Is Make In India Failing? | Case study

[Music] we want to make India a global manufacturing destination this offers a timely and unique opportunity for industry and government to work together to make India truly globally competitive a manfacturing gr at the same [Music] time the challeng was to reverse the trend and provide momentum energy and a single-minded commitment to growth [Music] hi everybody make it India was one of the most ambitious initiatives of the BJP and it's been 10 years since making India was launched Prime Minister Modi today launched a makeing India campaign automobile Agro value Edition come make in India the imprint of makeing India initiative has become visible across sectors including areas where we never ever dreamt of making an impact back then it was bragged as the policy that would change the face of India and turn us into a manufacturing Powerhouse but the question is did it really happen a decade long journey has propelled India to become a global manufacturing Hub India is not yet among the top five nations which have increased their share of exports in major labor intensive sectors I think in some areas we've done a lot as I said infrastructure we've done a lot that's been very useful but we need to check the other places mod make in India fail look at this in the last decade India's manufacturing has increased by 5. 5% and today India is manufacturing everything from smartphones to solar panels to semiconductor chips to electric vehicles you name it and we make it in India so it all looks absolutely fantastic right but what if I told you that making India is actually a failure pran G make [Music] India yeah making India huh look at this making India was started with four important objectives firstly we wanted to decrease our dependence on Imports and have they decreased well yes but not significantly if we see the Imports as a percentage of our GDP in 20134 it was 25. 95 but by 2023 it only went down to 23.

9 6% so it has slightly decreased secondly through Manufacturing the government of India in 2014 set a Target to achieve manufacturing growth rate of 12 to 14% but if we see this table we are far far away from achieving this Target only in 2015 we were able to achieve this kind of growth rate and in 2019 it was minus 2. 4% and if you see the last 10 years which is 10 years into this initiative manufacturing growth in fact has slowed down to 5. 5% and its GDP share remains stagnant at 15 to 177% which is again far far away from the government's Target of 25% then we wanted to increase our exports did they increase yes look at this our exports have grown almost twice India's exports in 2014 stood at $37.

45 billion but as of 2023 it stood at $776 68 billion but the catch over here is that the objective of making India was not just to increase exports it was to increase exports as compared to our Imports but did it increase well not really look at this as of 2014 India spent $ 32. 4 billion more on Imports and outward payments than its earning from exports and inward payments but by 2024 this number stood at $54. 5 billion thirdly through making India we wanted companies all around the world to invest billions of dollars with foreign direct investment and FDI was supposed to shoot up in India but did it really shoot up not at all look at this chart while the gross investment foreign companies has shot up from $46 billion to $71 billion at the same time the gross disinvestment has increased from $13.

6 billion to $ 44. 4 billion so in short more money is going out of India than it is coming to India despite all the ra strongest growing large economy in the world etc etc the fact is the economy is not working for many of our VI India's share in the global economy export share is very minimal it's just about 1. 5% and therefore India needs to work hard to penetrate Global markets the integration of India into the global economy would have been on a more Superior base if this initiative had succeeded sadly the make in India program never really took off the way it was meant to be and lastly while we aim to employ 100 million people in manufacturing today we have barely employed 18.

