Make in India mega event fails to boost business confidence
The week-long Make-In-India event, which ended in Mumbai yesterday, has managed to create a buzz to boost manufacturing in India but a lot still needs to be done to take the share of manufacturing from the present 17% to 25% of the Gross Domestic Product (GDP), say CEOs.
The Indian government yesterday announced that it received investment commitments worth Rs 15.2 trillion or $222 billion during the week, But a quick perusal of investment commitments shows that many of these investments announced were already made earlier.
For example, during the Digital India conference held in July last year, Anil Agarwal-owned Sterlite had announced Rs 40,000 crore of investments in Liquid Crystal Display Unit in India. But this week, Vedanta again announced a Rs 68,000 crore LCD unit in Maharashtra. During the week, many companies just reiterated their capital expenditure plans as fresh investments.
The Make in India Week was held in the backdrop of falling stock markets, rising bad loans of the banks and record low capacity utilisation of Indian factories.
CEOs say even though the investment commitments will take at least two years to fructify, the event has showed the commitment of Modi’s government to take the country forward. "Make In India is a step in the right direction and all the measures are to stimulate the demand for goods and services in the economy. That means the government must invest in infrastructure that is the prime move forward," said Ravi Uppal, CEO and MD Jindal Steel & Power.
Apart from Modi, Finance Minister Arun Jaitley, Defence Minister, Manohar Parrikar, Power Minister, Piyush Goyal, Road and Transport Minister, Nitin Gadkari and Maharastra Chief Minister Devendra Fadnavis made a plea to investors to start investing in the country – taking into account India’s huge potential. Goyal said the country offers investment potential worth $1 trillion (Rs 68 trillion) in power sector by 2030 while Gadkari asked investors to take advantage of $250 billion to construct 50,000 kilometers for roads.
Indian industry has always complained of creaky infrastructure in the country, which has stalled growth. “Infrastructure has not been able to match the pace of growth in the country. What we lacked is thinking big enough for the growth that we could achieve,” former Chairman of Tata group, Ratan Tata said.
The good news from the event was that Maharashtra government will award contracts to build the trans-harbour sea link between Mumbai and Navi Mumbai by October this year. The project will cost Rs 17,750 crore and of this almost Rs 15,000 crore will be lent by Japan government at very low interest.
But the entire positive atmosphere created by the Modi government was sullied by an Income Tax notice to Vodafone - which is fighting a pitched battle with the Indian government over retrospective tax. “The timing of the notice just shows that Modi government is not getting support from its own officials,” said a tax advisor.
No wonder Vodafone reacted angrily saying the government and the tax department are not in sync with each other.
Meanwhile, the global defence companies promised to set up units in India if the government gives them orders for defence equipment. The Modi government wants defence imports to fall to 40% from the current 65% and has asked Indian companies including Tata, Mahindra, Bharat Forge to set up units in India so that it can pass on the orders to local firms. This, the government says, will help in local job creation and save precious foreign exchange.
Corporate India is now hoping that the Budget to be presented by Jaitley on February 29th will include tax and banking reforms which would help local manufacturing. Says Banmali Agrawala, GE South Asia president & CEO: "The economy needs faster reforms, which would make the entire Make In India more impactful. However, India will have to balance the economic development and social and political side of that."
Aditya Birla group’s chairman Kumar Mangalam Birla said: “There is no secret sauce of manufacturing that we are not aware of… it is just like making an elephant dance. It just cannot happen in a few months.”
The Indian government yesterday announced that it received investment commitments worth Rs 15.2 trillion or $222 billion during the week, But a quick perusal of investment commitments shows that many of these investments announced were already made earlier.
For example, during the Digital India conference held in July last year, Anil Agarwal-owned Sterlite had announced Rs 40,000 crore of investments in Liquid Crystal Display Unit in India. But this week, Vedanta again announced a Rs 68,000 crore LCD unit in Maharashtra. During the week, many companies just reiterated their capital expenditure plans as fresh investments.
The Make in India Week was held in the backdrop of falling stock markets, rising bad loans of the banks and record low capacity utilisation of Indian factories.
CEOs say even though the investment commitments will take at least two years to fructify, the event has showed the commitment of Modi’s government to take the country forward. "Make In India is a step in the right direction and all the measures are to stimulate the demand for goods and services in the economy. That means the government must invest in infrastructure that is the prime move forward," said Ravi Uppal, CEO and MD Jindal Steel & Power.
