Make in India is essentially a programme to productively employ India's youth and thereby meet one of the biggest challenges in India today of providing a big push to manufacturing, which has stagnated at around 16 per cent of the GDP for several decades in India.
This percentage must reach around 25 in the short and medium term. It is with this in view, the government launched the ''Make in India'' initiative, Prime Minister Narendra Modi told a business conference in bangalore today.
To make it a success, apart from vigorous implementation of measures for ease of doing business, he said, the government has fast-tracked approvals and clearances for industry and infrastructure.
In addition, transparent auction and allocation of spectrum and of key natural resources like coal, iron ore and other minerals in the last 15 months have created a level playing field for investors, he pointed out.
The government also liberalised the foreign direct investment (FDI) regime allowing 100 per cent FDI in railways and enhancing foreign equity limit in defence production and insurance business to 49 per cent in a bid to bridge the paucity of domestic financial resources, Modi pointed out.
Besides, Modi said, the FDI policy for construction and medical devices now allow greater foreign participation. We have rationalised a number of other FDI related policy issues, including bringing in the concept of composite sector caps for the FPIs and other investors, he added.
India, he said, is keen to build futuristic physical and social infrastructure and has targeted an annual funds flow of Rs20,000 crore (approximately €2.7 billion) into a special India Investment and Infrastructure Fund to be invested in infrastructure projects.
''Through self-imposed discipline in the management of our financial resources, we have been able to allocate more resources for infrastructure sectors... We are also putting in place a professional team for asset management,'' Modi said.
Besides, the government has come up with the mechanism of tax-free infrastructure bonds for projects in rail, road and irrigation sectors, he added.
Besides, the Prime Minister said, the government has taken a number of decisions on regulatory and taxation issues which were adversely impacting the sentiments of foreign investors. We have taken very decisive steps to remove a number of long pending concerns of investors. These include:
- Expediting regulatory clearances, including security and environmental clearance;
- Across-the-board increase in the validity period of industrial licences;
- De-licensing of a number of defence items and number of restrictions like end-use certificate;
- Increase in the validity period of defence industrial licences up to eighteen years from three years;
- Withdrawal of decision on retrospective taxation and the government's stance against imposition of Minimum Alternate Tax on FPIs;
- Notification on regulations for Alternative Investment Funds allowing foreign investments in such funds;
- Rationalisation of capital gains tax regime for real estate investment trusts
- Modification of the permanent establishment norms;
- Decision to defer the implementation of the General Anti-Avoidance Rules for two years;
- Introduction of the GST Bill in Parliament; we are hopeful to roll it out in 2016; and
- Working on a new bankruptcy code is in progress and the Company Law Tribunal will soon be formed.
He said the government wanted to make sure that the tax regime is transparent and predictable. It is also keen to see that genuine investors and honest tax payers get quick and fair decisions on tax matters, he added.
As a result of our initiatives, he said, FDI inflows have gone up by 40 per cent compared with previous year's corresponding period. The growth rate of GDP is also above 7 per cent now.
''India has improved its UNCTAD ranking of investment attractiveness. Against 15th so far, now we are at 9th place. India has also jumped 16 places on the World Economic Forum's global competitive index after five years of decline in the list.
''Similarly, in a ranking of the top global destinations for greenfield investment in the first half of 2015, India is at number one. Foreign Policy magazine of USA has ranked India as number one FDI destination,'' the prime minister said.
He said his government knows fully well that governments have no business to do business. ''Hence, through PPP or otherwise, we are encouraging private investments in areas where earlier only government used to invest. We are also divesting our stake in the public sector enterprises, to instill market discipline.''
The prime minister also assured investors full protection of their Intellectual Property Rights of all innovators and entrepreneurs. We have taken several initiatives for transparency and online processing in IP administration and a comprehensive National IPR policy is being finalised, he said.
''Our commitment and aggressiveness to achieve the goal in a faster and effective manner offers immense opportunities to German companies. These opportunities range from building 50 million houses to setting up 100 smart cities; modernization of our railway network and stations to setting up of new railway corridors; generation of 175 GW of renewable energy to construction of transmission and distribution networks, national highways, bridges, and metro rails. Such a huge potential for creation and production will not be available in any one country. More importantly, no one place on the earth can offer the potential for consumption on such a massive scale,'' Modi stated.
Fifteen Indian states, a number of CEOs and hundreds of companies from India, had participated in the Hannover Messe, which, he said, will go a long way in shaping our vision and strategy of manufacturing. This is particularly important at a time when India is on the path of making the country a global manufacturing hub, he added.
There is tremendous potential in India-Germany economic collaboration. Germany ranks 7th among foreign investor countries in India. About 600 Indo-German Joint ventures are already operating in India. However, as of now, our economic partnership remains below our full potential. We are particularly keen to develop the sectors where Germany is strong. We are working hard to create conducive conditions for the same, he said.