wealth.

3. India-Hub for Electronics Manufacturing

Government has been pushing to boost manufacturing in India since 2014, not just to meet domestic demand but to cater to the international market.
By giving subsidies to manufacturers setting up shop in India, the Government aims to boost exports, curb cheap imports, and generate jobs by creating global manufacturing powerhouses within the country.
The electronics sector has perhaps been one of the biggest beneficiaries of this scheme.
The target of the Government is to increase electronics manufacturing capacity to Rs. 24 lakh crore by 2025-26, which will also help create over 10 lakh jobs.

Early Signs of Success

Exports of mobile phones crossed a major milestone of $ 11 billion in 2022-23 (about Rs. 90,000 crore).
PLI Scheme for Large-Scale Electronics Manufacturing (LSEM) along with existing Phased Manufacturing Program (PMP) has led to increased value addition in the electronics sector and in smartphone manufacturing, by 23% and 20%, respectively, from negligible in 2014-15.
Of the $ 101 billion total electronics production in FY 2022-23, smartphones constitute $ 44 billion, including $ 11.1 billion as exports.
Import substitution of has been achieved in the telecom sector.
The drone sector, which consists of only MSME startups, has seen a seven-fold jump in turnover due to the PLI Scheme.
Value of exports of electronic goods have increased from Rs. 39,978 crore ($ 5.96 billion) in 2016-17 to Rs. 1,09,797 crores in 2021-22 ($ 14.6 billion), exhibiting a compounded annual growth rate (CAGR) of 22.39%.
India's share in global electronics manufacturing has grown from 1.3% in 2012 to 3.75% in FY 21-22, as per industry estimates.
Make in India Initiative: The Game Changer
To attract and incentivize large investments in the electronics value chain and promote exports, the following schemes have been notified under the aegis of NPE 2019:
Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing (LSEM) to provide an incentive of 4-6 per cent to eligible companies on incremental sales (over base year) involved in mobile phone manufacturing and manufacturing of specified electronic components.
PLI for IT Hardware to provide an incentive of 4 -2 per cent/1 per cent on net incremental sales (over base year) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four years.
Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) was notified on 1 April 2020 to provide financial incentive of 25 per cent on capital expenditure for the identified list of electronic goods that comprise downstream value chain of electronic products.
Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme to provide support for creation of world class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds/Plug-and-Play facilities for attracting major global electronics manufacturers along with their supply chain to set up units in the country.
Programme for Development of Semiconductors and Display Manufacturing Ecosystem- To widen and deepen electronics manufacturing, a comprehensive programme with an outlay of Rs. 76,000 crore for the development of Semiconductors and Display manufacturing ecosystem has been approved.
Fiscal Incentives Available to Eligible Applicants:
Modified Scheme for setting up of Semiconductor Fabs- Fiscal support of 50 per cent of the project cost is available for setting up of silicon-based semiconductor fabs across all technology nodes.
Modified Scheme for setting up of Display Fabs- It provides fiscal support of 50 per cent of the project cost for setting up TFT LCD/AMOLED based display fabrication facilities.
Fiscal support of 50 per cent of the capital expenditure to the eligible applicants for setting up of Compound Semiconductors/Silicon Photonics (SiPh)/Sensors (including MEMS) Fab/ Discrete Semiconductor Fabs, and Semiconductor ATMP/ OSAT facilities in India.
Design Linked Incentive Scheme: It offers financial incentives, design infrastructure support across various stages of development and deployment of semiconductor design for ICs, Chipsets, SoCs, Systems & IP Cores, and semiconductor linked design.

