Investments in 'Make in India' plan face challenges

THE Indian government set in motion its high-profile move to the "Make in India" programme in Mumbai last week. First mooted by Prime Minister Narendra Modi in his Independence Day speech in 2014, the policy seeks to push industrial employment in the country from the current 17 per cent to 25 per cent by 2022.

India, which has missed the industrialisation opportunity, hopes to catch up with China and much of South-east Asia. While there are several promising signs of foreign investment, structural impediments in the economy make the target a difficult and challenging one. The major collaborations announced are in defence production with several big-ticket proposals in electronics and transport. However, opportunities in employment-generating fields such as solar energy, textiles and leather have not been sufficiently pushed.

Investment in manufacturing for defence has been a major draw. For instance, Hakan Buskhe, president and CEO of Saab AB, inked deals to develop, manufacture and undertake the final assembly of its Gripen fighter jets in India. The Indian Defence Ministry is auctioning a 600 billion rupee (S$12.2 billion) contract to design and build an infantry combat vehicle in the country. Leading Indian industrialists are in the running for this. Boeing could assemble fighter planes and helicopters in India. Russia, the country's traditional weapons supplier, signed deals for transfer of technology for components of fighter aircraft, and the manufacture of multi-role helicopters in India. Other deals include overhaul of Russian-built submarines by dockyards in India.