India is emerging as a global manufacturer at an unprecedented rate. With innumerable industries gracing the economic landscape, there is a huge emphasis being laid upon ‘Make in India’ initiatives.
Make in India is a national program that aims to transform India into a global manufacturing hub. Having said this, the Prime Minister proposed to the world the requisite skills, labour and intention to create world-class products, from the boundaries of India. This initiative has promised a ease in doing business in India, under different sectors, to make FDI inflow better than ever. This program is being diligently led by Department of Industrial Policy and Promotion (DIPP) and the Ministry of Commerce.
What makes ‘Make In India’ so unique?
The idea behind the Make in India initiative was conceived by Prime Minister Narendra Modi who wanted to make a difference to the Indian economy. Built on 4 pillars of growth- New processes, New Infrastructure, New Sectors, and New Mindset, the initiative has been boosting entrepreneurship in India, manifold. This campaign is aimed at facilitating investment, fostering innovation, enhancing skill development, protecting the country’s intellectual property, and building the best-in-class manufacturing infrastructure.
The country has seen tremendous inflow of Japanese investment and the rise of new companies under this initiative. The number of Japanese companies grew from 1072 in Oct 2013 to 1209 in Oct 2014 with an FDI inflow of $273 million between June- Sept 2013 to $618 million between June to Sept 2014.
The focus of Make in India lies in 25 sectors that include aviation, chemicals, automobiles, pharmaceuticals, defence manufacturing, mining, tourism and hospitality, IT and BPM, construction, automobile components, railways, media and entertainment, ports, leather, thermal power, highways and roads, electronic systems, wellness, renewable energy, biotechnology and space.
How can companies make a foray into the Indian ecosystem?
There are various factors involved when a company looks at entering a new market space. Besides carrying out proper due diligence, there are a lot of geographical and economical limitations that may cloud certain judgements.
A company has to scout the country’s landscape thoroughly before setting up a manufacturing unit. Start-ups and entrepreneurs have to look at collaborating with local vendors and labour to effectively reap the benefits of their business objectives.
Appropriate due diligence of the feasibility of setting up a business must be performed before a commitment to invest in a particular sector in India. The status and results of the due diligence must be reported in the request for approval under the company’s policy and must be in line with the FDI policy of the country.
Entrepreneurs need to reframe their perspective and understand that due diligence can actually be beneficial for them in the long run. It not only adds a lot of value to their investment but also helps them in asking the right questions pertaining to the 5Ws that include- What, Where, Why, When and Whom.
Sherlock Zone, as a platform of reliable risk management professionals, helps entrepreneurs understand their weaknesses and operational skills needed to handle a setup as large as they plan, to bring in India. It dares them to ask the questions and dispute their projections of investment in the country.
The platform confers parties to conduct due diligence on individuals, corporate entities, markets and assets to establish and run a project in India.
With a structured due diligence process, companies can think of this as an antagonistic and challenging exercise with the help of financially knowledgeable and experienced due diligence professionals on the platform. The geographical placement, cost of setting up the unit, labour issues, regulatory framework, skill requirement, economic feasibility, ROI, risk assessment, FDI policies, and much more are covered under the scope of due diligence by experienced investigators.
With the rise in connectivity, smartphone manufacturers such as Xiaomi, Apple and Samsung, have shifted their manufacturing to India. Samsung Electronics had opened up the world’s largest mobile manufacturing setup in India, adding nearly 120 million units per year since 2015.
India is seen as the second largest mobile phone manufacturer after China. According to the Indian Cellular Association (ICA), the annual production of mobile phones saw an increase from 3 million in 2014 to 11 million devices by 2017. The mobile manufacturing industry is set to grasp a sizeable reach of over $217 billion by 2020. This is majorly because of the rise of mobile phone users in the country, who are not only located in Tier 1, 2 and 3 cities, but also come from the rural outreaches of the country.
Fast Track Task Force (FTTF), under the Indian Ministry of Electronics and IT, approximates 500 million mobile phones production in India in 2019, priced at $46 billion. Their target is also to create a component manufacturing production worth $8 billion and employment worth $1.5 million in 2019.
The biggest factor in having a fruitful cross-border collaboration is the due diligence process that brings these investments to life. Complete feedback before the onset of the process and a long-term strategic plan helps businesses and individuals to reduce the opportunity cost and unfolds their operational capability as planned.