Two things stood out in the maiden Independence Day speech of Prime Minister Narendra Modi from the ramparts of Red Fort. First, he rolled out an open invitation to overseas investors. “Come, Make in India,’’ Mr Modi urged the global investor community. Sell anywhere but make them in India, he said, pointing out that “we have got skill, talent, discipline and determination to do something.’’ Second, he sought to sell the ‘Made in India’ idea to youth. With these twin calls — one to investors from abroad and the other to young Indians — Mr. Modi has, in a way, set in motion the policy course for the BJP-led NDA Government at the Centre. These two aren’t isolated thought processes, but are a carefully conceived integrated policy prescription for a new India, which Mr. Modi is trying to build. That he had chosen to lay it bare during his maiden speech from Red Fort reveals not just the astute politician in Mr. Modi but also the insider-outsider dilemma of Prime Minister Modi.
The moot point
‘Make in India’ is easier said. Is it easy to make in India? That is the moot point. It is too simplistic to assume that people are just waiting to come to India and set shop. India has skill, abundant labour and, to top it all, English-speaking people. Yet, why has the country not seen FDI (foreign direct investment) gushing into it? Hurdles are aplenty for an overseas investor ‘to make in India’. First of all, the country requires an ecosystem that fosters FDI. One Vodafone case is enough to make oversees investors shy away. In any situation, the country’s interest needs to be protected. There are no two views on that. The problem starts when rules framed after elaborate discussion are tweaked, and that too applied retrospectively. FDI is possible if there is transparent law, and only if there is stability in rules. Again, it requires the ability of the government to take the Opposition along. The tug-of-war over raising the FDI limit in insurance is a classic case, where limits of frustration — bordering on exasperation — have already been tested.
Let alone for overseas investors, making in India has become a pipedream even for Indian companies. Land has escalated into a major piece of dissuading force for India Inc. The abortive foray by the Tatas to make Nano cars in West Bengal, the escalating tension over land acquisition by SEZs (special economic zones) and the like have ensured that Corporate India thinks many times over before venturing into any greenfield project. With land becoming such a ‘trouble spot’, how can anyone think of a large project? Land ownership — like gold buying — is a touchy subject in the Indian context. And, the political leadership isn’t making thing any easier with its opportunistic stand.
After laws and land, labour is an important clog in the wheel. In an increasingly globalised economy, jobs tend to move towards one direction, that is, where the labour is cheap. Many big names in the global corporate field have moved to countries such as China, India, Thailand et al to cash in on the labour advantage these countries offer. If China could do, why can’t India? This question has often been posed in many a discussion forum. With a command structure, China could offer a ‘friendly labour ecosystem’ to overseas investors. Being a democratic nation, India is differently positioned vis-à-vis the labour. Archaic labour laws have proved a strong deterrent for any overseas company to set shop in India. Much of these have spawned inefficiency in the economy. From labour rights to human resource management, the employer-employee relationship has acquired a new meaning and definition in the context of a global village. For industry, in general — be it Indian or multinational — a smooth and friendly HR (human resource) scene is a sine quo non for projects to come up and sustain. Here again, the subject of labour has often acquired political underpinnings with varied stakeholders taking a narrow stand.
Retaining talent
“Come, Make in India’’ offer presupposes quicker resolution to issues related to ‘Three Ls’ (laws, land and labour). Mr. Modi has indeed rolled the red-carpet out from the ramparts of Red Fort. Caught in the insider-outsider mesh, Mr. Modi will have to move quickly to remove these ‘L’ hurdles. Besides addressing the `Three Ls’, he has to conceive a `Stay in India’ package to retain talent.
Microsoft, Google, Apple and others are what they are today because of no mean contributions by Indians in those firms. You invite outsiders to ‘Make in India’ but insiders go out to ‘make world class companies’. Mr. Modi would do well to ensure that home-grown talent stays in India as well.
>jagannathan.kt @thehindu.co.in
(This article was first published in >The Hindu print edition dated August 18, 2014.)