‘Business-friendly Climate Needed’

In an exclusive interview with BW Businessworld, World Bank country director, India, Onno Ruhl talks about the bank’s experience in working with various countries on ease of doing business, his association with the Department of Industrial Policy and Promotion (DIPP) for the purpose of ranking various Indian states on the ease of doing business index, as well as why the Modi government’s Make in India drive is much more than a manufacturing programme.

Excerpts:

How do you look at the Narendra Modi government’s Make in India drive?
I think it’s a great initiative. For many, it’s just manufacturing; to me it’s a programme that creates jobs in India. In order to take advantage of its demographic dividend, it’s important for India to create jobs. That requires a business-oriented and job-driven approach.

What is the World Bank’s role in this? Is the World Bank supporting the idea in some manner or the other?
We have extensive relationship in supporting the DIPP that drives the Make in India programme. The main thing we are doing with the DIPP is supporting them on the Prime Minister’s goal of improving the ease of doing business ranking, including the state reports that you have heard about. Improving business climate is a very important part of Make in India. We have also worked with the DIPP on Startup India. That’s part of Make in India, too, and was famously launched by the Prime Minister. We have told the DIPP that we are always happy to provide support. Mostly our support has been on technical assistance — like on ease of doing business, how a goal could be achieved.

What has been the World Bank’s experience with other countries with similar programmes?
There are several countries that have set themselves ambitious targets for improving their ease of doing business ranks. Georgia had an ad on CNN on how we did it.

More recently, Russia and Rwanda — very different countries — have had very good results; and both of them have received similar type of assistance from the World Bank.

Any country that asks for this kind of support, we would readily give it.
The thing that I had never heard about before was the focus on startups and digital space. Clearly, India has a very specific strength there. In our team, there were people who knew about the constraints for startups.

Are you partnering with the Indian government on its Startup India initiative?
Our team has discussed with the DIPP. There were questions like ease of doing business and patents. We just shared with them some experiences. The startup initiative is completely the government’s package.

Do you think the time and conditions are right for another manufacturing wave in India?
Manufacturing to some extent is obviously important. But manufacturing has also changed a lot. Manufacturing is increasingly getting mechanised. We are now talking about the fourth Industrial Revolution. In manufacturing much is happening. The first thing is China is no longer a low-cost manufacturing destination. Jobs are moving out of China. But where they are moving, we don’t know 100 per cent. India would like to get some of them. Big competition would be places like Vietnam and Malaysia.

I personally think that India has a very good value proposition. First of all, India has a very large home market. The country is also well-positioned to be manufacturing for Africa. If you look at Startup India, then most of these enterprises are services. If you look at the single-biggest employment sector in the world, it’s probably tourism.

I don’t equate Make in India with manufacturing. Manufacturing is good. But I won’t advocate Make in India primarily as a manufacturing programme.

You partnered with the DIPP in preparing the ease of doing business index for the states. How was the overall experience?
The PM has set a very ambitious goal of getting into the top 50 on the ease of doing business index in the next three years. Rwanda did something similar in four years. Russia in four years went from somewhere India is to the 60s. India’s task is ambitious; it’s not impossible.

Are you partnering Indian states?
Quite a few states have asked us to send teams to understand why they didn’t do as well as they expected in the report.

What are the main challenges that the Make in India programme faces?
Internationally, the economic environment is not very good. Domestic growth is good, domestic market is big. Exports are disappointing, so that’s the first challenge. It’s not just the external environment. The next big challenge is infrastructure, which is good in some places but not so good in other places. So some locations are much better than the others. GST is another challenge; this is a reform that is good for everybody in India. GST will help India in creating more jobs. India has very high skills at the top end, particularly in the services industry. But it doesn’t have deep and broad skills in all ranges. Make in India has to go hand in hand with Skill India. Make in India is about creating millions and millions of jobs.