WHY " MAKE IN INDIA" IS "MISSION IMPOSSIBLE" MR. MODI?

WHY " MAKE IN INDIA" IS "MISSION IMPOSSIBLE" MR. MODI? ( By Sanjeevi Ramamoorthy)

In his first Independent Day Speech to the Nation, prime minister Modi has openly invited  world to "Make in India". But Why "Make in India" wont happen unless Mr.Modi does the following Reforms?

INDIA'S ECONOMY AT A GLANCE:

India's GDP is $ 1.87 trillion USD ( 10th Largest in the World). Contribution of Agriculture, Manufacturing & Services to the GDP are 14 %, 21% & 65 % respectively.

It is clear that Indian Economy is totally dependent on Services like Software, Banking,Hotels, Trade ( 65 % contribution to GDP) for its survival. But irony is that it employs only 20 % of People whereas  Agriculture ( Just 14 % of GDP) contributes to 60 % of Employment. ( It means that 60 % of Indian People are sharing 14 % Income where as remaining 40 % of people are sharing 86 % income of our country. Real Cause for Social Inequality).

11 Million people are joining Indian Labor Force every year. It means that India should create 11 Million New Jobs every year just to keep unemployment rate at the same Level. But fact is that India has only added 7.5 Million Jobs  between the year 2004 -2012 ( UPA Legacy).

OOPS..!!!!!!...... SOME THING IS GOING WRONG. WHAT IS THAT? 3RD FASTEST GROWING ECONOMY IN THE WORLD IS NOT ABLE TO CREATE ENOUGH JOB. WHO IS THE CULPRIT?

Culprit is the Manufacturing Industry. Countries like China, Japan, Germany & East Asian Economies grew only because of manufacturing not because of Agriculture & services. Only Manufacturing Industries can create Maximum & Sustainable No of Jobs required to eradicate the Poverty. As long as India depends on Services Industry and Agriculture for Jobs, it will remain as Third World Country and cant dream of becoming Super Power. MODI KNOWS THIS VERY WELL. This is the reason behind his open invitation to world to set shop in India and to Manufacture ( MAKE IN INDIA).

BUT WHAT STOPS INDIA FROM BECOMING MANUFACTURING HUB FOR THE WORLD LIKE CHINA DESPITE HAVING CHEAP LABORS AND DEMOGRAPHIC ADVANTAGE ( Age of 65 % OF POPULATION IS < 35) ? AND WHY WORLD IS NOT READY TO COME TO INDIA?


1. INDIA'S DRACONIAN LABOR LAWS:

 Forget MNCs. Even Indian Companies are not ready to open Manufacturing Plant in India due to it's century old Labors Laws and Land Acquisition problem.Even Existing Companies also want to remain as small as possible rather than to expand resulting in importing even Toys from china which depreciate our currency.

Another interesting Statics is that only 10 % of Indian Labors ( out of  435 Millions) are working in Organised Sector. Rest 90 % of employment is in unorganized Sector. WHY? WHAT IS THE PROBLEM WITH OUR LABOR LAWS?

HIRE AND FIRE POLICY

In ever changing, unpredictable & Seasonal   market scenario, companies need Hire & Fire Freedom inorder to remain lean and competitive. But, Industry Disputes Act (1947) disallows companies having more than 100 employees to fire any employee without state government consent.

Result: It gives indirect incentive for companies to remain small ( less than 100 employees) and they never want to expand inorder to escape from this law. (Only 9 Lakhs companies out of 83 Million Companies ( Total Registered Companies in India) are enterprises. Rest are very small)

UNLESS MODI REFORMS THIS LAW, MNCs WILL BE RELUCTANT TO COME TO INDIA AND EVEN EXISTING INDIAN COMPANIES ALSO WONT EXPAND. INDIA WILL CONTINUE TO IMPORT EVEN SMALL TOYS FROM CHINA INSTEAD OF MANUFACTURING THE SAME IN INDIA WHICH WILL GENERATE EMPLOYMENT HERE.

TRADE UNION ACT:

According to Trade Union ( Amendment ) Act 2001 of India, just 10 % of employees are enough to legally register a Trade Union. It means that companies having 100 employees can have 10 different Trade Unions resulting in Chaos.

There are some other Laws Like Contract Labors Act, Apprentice Act, Indian Factory act which make it almost impossible for Manufacturing companies to oblige all laws and still remain competitive.

THESE LAWS ONLY PROTECTS 10 % OF INDIAN LABOR FORCE STALLING THE EMPLOYMENT GENERATION FOR OTHERS.

2. LAND ACQUISITION ACT:

Last Year, UPA II passed the foolish Act called Right to Fair Compensation and Transparency in Land Acquisition ( Major folly of UPA II to get Farmers Vote).

Major absurd points of this acts are as follows

1. Companies should compensate the  Land Owners the 4 times the Market Price incase of rural land and 2 times the Market Price in case of Urban Land.

2. In addition to the compensation, companies should provide alternate House for Seller along with Job / annual payment of Rs 2000 per month for 20 Years ( adjusted to inflation)

3.80 % of Owners approval is need for Land Acquisition.

4. Approval & Clearance from State and Central Agencies for Various Stages of Acquisition( We all know How difficult to get clearance from these agencies even after paying Bribe).

The above law is totally absurd and  will increase project cost multiple times in addition to the delay.

CONCLUSION:

If modi really wants to make India as Manufacturing Hub of the World and to realize the dream of "Make in India", he should immediately amend the Land & Labors Laws at the earliest with out fearing backlash from Trade Unions and So Called NGOs for the sake of aspiring young generation of India which need jobs and same kind of life style like their counterparts in Western Countries.

"MAKE IN INDIA" WILL BE "MISSION IMPOSSIBLE" WITHOUT THE LAND AND LABOR REFORMS.