The three pillars supporting the development of the Indian economy
Bangkok 15, February 2017
On Tuesday the 14th of February I took part at the JFCCT President’s Council Luncheon, hosted by the India – Thai Chamber of Commerce. The customary, introductory national presentation by the hosts indeed came across as throught provoking and hence I decided to do additional research on the successes of Prime Minister Modi’s policies and prepare a brief analysis on the results of the “Make in India” campaign, highlighting India’s national drive towards the modernization of its national economy.
The Democracy consideration perhaps refers to India being widely known to outside world as being the world’s largest democracy. However, the underlying statement here is the implication of democratic and stable business environment, facilitating to the favorable and progressive business relations, both at local as well as cross border international trade platforms.
The modernization of the Indian economy entails both a procedural and legislative approach with the Red Tape concept of bureaucratic administration, most often construed as inefficient with objectionable results, being substituted to a Red Carpet concept, entailing a reformed, and investor friendly climate and formula.
By liberalizing FDI policies, simplifying customs procedures and ensuing complexities, deregulating transportation and logistics sectors to unrestricted investments, India has initiated the buildup of interconnected routes and industrial cities, marking significant improvements within the ease of doing business indexes, creating trade corridors, promoting smart cities and finally investing in training of the unskilled labor force, giving India renewed economic practicalities to facilitate foreign investments.
Additionally radical reforms have materialized in special fields, such as company registrations and licensing, limited capital requirements and online governance. Likewise, favorable propositions have been shared with for example, Japanese business investors at the Nikkei exchange during Prime Minister Narendra Modi’s visit to Japan. Targeting the improvement of India – Japan agreements through a more advantageous business climate with fast track facilitation of investments in special projects, fast track clearance of goods and services, singular task forces have been established to deal with specialized business deals. Additionally and perhaps lucratively, proposals have been shared to offer software support and services to compliment the Japanese computer and digital industry hardware manufacturing and international market share.
The government has undertaken to invest over USD1.6 billion for financial incentives and new startups, over USD32.6 million to fund innovation and young business ventures.
As far as the Demographic pillar is emphasized, the government has noted the impending rise of the productive population segment and unlike the Nordic countries or Japan and Korea which have strongly ageing population syndromes, by 2020 over half of the Indian population will be under 35, and therefore in the productive stage of life cycle where companies would benefit from availability of active workforce, additionally the specialized capabilities of the young workforce will greatly enhance India’s HR competitiveness
Varied choice of industries highlighted and promoted for investors under the Make in India campaign include without limitation to:
• Manufacturing electrical machinery accommodating heavy, medium and small range
• Automobiles production in India, with projections to establish a major regional auto manufacturing hub as well as huge local and regional market
• Textiles and garments industry expansion with the industry expected to be worth 141 Billion Annual USD by 2020
• Chemicals industry foreseen to grow to USD 350 Billion by 2021, currently the fourth largest producer of agrochemicals
Amongst alternative industries such as construction, defense manufacturing, ICT, media, mining, oil and gas, ports and shipping, railways, renewable energy, infrastructure, tourism and wellness industries to be singular growth points contributing to the rise of India as a tiger economy center globally.
In the implementation phase various points of delivery are planned where the positive investment climate will be carried forward by the creation of better infrastructures namely in the form of:
1- Industrial Parks and Smart cities where special incentives will be given to set up business and new industries – Physical Infrastructure
2- Investment and manufacturing zones with privileges – with added support of administrative and logistics services – Fiscal Infrastructure
3- Decreasing Corporate Income Tax and providing targeted allowances – Fiscal Infrastructure
4- Economic Zones with enhanced custom allowances – Legislative Infrastructure
5- Online Business Registration for some Industrial licenses and facilitating e-governance – Administrative Infrastructure
Concludingly, with the 52% increase of FDI within two years of the revival plan to USD106 Billion, the reorganized direction of the Indian leadership is undoubtedly adding vigor and substance to the development of the Indian economy, making it the sixth largest manufacturing nation in the world, marking India’s prominent place as a R&D hub, gradually overcoming characteristic difficulties and stockholder unease, becoming an attractive investment zone for foreign companies with guaranteed labor available with variable educational skills and specifications, concurrently building on the Democracy, Demography and Demand paradigms pushing all industries to new levels of growth and necessary input into the prosperity of the country as a whole.
Armenian – Thai Chamber of Commerce