PLI Scheme 2.0 for IT Hardware

Government came up with the Production Linked Incentive (PLI) Scheme 2.0 for IT Hardware for enhancing India's manufacturing capabilities and enhancing exports with a budgetary outlay of Rs. 17,000 crore.
The scheme has three categories of applicants: global companies, hybrid (global/domestic) companies, and domestic companies.
Approved applicants of existing PLI will be allowed to apply under PLI 2.0.
This scheme is expected to result in broadening and deepening of the manufacturing ecosystem by encouraging the localisation of components, sub-assemblies and allowing for a longer duration to develop the supply chain within the country.
The scheme provides increased flexibility and options for applicants, and is tied to incremental sales and investment thresholds to further incentivise growth.
The scheme is expected to lead to total production worth Rs. 3.35 lakh crore, bring an additional investment of Rs. 2,430 crore in electronics manufacturing and lead to generation of 75,000 additional direct jobs.

Challenges

Still, there are several roadblocks on the path of India to becoming a global manufacturing powerhouse.
The biggest one is infrastructure, such as insufficient and poor-quality roads and ports, which can hinder the movement of goods.
bureaucratic red tape and a complex taxation system can make it difficult for companies to do business in India.
scarcity of skilled labour is also a major concern.
Both domestic partners as well as the Government need to go out of their way to make sure at the overall experience of investors in setting up a manufacturing base in India is smooth.

Way Forward

The Economic Survey 2022-23 stated that India's manufacturing sector accounts for about 16 per cent of the country's GDP, and the target is to take it to 25 per cent by 2025. The survey also underlined three primary assets to capitalize on this opportunity.
The potential for significant domestic demand, improved measures by the Government to encourage manufacturing, and a distinct demographic edge. We will need to work on all three, concurrently and aggressively, to ensure that this opportunity is not lost.

4. PLI Scheme for Aatma-Nirbhar Bharat

NITI Aayog came out with the Production linked Incentive (PLI) Scheme to provide financial incentives to companies for setting up manufacturing facilities in India for identified products.
NITI Aayog identified 10 Sectors for providing incentives /Drug under the PLI scheme: Advanced Chemistry Cell (ACC) battery, Electronic/Technology Products, Automobiles & Auto Components, Pharmaceutical drugs, Telecom & Networking products, Textile products, Food products, Rs. 51311 Cr. High Efficiency Solar PV modules, white goods (Acs & LED) & Specialty Steel.
Manufacturing of Drones and Drone component was also added subsequently to these 13 sectors, and an outlay of Rs. 120 Cr.
With this, the total commitment of Gol towards PLI scheme for 14 Sectors stood at Rs. 197411 Cr.
The Government therefore tried to achieve four specific end results, viz.
Reduce import dependency for manufactured products/goods identified under the PLI Scheme.
Enhance the export of these products.
Attract FDI by setting up manufacturing capacities for these products in India.
Bring in cutting-edge technology into the country in these sectors and products.
Merchandise Export Incentive Scheme (MEIS) of Department of Commerce provides an average incentive of around 2% of the export value was provided to exporters.
PLI scheme notified by M/o Steel as July 2021 earmarked an incentive of Rs. 1293 Cr (out of 322 Cr. total outlay) for promotion of domestic manufacturing of Electrical steel, viz. CRGO & CRNO (used in electrical motors).
The maximum investment under the PLI scheme has so far been in the Pharma sector, mainly in the manufacture of APIs and drug intermediaries.
India is set to cross Rs 1.2 lakh crore in mobile phone exports in 2023-24, in comparison to Rs 90,000 crore in 2022-23.
In 2022-23, India's electronics imports stood at $ 77 billion, which is next only to its petroleum imports, which stood at $ 158 Billion.
In the telecom sector, the PLI scheme has resulted in import substitution to the extent of over 60%.

Conclusion

PLI scheme has been a game changer for promoting Aatmanirbhar Bharat, and a lot has been achieved in the last three years. The impact of the scheme on employment generation has also been phenomenal. As manufacturing commences in sectors such as specialty steel, where the gestation period required for setting up manufacturing facilities is long, the impact on downstream industries shall be phenomenal and would help boost both direct and indirect employment as well as exports.