5 4 million people hundreds of applicants just a handful of openings sites like this one have become commonplace in India around 30% graduates in India cannot find a job it's among the highest rates globally is a reason why making India according to the stats has failed to a large extent not fully but to a large extent now the moment we say this the left will say that it is all bjp's fault and the right will argue that Modi G is a legend and no matter what the stats say BJP has done more for India than Congress but the truth of the matter is that it's not about BJP or congress but the Indian system itself which has some viruses that are causing this failure and no matter which party is in power if we don't solve these fundamental issues we will keep failing so as responsible citizens the right question to ask is not whether BJP has succeeded or not but why has India not succeeded and why is India not succeeding at the same time the left media always keeps blaming without understanding the reasoning so today on the occasion of 10 years of making India we read through hundreds of pages of research reports and stats so that we could uncover the most important problems that are holding India behind and in this episode we are also featuring some of the most important points made by great leaders of our country like Shashi Tor nirmala Ma and even nitin gar sir so in this episode today let's do a deep dive and try to understand why exactly is making India failing what are the biggest underlying governance issues that are failing our manufacturing dream how is it costing us thousands of crores in losses and most importantly what are the solutions that we need to work on to make India succeed in the 21st century but before we move on we have a very very important announcement coming from ditto people the insurance Market in India is so tricky that either people don't buy an insurance or they end up buying the wrong insurance and because of this millions of families end up with lacks of rupees in medical bills which destroys their savings and you will be shocked to know that medical costs in India are so high that angioplasty can cost you 1. 5 to 3 lakh rupees diabetes can cost you 1 lakh rupees a year and Cancer Treatments can cost you 3 to 6 lakh rupees a year this is the reason why it's absolutely critical for you to have personal health insurance I say personal because you might have a corporate cover which won't always stay with you if you change your job or start something of your own so always have your personal health insurance to get the best possible coverage at all times and here's where I would personally recommend ditto which is by far the most trustworthy Insurance adviser for you and your family the best part about them is that they won't spam you and they have the best professional advisers at your disposal secondly at any given point in time if you have a genuine claim and your insurance company denies it ditto will personally intervene to talk to the insurance company and get to the insurance money so that you and your family can stay safe during an emergency I have personally consulted them and I can vouch for their honesty and transparency and guess what they do all of this at no cost at all which is why if you want to get the best insurance for your family if you want to keep your family safe during an emergency please use the link below and schedule a call with ditto today CH let's start by understanding why exactly is making India so so important and why are we so crazy about manufacturing everything in India why can't we just import and chill and why don't we just focus on our service industry which is growing at a very rapid Pace well that is because ladies and gentlemen manufacturing brings in three important superpowers to our economy as compared to the service based economy firstly if you look at service Industries like it Services they can largely provide jobs only to Skilled and at Max semiskilled people whereas if you look at manufacturing Industries like textile they can provide jobs to all kinds of people whether they are skilled semiskilled or unskilled people and semiskilled and unskilled people alone form more than 50% of our population which is why employing them is very very important and if you look at the difference in their employment capability it will blow your mind for example while the IT industry contributes 7. 5% to our GDP the textile sector barely contributes 2.