Apart from Modi, Finance Minister Arun Jaitley, Defence Minister, Manohar Parrikar, Power Minister, Piyush Goyal, Road and Transport Minister, Nitin Gadkari and Maharastra Chief Minister Devendra Fadnavis made a plea to investors to start investing in the country – taking into account India’s huge potential. Goyal said the country offers investment potential worth $1 trillion (Rs 68 trillion) in power sector by 2030 while Gadkari asked investors to take advantage of $250 billion to construct 50,000 kilometers for roads.
Indian industry has always complained of creaky infrastructure in the country, which has stalled growth. “Infrastructure has not been able to match the pace of growth in the country. What we lacked is thinking big enough for the growth that we could achieve,” former Chairman of Tata group, Ratan Tata said.
The good news from the event was that Maharashtra government will award contracts to build the trans-harbour sea link between Mumbai and Navi Mumbai by October this year. The project will cost Rs 17,750 crore and of this almost Rs 15,000 crore will be lent by Japan government at very low interest.
But the entire positive atmosphere created by the Modi government was sullied by an Income Tax notice to Vodafone - which is fighting a pitched battle with the Indian government over retrospective tax. “The timing of the notice just shows that Modi government is not getting support from its own officials,” said a tax advisor.
No wonder Vodafone reacted angrily saying the government and the tax department are not in sync with each other.
Meanwhile, the global defence companies promised to set up units in India if the government gives them orders for defence equipment. The Modi government wants defence imports to fall to 40% from the current 65% and has asked Indian companies including Tata, Mahindra, Bharat Forge to set up units in India so that it can pass on the orders to local firms. This, the government says, will help in local job creation and save precious foreign exchange.
Corporate India is now hoping that the Budget to be presented by Jaitley on February 29th will include tax and banking reforms which would help local manufacturing. Says Banmali Agrawala, GE South Asia president & CEO: "The economy needs faster reforms, which would make the entire Make In India more impactful. However, India will have to balance the economic development and social and political side of that."
Aditya Birla group’s chairman Kumar Mangalam Birla said: “There is no secret sauce of manufacturing that we are not aware of… it is just like making an elephant dance. It just cannot happen in a few months.”
| IIP | Corporate growth (YOY in %) | |||
| Growth Rate (%)# | Sales | Net Profit | Adjusted NP | |
| Sep-11 | 3.2 | 20.3 | -44.4 | -29.1 |
| Dec-11 | 1.2 | 26.7 | 6.0 | 13.7 |
| Mar-12 | 0.8 | 18.6 | 15.6 | 16.5 |
| Jun-12 | -0.3 | 13.1 | -56.4 | -52.6 |
| Sep-12 | 0.4 | 15.0 | 78.7 | 64.9 |
| Dec-12 | 2.3 | 8.2 | -2.5 | -13.3 |
| Mar-13 | 2.2 | 6.3 | -2.8 | 1.7 |
| Jun-13 | -1.0 | 6.5 | 100.7 | 107.3 |
| Sep-13 | 1.9 | 14.0 | -13.1 | -22.3 |
| Dec-13 | -0.8 | 11.3 | 11.1 | 9.8 |
| Mar-14 | -0.5 | 12.0 | 16.5 | 6.7 |
| Jun-14 | 4.5 | 14.8 | 51.2 | 43.7 |
| Sep-14 | 1.3 | 4.1 | 3.5 | 16.1 |
| Dec-14 | 2.0 | 0.5 | -20.1 | -9.4 |
| Mar-15 | 3.4 | -9.3 | -48.3 | -18.2 |
| Jun-15 | 3.2 | -5.3 | 5.7 | 2.3 |
| Sep-15 | 4.8 | -4.4 | -2.9 | -0.3 |
| Dec-15 | 1.7 | -3.5 | 12.6 | 12.3 |
| Note | ||||
| Adjusted profit is profit after adjusting extraordinary income or loss | ||||
| IIP Figures are average for the quarter | ||||
| Corporate growth rate is calculated for BSE500 companies (Ex bank & Finance) | ||||
| Source: Capitaline/Bloomberg | ||||
| Compiled by BS Research Bureau | ||||
(Source : business-standard.com)
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