5. Cultural Heritage Tradition to Innovation

India's cultural heritage is a tapestry of unparalleled diversity, shaped by a history spanning thousands of years and influenced by various civilisations, religions, and regions.
Cultural heritage plays a pivotal role in shaping India's global perception.
It acts as a powerful soft power tool, drawing tourists, scholars, and enthusiasts from around the world.
The country's cultural exports, like yoga, music, dance, and traditional medicines, have garnered international acclaim, fostering goodwill and enhancing diplomatic ties.
Economic pressures sometimes prioritise commercial viability over safeguarding cultural authenticity.
The ‘Make in India' initiative provides a golden opportunity to coalesce tradition and innovation, thus safeguarding and revitalizing India's cultural heritage.
The Make in India campaign has undertaken several crucial initiatives to empower and uplift traditional artisans and craftsmen in India.
These programmes train artisans to utilise modern techniques, design, marketing, and e-commerce, and equip them with the expertise required for sustenance in contemporary markets.
Financial support, crucial for the empowerment of artisans, has been addressed through schemes like the Prime Minister's Employment Generation Programme (PMEGP), where loans are provided to assist artisans in starting new ventures and expanding existing ones.
Trade fairs and online platforms like e-Haats provide artisans with digital marketplace for exhibitions cum sale of their creations to customers.
Government's establishment of 150 rural handicrafts clusters across India enables the nurturing of artisans for training in skill, marketing, and financial resources, thereby facilitating their growth.

Revitalising Traditional Art Forms

The ‘Make in India' campaign is a cultural renaissance for its art, crafts, and traditions and breathes new life into them, thereby ensuring the relevance of human values enshrined in the nation's rich heritage.
This fosters a creative ecosystem that ensures, for artisans, an expansion of the horizons of their craft through the blend of modern tools with uncompromised authenticity.
In 2015, the Indian Government decided to celebrate 7 August as National Handloom Day every year.
It also envisioned the sequence of SF - Farm-to-Fiber, Fiber-to-Fabric, Fabric-to-Fashion and Fashion-to-Foreign (thereby promoting the entire value chain of the textile sector).
The resurgence of traditional pottery encourages artisans to experiment with innovative glazes and shapes while remaining rooted in the ancient craft.
Leveraging Technology for Cultural Heritage – The Potential and Future
Technology's provision of historical artefacts, artworks, and ancient texts through the creation of digital replicas, high-resolution images, and 3D scanning and printing to preserve the fragility of artefacts without any damage to the original has greatly enhanced the conservation of our heritage.
Digitization plays a pivotal role in the establishment of virtual museums and online exhibitions.
Virtual museums serve as backups for physical artefacts, providing an additional layer of protection in the event of natural disasters, theft or damage.
By eliminating intermediaries, artisans can directly engage with consumers, ensuring fair prices for their products and better financial inclusion.
E-commerce platforms enrich artisans lives by providing training, support, and marketing strategies to, entrepreneurship.
Cultural Tourism and Experiential Learning
Make in India initiative has promoted cultural tourism is through the development of new tourism products and experiences.

Some of these initiatives include:

The Swadesh Darshan scheme, was launched by the Indian Tourism Ministry in 2015. It aims to develop theme-based tourism circuits that showecase India's rich cultural heritage.
The Incredible India! campaign, launched by the Ministry of Tourism in 2002 aims to promote India as a tourist destination and highlight the country's rich cultural heritage.
Establishment of Indian Council for Cultural Relations (ICCR), that promotes Indian culture abroad.
Economic Impact of Cultural Tourism on Local Communities and Heritage Preservation
Tourism plays a crucial role in promoting Indian art and culture on the global stage by providing a platform for showcasing the country's rich artistic traditions.
Cultural diplomacy gets strengthened through cultural exchanges.
India is successful in showcasing its artistic heritage to global audiences, fostering a deeper appreciation fostering cultural contributions.

Conclusion

The ‘Make in India' has the potential to have a significant long-term impact on preserving and promoting India's cultural identity. By integrating cultural elements into tourism, fostering artisanal growth through e-commerce, and promoting cultural diplomacy, it elevates the global visibility of India's rich heritage, creating a permanent legacy for future generations.

