<p><em>Reform in labour laws and fair and faster dispute resolution mechanism are a must if Make in India has to succeed in the near term, writes <strong>Rajendra Shrivastav</strong></em></p><div>Prime minister Narendra Modi has been campaigning hard for ‘Make in India’. He has fired all engines to attract foreign companies to create manufacturing capacities in India. Defence, nuclear power, aviation, space, electronics, railways, electrical industry, renewable energy, ports and oil & gas are some of the key focus areas. However, ‘Make in India’ can happen only in a few practical ways and those are elaborated below. </div><div> </div><div>Why would foreign companies invest to create local manufacturing in India? Because the educated manpower costs are lower in India; besides, there could be assured business growth with long-term visibility -- companies do not care much about business potential. Other than ease of doing business in India, the multinational corporations (MNCs) expect a fair and ethical behaviour by competitors and stakeholders in the local market. It has been my experience that this is often not the case. </div><div> </div><div>Another way is to partner with an Indian company and this is quite often the first choice of the management and boards of MNCs. But many MNCs face problems in finding a suitable local partner that knows the local system and its inner workings very well, and one that is willing to make equitable investment and take business risks. </div><div> </div><div>MNCs can also contribute to ‘Make in India’ by facilitating access to state of the art technology to Indian companies ie., license for local manufacturing. Transfer of Technology (ToT) entails protection to the supplier for its Intellectuals Property Rights (IPR), patents, copy rights, design and trademarks. Although the Indian government is trying to assure MNCs on IPR and patent protection, this is still an area of concern. </div><div>The ‘Make in India’ route can compel MNCs to locally invest in some measure when a large order is placed with MNCs such as General Electric by Indian Railways for supply of diesel locomotives or Alstom for electrical locomotives. In such cases the investments by the foreign companies is dedicated to creating a niche local manufacturing capacity. Incidentally, this practice is not accepted by Russian suppliers, and they continue to receive orders worth tens of billions of dollars in the nuclear sector from the government.</div><div> </div><div>Also, while ‘Make in India’ seeks to attract investments, Indian start-ups are fleeing to other countries. Online grocery shopping portal Grofers, started by IIT Mumbai graduates three years ago, has relocated to Singapore to escape the Indian tax regime. MNCs such as Vodafone, Nokia and Vedanta that have been in India for decades are constantly among headlines for their battle in the Indian courts against taxes and notices for penal recoveries. This is not at all a good publicity for the country. </div><div> </div><div>Reform in labour laws and fair and faster dispute resolution mechanism are a must if Make in India has to succeed in the near term. The above-mentioned elements are keenly watched and critically examined in the boardrooms of any MNC that would like to invest under the Make in India drive.</div><div> </div><div>A note of caution: Some of the MNCs that have been in India for decades are economical with truth when it comes to their ‘Make in India’ credentials. They tend to pass off even routine expansion of capacities at their existing factories as their ‘Make in India’ contribution. </div><p><em>The author is former MD, Nuclear Business, Alstom; President, Indorama and Country Director, EDF</em></p><div>(This story was published in BW | Businessworld Issue Dated 02-11-2015)</div>