3% but if you look at the employment that they provide while the IT services industry employs only 5. 43 million people our textile industry alone employs 45 million people so everybody from a skilled engineer to an uneducated clerk can get a job in manufacturing so manufacturing Industries help us uplift the people from the poverty line and they help us bring them to a sustainable standard of living secondly while the services are prone to more economic shocks manufacturing Industries relatively I repeat relatively experience less shocks for example while the financial services industry and the marketing Services industry took a massive hit during the 2008 recession companies like nesle proor and Gamble and Hindustan unver were not as badly affected because if you look at the fundamental change in the industry while people could cut down on their spending on financial services and marketing Services they could not cut down on Essentials like razors detergents and baby foods and lastly while manufacturing is easily scalable to increase exports scaling a service company is relatively very very difficult so employment scale and resistance are the three superpowers that manufacturing sector brings to our economy and then comes the last reason for manufacturing which is specific to India which is to decrease our Imports and to increase our exports and currently our economy is practically bleeding because of increasing Imports and while most people think Imports don't impact our economy here's a very simple three-part answer as to why increasing Imports is bad for the Indian economy firstly Imports kill domestic Industries and they cause job losses here in India and the best example for the same is the solar panel industry if you saw saw our solar case study we saw how the Chinese vendors are providing solar panels at such dir cheap cost that no Indian company other than Vari energies is actually able to stand against them and because of this the solar industry of India is finding it very hard to progress similarly when Chinese phones flooded the Indian market Micromax and lava like companies went out of business now some people over here may argue that they were terrible phones and they did not make great products at all but the truth of the matter over here is that in the electronics Market it takes time to build a great product but once created they could create a, CR economic impact every single year secondly Imports cause a trade deficit and they decrease the value of our currency so if India Imports products worth $100 billion and exports only 70 billion worth of products this deficit of $30 billion will push us to buy more Us doll and because of this what happens we will need billion in US dollar because of which the demand for US dollar increases and when the demand for US dollar increases the dollar value will shoot up and the rupee value will go down and now what is 80 rupes to the dollar will become 90 rupes to the doll in no time and if this happens then a barrel of oil which we are buying currently at 6,000 rupes a barrel it will shoot up to 8,000 rupees a barrel simply because of the dollar conversion and because of this petrol cost will shoot up production cost will shoot up and hence inflation will shoot up in India and lastly the current account deficit causes a dent in our e economics so this $30 billion deficit after certain point will require us to take up loans which will again increase our expenses this is the reason why in 2014 under the make in India initiative the Modi government set a goal to increase the manufacturing share of GDP from 15% in 2014 to 25% in 2022 and then it got revised to 2025 due to the pandemic so this begs the question when we have a government that is so passionate about manufacturing when we have a government that is introducing so many schemes to decrease taxes and invite businesses when Modi G himself is asking businesses to come to India with tax breaks and land Banks where are we failing we have a large population we have a government that is aggressive and capitalistic and so many businesses as it is want to move out of China then the question is what exactly is the problem well one of the biggest roadblocks to Indian development is red tapism and Indian bureaucracy because of which even today India is a very difficult place to do business in and this is something that even Shashi s mentioned in our podcast processes of government every file requires four or five signatures in particular order of sequence if one guy's on leave or sick or traveling somewhere on duty or whatever the file just sits until he comes back and signs that file it's no surprise then that when Modi takes office he's given it a free hand in an effort to cut red tape LIC we had to cut red tape red tape long story short setting up a business in India involves multiple stages from company registration to obtaining regulatory approvals to even acquiring a land is a very very tedious task in India while registering a company in India can take around 15 to 30 days through electronic system the entire process of setting up operations including land acquisition environmental clearances construction and obtaining the necessary permits all of these processes can take anywhere between 1. 5 to five long years on the other hand if you look at Vietnam it takes approximately 6 months in 2024 as compared to 3 to 4 months in 2019 this duration includes the time from selecting a location to the actual commencement of the operation so do you understand the gravity of the situation if a business expects to make 10 lakh rupes in Revenue per day a delay of just 1 month in India would result in a loss of 3 CR rupees and 36 CR rupees in a month and a year respectively and for big businesses this could even mean hundreds of cres losses now you tell me if you have the option to set up a business in Vietnam would you even consider India no right in fact in 2019 Elon must casually mentioned in a tweet about coming to India next year and now it's been five long years and nothing has changed and if you look at what exactly is the problem you will see that in 2021 India's import tariffs for EVS was as high as 100% which could have costed $40,000 for an Indian buyer that is around 32 lakh rupes so Elon Musk asked the government to let Tesla sell cars in India without Manufacturing in India so that they can test the Indian markets by selling imported cars and after they reach a certain scale they would consider Manufacturing in India but the Indian government didn't want that at all India wanted Tesla to set up their own Factory instead of selling imported cars in India and fast forward to 3 years later neither the government has agreed nor has Tesla if the musk is ready to manufacture a Tex in India there is no problem we have got the all competency the vendors are available we have got the all type of technology and because of that he can reduce the cost but our request to him is that you come to India start manufacturing here India is a huge Market the export availability everything ports are available they can make their export from India and he is welcome he is welcome in India we don't have any problem now who's right who's wrong you decide but what I know for sure is that if we prevent companies like Tesla from entering India we are missing out on a huge opportunity both in terms of taxes and in terms of employment for the people of India this is the first problem that we have the second problem that we have is of environmental clearances and this is literally blocking the growth of infrastructure and is hindering businesses from starting operations in India in fact this is something that even g s mentioned in our podcast sh cont so do you understand the gravity of this problem in fact in recent times the Delhi Metro's lpat nagar to sake G block Corridor it has been delayed by at least 6 months and what was to be completed in 2024 is being pushed to 2025 and in Gujarat it is absolutely unbelievable that over 1,000 projects have been delayed due to environmental approvals in August 2024 this is the second problem that we have that is slowing down the growth of our economy and then we come to the third problem which is the biggest problem of all which is called land acquisition for those who don't know in India if you want to acquire land for industrial purposes or for highways it can take years due to Legal dispute compensation issues and approvals from various government departments and it affects both International businesses and domestic infrastructure projects and the best example example of this is of a company called posco posco is a South Korean Steel company that wanted to come to India and they announced plans to invest 12 billion dollars in a steel plant in odisha back in 2005 and this would have been one of the biggest foreign direct investments in India but guess what the project faced a massive delay for 10 long years and this was because of land acquisition and environmental clearances so local residents refus to give up their land and after 2017 which is after more than a a decade of struggle PCO decided to scrap the project and move out of India PCO stall project to built a steel mill in the Indian state of adisha the biggest foreign direct investment ever in India is yet to take off the project was launched in 2005 but has been delayed for roughly 9 years due to land acquisition issues and environmental concerns largest foreign direct investment project posco is paralyzed by protesters who are determined not to allow the Takeover of their land in fact let alone foreign companies even India's own infrastructure projects have been suffering due to land acquisition processes and the best example for this is bhat Mal but in 2023 the ministry actually increased the cost to 32 CR rupees per kilometer for 26316 kilm the bhat Mala Fe project which was originally supposed to be completed by 2022 it is now being delayed to 2027 and because of this delay the cost has doubled from 5.