6. Make in India's Super Star Sectors and Water Management

The Make in India initiative, launched in September 2014 with the objective of promoting India as the most preferred global manufacturing destination, has a huge reliance on the effective use of water.
There are six “super star sectors” identified as boosting the Make in India initiative: Automotive, Electronics System Design and Manufacturing, Renewable Energy, Roads and Highways, Pharmaceuticals, and Food Processing.
These sectors are expected to attract multi-billion Foreign Direct Investments (FDI), expand at a faster pace, and reinforce growth in other connected segments.
Automotive
The Automotive Mission Plan (AM) 2026 envisions the automotive industry as the engine of Make in India.
It projects a four-fold growth from the existing USD 74 billion to USD 300 billion.
The sector will create about65 million jobs and contribute over 12% to the country's GDP.
According to estimates by the automobile industry, producing a car uses 39000 gallons of water.
Thus, it becomes imperative for industries to choose locations with sufficient and sustainable water availability.
it is heartening to observe that major automotive manufacturers have been adopting sustainable water management practices and waterless solutions in their production and supply chains.
Electronics System Design and Manufacturing
Government's National Policy on Electronics 2019 (NPE 2019) recognises electronics hardware manufacturing as one of the important pillars of Make in India and proposes to achieve a turnover of USD 400 billion by 2025.
Electronics manufacturing industry needs ultra-pure water at various stages of its processes and applications.
generation of one unit of ultra-pure water requires multiple units of raw water, depending on the required quality.
Industry experts estimate that it takes approximately 2200 gallons of water, including 1500 gallons of ultra-pure water, to create one integrated circuit on a wafer, and one computer can contain a multitude of those little wafers, or chips.
This too points to the tight coupling between the availability of pure water and the success of the ‘Make in India' initiative.
Electronics industry has the potential to innovate to create ultra-pure water with minimum wastage, which is not only useful for the industry but for the generation of pure water for drinking purposes as well.

Renewable Energy

India is striving to achieve 50% of cumulative electric power installed from renewables by 2030.
The sector allows Foreign Direct Investment (FDI), which stimulates the growth of manufacturing industries that make components for power generation.
Renewable energy generation is also linked to water availability, both directly and indirectly.
1 to 5 million gallons of water is used to clean a 100 MW capacity solar plant, industry reports suggest.
When the electricity used for hydrogen generation is sourced from renewable resources, that is, without emitting carbon dioxide, it is called green hydrogen.
Since March 2019, the Government of India has been recognising Large Hydro Power Projects (LHPPs), including Pumped Storage Projects (PSPs) with a capacity of more than 25 MW as part of renewable energy.

Roads and Highways

A robust road and highway network is essential for a stable economy, and its capacity needs to keep pace with economic growth.
India has the second largest road network in the world, with about 63.32 lakh km.
The private participation is being encouraged with the amendment of the National Highways Act 1956.
Roads and highways are the infrastructures that interact directly with water courses. So, it is important that the road and highway network be planned and implemented with due consideration for water conservation.
There is also scope for collaboration with water conservation efforts.

Pharmaceuticals

India's pharmaceutical industry is the third largest in the world in terms of volume, with a network of 3000 drug companies and 10,500 manufacturing units.
India's pharmaceutical industry is expected to grow to USD 130 billion by 2030.
Further, our export of medical devices is expected to reach USD 10 billion by 2025.
Government has launched Production Linked Incentive (PLI) schemes for medical device with financial incentives worth USD 400 million to boost domestic production.
National Medical Devices Policy was launched in May 2023 with a vision to place the Indian medical devices sector on an accelerated growth path with a patient-centric approach to meet the evolving healthcare needs of patients by building an innovative and globally competitive industry in India.
The availability of pure water of high quality is inevitable for pharmaceutical industry in almost all stages of manufacturing cycle.
According to a study published by the World Wide Fund (WWF), 80% of the top 30 global pharmaceutical companies list water as one of their top sustainability focus areas, and 83% of the companies regularly undertake water risk assessments.

