Make in India! But Why in India?

December 15, 2014

India! A buzz word and ray of hope for the World and a great pride to all Indians.  Indian is known for its cultural, social, religious and many other factors which are known to us. But let us try to understand the reason for a cry to the World to Make in India. Our Prime Minister, Mr.Narendra Modi had initiated a big dream for India and he is working hard to achieve the same through attracting attention of the World to India as an Investment destination. But what make India special as an investment destination? Throughout this article I am trying to understand the qualifications of India to invite the World to come and Make in India and what makes us special as an Investment destination.

 

The Growing Population is not a bane!

One out of every six people in the world is an Indian! In 2011, India’s population is estimated at 1.21 Bllion people, against the total world population which is 6.9 Billion. Moreover, India’s biggest asset is huge size of its young and working population class. The proportion of population in the working age-group 15-59 years is expected to rise from 57.7 percent in 2001 to 64.3 percent in 2026. This is going to positively impact India’s growth in the coming years. According to the National Population Commission, India will add 173 Million people in working-age population by the year 2026. In fact, by this time, India will have the largest working age population in the world. This will act as a vital point in making India a world leader in coming years.

 

The major and prime most attraction on India as an Investment destination is the huge population base India is having. The growing poor and middle class population and their increasing buying capacity is increasing the domestic consumption. As per the McKinsey Report (2010) if India continues its recent growth trend, average household incomes will triple over the next two decades and it will become the world’s fifth largest consumer economy by the year 2025. The consistent economic growth in India has been an important factor that has contributed towards the decline in poverty.

 

India's per capita income is projected to soar by 10.4 per cent to Rs 74,920 in 2013-14 as the country becomes a $1.7 trillion economy. Per capita income is calculated by evenly dividing the national income by the country's population. However, the increase in per capita income would be only 2.8 per cent in 2013-14 if it is calculated on the basis of 2004-05 prices. Per capita income (at 2004-05 prices) would be Rs 39,961 in 2013-14, against Rs 38,856 in the previous fiscal, according to the latest data on national income. The size of the economy at current prices is projected to rise to Rs 105.39 lakh crore ($1.7 trillion)at the end of 2013-14 fiscal, up 12.26 per cent from Rs 93.88 lakh crore in FY 2012-13.  Based on 2004-05 prices, the Indian economy is projected to expand by 4.9 per cent in the 2013-14 fiscal. This is higher than 4.5 per cent growth in 2012-13. The country's population is expected to increase to 123 crore by the end of March 2014, from 121.7 crore in March 2013.(Source: Economic Times)

 

Governance

India has a Federal Republic Government, established in 1947 after it became independent. The Indian political system is supported by Executive, Legislative and Judicial branches. The political governance system in India was established by the ‘Constitution of India’ in the year 1950. It has given India’s Union Government the governing authority of all its administrative divisions, which comprise of 28 states and 7 union territories.

 

The Executive branch is constituted by India’s President, Prime Minister and the Council of Ministers. The Legislative branch is made up of the dual functioning of Lok Sabha or the House of the People and the Rajya Sabha or the Council of States. The Judicial branch is composed of the Supreme Court, High Courts and subordinate courts. India follows the British law which has been amended to suit local conditions.

 

The infrastructure

  • Road - India’s total road network spans 3.34 million KM which is second largest in the world. This road network consists of 65,589 KM of highways.

  • Rail - Indian rail route is 63,028 KM long which is largest in Asia and second largest in the world under one management. Indian Railways have 222,147 freight wagons for use in movement of freight to any corner of the country.

  • Ports - There are 13 major ports and 187 minor/intermediate ports along the coast line of the country. Total capacity of Indian ports in the year 2010-11 was 616.73 million tons. Ports handle over 90% of India’s international trade.

  • Airports - India has a total of 125 Airports, which include 11 International Airports.

  • SEZs - With a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000 by Indian Government. There are 133 special economic zones operating presently all over India.

 

Locational advantage

Located in south Asia, India has its border countries as China, Bhutan and Nepal on north-west side, Myanmar and Bangladesh on East side and Afghanistan & Pakistan on its North-West side. The great Himalaya Mountains divide India from rest of Asia in its North side. Some of the emerging and established markets such as Middle-East and South East countries are also closely located.

Naturally connected via the sea route from the other three sides, India is surrounded by Bay of Bengal, Arabian Sea and Indian Ocean which facilitates most its overseas trade in all directions. Total area of the country is about 3.3 million square kilometers, 90% of which is land area. India is the seventh largest country in the world in area. India’s coast line spreads over a length of 7,517 kilometers on three sides.

 

Education strata and manpower resources

India can boast of remarkably strong manpower resources with one of the most developed higher education systems across the globe. India’s size of education system ranks third in the world, after US and China. The literacy rate in India is 74 percent in 2011, with English being understood and used commonly as a medium of spoken and written communication. India had 409 university level institutions in 2008-09. The total number of colleges is 25,990 and that of polytechnics was 1742. Total number of annual enrolment for various postgraduate courses is as high as 18.6 Million in the nation. India has 1522 degree-granting engineering colleges with an annual student intake of 582,000. The number of student enrolled each year to become doctors is as large as 273,366 in India. The number of graduates from other courses like management, law, architecture, hotel, travel and tourism management are also growing fast.

 

Material resources

India can boast of being rich in a variety of natural resources. Some of them are coal, iron ore, manganese ore, mica, bauxite, petroleum, titanium ore, chromite, natural gas, magnesite, limestone, arable land, dolomite, barytes, kaolin, gypsum, apatite, phosphorite, steatite and fluorite.

 

Other Major attractions to Make in India

  • Large and fast growing middle class & graduation of poor to middle class and hence growing domestic consumption

  • Indian Government’s constantly evolving investor friendly policy

  • Lower cost of production due to lower labour rates

  • Availability of skilled manpower

  • Abundant natural resources

  • English as one of the major business languages

  • Government’s emphasis on infrastructure improvement

  • India’s location, close to markets of South East Asia, Middle East and also Europe.

 

All these factors are capable to make India a favourite Investment destination, but the policies and procedures for  entering India should be less complicated and investor friendly. By implementing clear policies with a long term vision will give investor confidence and India can emerge as Super financial power in years to come

 

Source : Economic Times, Articles posted by Government of India, Wikipedia

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