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“Come…Make In India!”
In 1990, the average Indian citizen had slightly more income than the average
Chinese citizen, as measured by GDP per capita. Today, China’s GDP per capita is
more than double that of India’s. Manufacturing and export-led growth, which
also made countries like Japan and South Korea prosperous, drove China’s
economic miracle. Instead of reinventing the wheel, Modi has gone back to
basics.
Modi’s economic reforms aim to make India the manufacturing hub of the world.
However, half of Indian workers are still employed in low-paying agricultural
jobs, and Modi knows that manufacturing jobs offer higher wages. A worker in
manufacturing is 14 times more productive than one in agriculture, and higher
productivity brings higher wages.4 In order to bring these jobs to his nation,
Modi aims to reform land and labor laws and increase inflow of capital via
foreign direct investment to serve as the catalyst for his “Make in India”
campaign.
Land acquisition problems have plagued producers and industrialists in India
and is the primary hurdle in setting up new ventures. Under Modi, the
government passed an executive order (an “ordinance” in India) to ease land
acquisition in critical sectors, including power, housing, and defense,
reinvigorating some of the $300 billion in projects that had been held up due to
the land acquisition laws.5
IAFEI Quarterly | Issue 29 | 41