Food Processing

The food processing industry helps reduce the gap between agriculture and other industry sectors.
This is one of the prominent means of enhancing farmer's income through value addition and market linkage.
Under ‘Make in India', the Ministry of Food Processing is assisting in establishing integrated cold chain projects and Mega Food Parks.
Government's PLI scheme for the food processing industry has an outlay of INR 10900 crore, which will be implemented over a six-year period from 2021-22 to 2026-27.
The implementation of the scheme would facilitate the expansion of processing capacity to generate processed food output of INR 33,494 crore and create employment for nearly 2.5 lakh people by the year 2026-27.
Pradhan Mantri Formalisation of Micro food Processing Enterprises (PMFME) scheme aims to enhance the competitiveness of existing individual microenterprises in the unorganised segment of the food processing industry and promote the formalisation of the sector.
water is an integral component in the operation of the food processing industry.
According to UNFAO's report, out of the 90% of water consumed in agriculture, 70% is for food production, and 20% is for food processing.
This indicates the scope of process improvement in the sector to bring down the water intensity.

Way Forward

Government has simplified the regulatory mechanisms so that businesses are not facing unnecessary hassles. However, a cautious approach is to be followed while easing the water and environment related norms.
While the circular use encourages reuse and recycling of fresh water drawn, the water-neutral approach advises optimization of process to bring down the water requirement as low as possible.
We must also be cautious that the faster growth of innovation and manufacturing does not inculcate the habit of discarding products before their lifecycle for want of new ones, and hampers the productivity of resources, including water.

7. Changing Paradigm of FDI

Foreign Direct Investment, or FDI, refers to the investment made by foreign companies or individuals in a host country to establish or expand their business operations.
It has been a significant growth booster by providing external resources, new technologies, capacity building, and employment possibilities.
FDI also promotes economic growth by easing access to foreign markets and providing capital, foreign exchange, and technology.
FDI can have a significant impact on the manufacturing industry in different ways.
First, by bringing new capital and technology to the industry, this boosts productivity and efficiency, and helps domestic manufacturers produce high-quality goods at lower costs.
Secondly, by creating employment opportunities through the setting up of new factories or expansion of existing ones.

FDI: The Conceptual Background

FDI refers to long-term participation by one country in another country.
It usually involves participation in management, joint ventures, and the transfer of technology and expertise.
IMF defines FDI as “The acquisition of at least 10% of the ordinary shares or voting power in a public or private enterprise by non-resident investors”.
There are two major types of FDI: horizontal FDI and vertical FDI.
Horizontal FDI is undertaken when the company wants to expand horizontally to produce the same or comparable goods in the host country as in the home country.
Product differentiation is a central aspect of horizontal FDI's success.
it is more profitable for the multinational company to be at a foreign location, and company can save a lot on low-cost inputs, such as labour.
Vertical FDI is undertaken when an organization seeks to exploit raw materials or wants to be closer to consumers by acquiring distribution outlets.
The idea is to make the production process more cost-efficient by reallocating some stages to low-cost locations.
It is conducted to benefit from the factor price differences between countries.

FDI in India

FDI enters India through many routes such as-
Automatic route- Foreign investors can invest in most sectors without requiring prior government approval. It provides ease of doing business and attracts investors from different parts of the world.
Government route- These sectors are considered sensitive or require special approval are regulated by the government.
Mergers and Acquisitions- Here foreign companies acquire existing Indian companies. Through this route, foreign investors can enter the market quickly and leverage existing resources and market presence.
The National Investment Promotion and Facilitation Agency reported that in the year 2022-23, a total of 70.97 billion US dollar FDI equity inflow took place in India.
The top five countries in terms of FDI investments in 2022-23 are Mauritius (26%), Singapore (23%), the USA (9%), the Netherlands (7%), and Japan (6%).

