Make in India is an initiative of the Government of India to encourage multi-national, as well as domestic, companies to manufacture their products in India. It was launched by Prime Minister Narendra Modi on 25 September 2014. When you import goods from another country, the lead time for you to order and bring goods to India is much higher, while if you manufacture in India, the lead time gets reduced, say from four to five weeks to two to three weeks. That was a key reason for the decision to “make in India”.

It is a challenging area to try to maintain the business and make it successful within the constraints of an economy like India, because for producing export quality goods for both domestic consumption and exports manufactures should be supported by a wide enough consumer base for good quality products. Therefore manufacturer are encouraged to keep costs down, thereby limiting their ability to move up the quality index.

In the circumstances, India’s manufacturers have two choices – ‘Make for India’ or ‘Make in India’ for export markets. “Make in India” and “Make for India” are qualitatively different choices. The former leaves the manufacturers entrapped in a low-level equilibrium, exit from which is very difficult. The latter choice – ‘make in India’ for external markets – requires technological and professional expertise, which only a handful possesses, and an enabling infrastructure and policy environment, which is sorely deficient. A lot of reforms are needed to make foreign direct investment (FDI) into India more attractive to doing business, India isn’t quite ready for the big time. Therefore any campaign to ‘make in India’ by ‘making for India’ is unlikely to achieve intended results, at least in the medium-run.

Keywords:- Make in India, Make for India, Manufacture, equilibrium, FDI, external market

 Download Full Paper