35 lak cror to 10. 63 lakh cror and this is happening because of land acquisition problem and the rising material costs secondly the most famous project of India that the government is absolutely proud of is the Mumbai Ahmedabad bullet train project but even this project was expected to finish by 2023 and as usual due to delays in land acquisition its completion has been pushed to 2028 and if you look at the cost it has increased from 1. 08 lakh crores to nearly 2 lakh CR rupees in fact this is something that even Nala man mentioned in our podcast after all the same bullet train was approved in Maharashtra as well but what happened with a change of government that particular agreement or understanding was put in the back burner but if you look at Vietnam they have streamlined land acquisition policies to such an extent that Samsung was able to get certificate in 2008 and they set up a massive smartphone manufacturing plant in 2009 itself and as of today Samsung has invested $22 billion in Vietnam you know how much money that is $22 billion is equivalent to 3.

5 times of Reliance biggest oil refinery of jam nagar and here in India you would be shocked to know that around 70% I repeat 70% of our infra projects get delayed and I also read this shocking fact that on an average as of August 2022 these projects were running behind by over 41 months which is almost 3 and a half years of delay this is how land acquisition and environmental certifications are paralyzing the growth of India if this is clear to you let's come to another big problem which is our infrastructure issue here we have rail road trains and ports all of which are in terrible conditions in India as compared to the international standards for example while the average speed of a Goods train in India is 25 km/ hour in China it is 45 km/ hour so our Goods trains are literally moving slower than a freaking Activa I'll attach a complete case study on this in the description so that you can understand this problem better if this is clear to you let's come to roads did you know that in India trucks travel at an average speed of 20 to 40 km/ hour meaning it can take anywhere between 2 to 3 days to cover 400 to 600 km in distance but in China it is 60 km/ hour and even in Vietnam it stands at 40 to 60 km hour then let's come to Ports even though India has a longer Coastline and more ports than Vietnam the average turnaround time for vessels at the Mumbai port in India was more than 2 days whereas for the Saigon port in hoimin City it was just around 0. 9 days or 21. 6 hours so ships in Vietnam move twice as fast while coming and going out to the ports as compared to India similarly on an average shipping containers spend 22 days on the depot while in Vietnam they just spend 9 days and this difference of 13 days increases the transportation cost for companies by billions of dollars and if you compare India's Port capacity to that of China China has seven out of the top 10 ports in the world and India's gmpt which is our top Port it is at the 35th spot and while ports in China could handle 1.

17 billion tons of goods back in 2020 India's largest port which is the Mundra Port can only handle 180 million metric tons of cargo perom so practically teally our ports are nowhere close to the capacity and speed of Vietnam and China our trucks are slower and our Goods trains run slower than an Activa and even if the government wants to build ports the problem is that because of land acquisition and environmental clearance issues 70% of our Central infrastructure projects get delayed due to clearance and approvals and even if the government wants to speed up these infrastructure projects the problem is that because of land acquisition issues and environmental clearance issues 70% of central infrastructure projects get delayed this is the fourth problem that we have and lastly we have a skill problem and a labor problem and you would be shocked to know that only 2% of India's Workforce holds a certificate proving Mastery of a professional skill and in comparison for South Korea this number stands at 96% for Japan it stands at 80% and China stands at 40% in fact even Vietnam stands at 12% now while the government did try to fix it through skill India initiative the reality is that only 5% of India's Workforce has received formal skills training and as we all know India's formal education system is so pathetic that as per the skill India report of 2024 35% of our btech graduates are unemployed 77% of our poly Technic graduates are unemployed and 60% of our ITI graduates are unemployed and all these problems together they cause the biggest problem of all which is unemployment and like I said before while the government set the objective of creating 100 million jobs by 2020 so far there are only 18.