FDI: Change in Policy Paradigm

Government of India has implemented several changes to the Foreign Direct Investment (FDI) policy to promote investment, ease business operations, and enhance economic growth. Some of which are as follows
Single-Brand Retail Trading (SBRT)- Government allowed 100% FDI in single-brand retail trading, permitting foreign retailers to own 100% of their Indian subsidiaries without government approval and Relaxation of local sourcing norms for first 5 years.
Construction Sector- Government revised the definition of “real estate business” to include the development of townships, housing, built- up infrastructure, and construction development projects.
Digital Media- Government allowed 26% FDI under the Government approval route for digital media entities engaged in uploading/streaming news and current affairs content.
Contract Manufacturing- It was included in the definition of SBRT, allowing manufacturers to undertake contract manufacturing for entities engaged in SBRT.
Coal Mining and Contract Manufacturing- 100% FDI in coal mining under the automatic route and Contract manufacturing was included in the definition of SBRT.
Civil Aviation- 100% FDI in scheduled airlines: In March 2016, the Government allowed 100% FDI in scheduled airlines under the automatic route.
Defence Sector- FDI limit through the automatic route was increased from 49% to 74%.
Insurance Sector- FDI limit was increased from 49% to 74% under the automatic route.
E-Commerce- Government introduced new FDI norms for e-commerce companies, including restrictions on exclusive deals, control over inventory, and equity participation in vendors.
Basic Objectives of Make in India
Attract FDI and make India a more attractive destination for multinational corporations seeking to establish a manufacturing base.
Promote domestic industries and move forward to India's self-reliance, and strengthen its industrial ecosystem.
Boost employment opportunities,
Foster Innovation and Technology and promote knowledge sharing and the development of cutting-edge technologies within India,
Enhance Export Competitiveness
Impact of FDI on India's Manufacturing Sector and Make in India-
Manufacturing sector contributes 17.3% of the total gross value added in GDP (Economic Survey, 2022-23).
the annual FDI equity inflows in the manufacturing sector have been steadily increasing over the last few years.
India's manufacturing output has continuously increased from 381.51billion US dollars in 2019 to 443.91billion US dollars in 2021, and contribution of the manufacturing sector to India's GDP during this time increased from 13.47% to 13.9% (Macrotrends, 2022).
Automobile industry in India witnessed a growth of 25.54% from 2017-18 to 2018-19.
In fiscal year 2021, the total FDI equity inflow to the automobile sector in India amounted to approximately 60 billion US dollars.
Indian automobile sector contributes around 7% of total GDP and employs approximately 19 million people (Statista, 2023).
The textile sector has attracted FDI of 1522.23 million US dollars from 2017 to 2022.
The textile and apparel industry represents over 4% of India's total GDP and more than 14% of the country's export earnings annually, making it India's largest manufacturing sector.
Automobile and textiles are two of the very important industries considered under the Make in India campaign which have expanded and are able to attract a high amount of FDI.

Conclusion

FDI has become a prominent feature of globalization, particularly in emerging economies. FDI plays a significant role in emerging economies to bridge the gap between providing capital and technological support for industrial development, which plays a critical role as a driver of economic growth.

8. Food Processing Advancing Make in India

Food and Agriculture Organization (FAO) roughly estimates food waste at around 40% of the total annual production in India.
Reasons of which are an inefficient supply chain and a fragmented food system.
So, the foolproof solution to food wastage is supplementing the supply chain strengthening with creating strong food processing industry with deep penetration in the hinterlands.

Types of Food Processing

According to FAO (Food and Agriculture Organization), processed foods can be classified into three types viz. Primary, Secondary and Tertiary.
The primary processing includes basic cleaning, grading and packaging as in case of fruits and vegetables.
Secondary processing includes alteration of the basic product to a stage just before the final preparation as in case of milling of paddy to rice.
Tertiary processing leads to a high value-added ready-to eat food like bakery products, instant foods, health drinks, etc.
The government of India also recognizes the potential of this emerging sector and has launched some far-fetched schemes to promote Make in India in food processing. Some of the major schemes are:

Pradhan Mantri Kisan Sampada Yojana (PMKSY)

It aims to develop a modern food processing infrastructure.
It is a comprehensive package that will result in the creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet.
Under this scheme, 41 Mega Food Parks, 376 Cold Chain projects, 79 Agro-Processing Clusters, 489 proposals under the Creation/Expansion of Food Processing and Preservation Capacities (CEFPPC), and 183 Food Testing laboratory projects have been approved across the country.
Central Government launched SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) with an allocation of Rs 6,000 crore. The scheme was renamed PMKSY in August 2017.
Later, the ‘Pradhan Mantri Kisan Sampada Yojana (PMKSY)' was extended till March 2026 with an allocation of Rs 4,600 crore.

Pradhan Mantri Formalisation of the Micro Food Processing Enterprises Scheme (PMFME):

It was launched on 29 June 2020.
It aims to improve the existing microenterprises in the unorganised segment of the food processing industry and formalise the sector.
currently being implemented in 35 states and union territories.
It also includes US $ 487.61 (Rs. 40,000) in financial assistance for working capital and the purchase of small tools for each member of the Self-Help Group (SHG) involved in food processing operations.

Production Linked Incentive Scheme for Food Processing Industry (PLISFPI):

It aims to boost domestic manufacturing, increase exports, while supporting food manufacturing entities with stipulated Sales and willing to make investment for expansion of processing capacity and branding abroad to incentivise the emergence of strong Indian brands.
It aims to assist in the emergence of global food manufacturing champions commensurate with India's natural resource endowment and to encourage Indian brands of food products in foreign markets.
According to an estimate published on the official website of the National Investment Promotion and Facilitation Agency, the Indian Food Processing market is growing at a compound annual growth rate of 15.2% and is estimated to reach $ 535 billion by 2025.
Food processing industry is leading the way by linking Indian farmers to consumers in domestic and international markets.
Union Cabinet gave its approval to introduce the Production Linked Incentive (PLI) Scheme in Food Products with an outlay of Rs. 10,900 crore for Enhancing India's Manufacturing Capabilities and Enhancing Exports—Aatmanirbhar Bharat.
The retail segment contributes 70% of the total sales in the Indian food and grocery market, which is the world's sixth largest.
The Indian gourmet food market is currently valued at $ 1.3 billion and is growing at a Compound growth Rate (CAGR) of 20 per cent.
In dairy production, India enjoys the first spot globally. But when it comes to exports, it ranks 46^th.
India is the second-largest veggie producer but 15^th in exports.
production of cereals, fruits, and nuts in India too stands at number two in the world, but in exports, the country's rank is 5^th and 25^th respectively.
exports of the processed food category are increasing far faster than the unprocessed food category.
Food Processing has also been designated as a Special Focus Sector by the government in the National Manufacturing Policy.
To capitalise on the unique organic character of agriculture in the North East states, one Mission Organic Value Chain Development in the North East Region (MOVCDNER) has been launched.
Under this farmer receive a subsidy of Rs. 31000/ha for three years under PKVY and Rs. 32500/ha for three years under MOVCDNER for various organic inputs, including organic fertilizers.
Within the next five years, India hopes to quadruple its marine product exports to Rs. 1 lakh crore from Rs. 50,000 crore.
The Government intends to build 10,000 new FPOs, which could act as a huge accelerator for farm-gate food processing and ultimately give ‘Make in India' a big boost in food processing.

9. Renewable Energy Making India Self-Sufficient

India is the fastest-growing economy globally and has overtaken the UK to become the 5^th largest economy in the world.
It imports more than 80% of its crude oil for energy requirements from outside sources and is the 4th largest emitter of CO2.
India has a target to cut carbon emissions by 1 billion ton by 2030 and achieve net-zero emission status by 2070.
India stands 4^th globally in Renewable Energy Installed Capacity (including Large Hydro), 4^th in Wind Power capacity, and 4^th in Solar Power capacity (as per the REN21 Renewables 2022 Global Status Report).
Country has set an enhanced target at the COP26 of 500 GW of non-fossil fuel-based energy by 2030.

Why Renewable Energy

Sustainable: Energy generated from renewable sources is cleaner, greener, and more sustainable.
Employment Opportunities: Inclusion of newer technology simply means more employment opportunities for the population of the country.
Market assurance: From an economic point of view, renewable sources provide the market and revenue assurance that no other resources can provide.
Power supply: Providing 24*7 power supply to 100% of the households and sustainable forms of transport, are some of the goals that can only be achieved through sustainable power that comes from renewables.

Initiatives taken by Central Government

Wind energy programme with the target of achieving a capacity of 60 GW by 2022.
FDI in India's able energy sector stood at $ 251 million in the third quarter of the financial year FY 2023.
Top investing countries being Singapore, Mauritius, the Netherlands, and Japan.
Cost of solar power in India has fallen by 84% since 2010, making it cheaper than coal-based power in most parts of the country.
Cost of wind power has fallen by 49% in the past decade, making it one of the most cost-effective sources of energy in India.
The country is a pioneer in floating solar technology, with the world's largest floating solar power plant located in Kerala.
India is also home to the world's largest solar park, the Pavagada Solar Park in Karnataka, which has a capacity of 2 GW.
Pradhan Mantri-Kisan Urja Suraksha evam Utthaan Mahabhiyan, (PMKUSUM) launched in 2019, aims to provide financial and water security to farmers through harnessing solar energy capacities of 30,800 MW (Revised in 2020) by 2023.
Other important steps taken by Government are as under

Permitting Foreign Direct Investment up to 100 per cent under the automatic route.
Waiver of inter-state transmission charges on transmission of electricity generated from solar and wind sources of energy, for projects commissioned up to 30 June 2025.
Setting up of Ultra Mega Renewable Energy Parks to provide land and transmission to renewable energy developers on a plug and play basis.
Laying of new transmission lines and creating new sub-station capacity under the Green Energy Corridor Scheme for evacuation of renewable power.
Standard Bidding Guidelines for tariff based competitive bidding process for procurement of Power from Grid Connected Solar PV and Wind Projects.
‘Must-run' status to solar and wind power as per clause 5.2(u) of Central Electricity Regulatory Commission Regulations, 2010
Bio-CNG vehicles with 20% blending in petrol is also a target the Government has been chasing. fuels produced from biomass have a high calorific value and are cleaner than traditional biomass.
Hydrogen in technology is likely to change the landscape of renewables, shifting towards Hydrogen Based Fuel Cells Vehicles (FCV) is another area of focus.
Grid Integration: It is the practice of developing efficient ways to deliver variable renewable energy (RE) to the grid.
According to the latest report from the International Energy Agency (IEA), India's installed renewable energy capacity will reach 174 GW in 2023, accounting for about 37% of the country's total energy supply.
The country's power distribution companies, known as DISCOMs, have struggled to integrate renewable energy into the grid due to a lack of grid infrastructure and limited storage capacity.
Integrating renewables with the main grid in India is one of the major challenges.
A sustainable, round-the clock power supply, along with the storage system, is a big challenge ahead.
Much power is consumed in the agricultural sector.
The Green Energy Corridor project, launched in 2013, aims to improve the transmission infrastructure for renewable energy and increase the capacity of grid-connected renewable energy.
Agricultural subsidies should be rectified in order to ensure that only the required amount of energy is consumed.
Hydrogen fuel cell-based vehicles and Electric vehicles are the most suitable options when it comes to shifting towards renewable sources of energy, that's where we need to work upon.

Way Forward

India has to achieve energy security for sustained growth and development and safeguard our interests from global geo-political events. A shift towards renewables has to become a mass movement.

UPSC MAINS PRACTICE QUESTIONS

Evaluate the effectiveness of Make in India initiative in boosting the manufacturing sector in the country.
Critically examine whether the ‘Make in India' initiative has met its objectives or not. Suggest some measures needed to improve its outcomes.
What is Foreign Direct Investment (FDI)? Discuss its importance to the Indian economy.

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