At the 142nd spot, India ranks below countries like Uzbekistan and Ethiopia on the World Bank’s list of “ease-of-doing business”. But things are looking up as top companies seem keen to invest in the subcontinent, thanks to Prime Minister Narendra Modi’s aggressive push to facilitate economic growth. It is the pro-business image of Modi, first as a successful Chief Minister of Gujarat who turned around the economy of the state, then as a Prime Minister who seemed bent on welcoming investments, that has brought companies like General Electric Company (GE, Financial) to India.
GE sets foot on Indian soil
Last Saturday, GE formally inaugurated its new manufacturing facility in India, as an export hub which will produce a range of products that will include aviation, rail and diesel engines. This plant will send half of the output to its global factories. The 67-acre plant near Pune city is GE's first multi-purpose manufacturing facility in India. Attended by Modi, this deal has brought the Prime Minister’s pet project of ‘Make in India’ to the forefront. "This will give a boost to the ‘Make in India’ initiative. I welcome all global investors to invest in India and I am assuring you that your products manufactured here will be globally competitive", the Prime Minister said at the inauguration.
GE will set up its operations in two phases which will include manufacturing products in power generation, oil & gas, transport, aviation and rail. The focus on locomotives and engines stem from the fact that the government has planned an extensive railway modernization program. With the country’s push for development in various sectors like infrastructure, rail, defence, renewable resources and digital, GE’s plan is to clinch on to more number of domestic offers.
Jabil Circuit Inc. (JBL, Financial), the electronics’ manufacturers for Apple Inc. (AAPL, Financial) received government approval for its investment proposal in June. It plans to set up operations from a factory in Pune to make products like television set-top boxes. The Florida-based company has already spent $6 million out of the $20 million it plans to invest. In an interview to Reuters, a news agency, GE Vice Chairman John Rice said the company had already spent a total of $200 million on the facility but declined to give other specifics.
What is Make In India?
Embroiled in a 2002 riot that blackened the history books of Gujarat, it’s then Chief Minister was widely seen as a man who not only failed reign in the situation but instead added fuel to the fire. Although the Indian courts vindicated him, groups and authorities in the US refused to give him a visa for over almost a decade citing human rights violation. However, riding on a wave of massive victory in India, once Modi became the Prime Minister, his visa for a trip was cleared.
In the US, to a thundering crowd, Modi outlined his plans for the future, and his vision of ‘Make in India’. The previous government has started the subsidy policy of around 25% on capital investment, but it failed to attract interest since it wasn’t marketed very well. With Modi’s promises to boost economy by allowing more foreign direct investment in industries, business houses began flocking to apply for this subsidy. In the US, Modi made a push for local manufacturing a.k.a “make In India’ to create 100 million new factory jobs by 2022. The government is also implementing an ambitious $18 billion program known as Digital India.
Why India?
GE has gone ahead with its massive investment hoping for returns promised by a man who has already shown potential in turning around the economy of a state. To make the same happen for the entire nation is, however, a much more difficult task. The Prime minister so far has made the right noises and moves to attract business. As an emerging economy, there is massive potential for growth in India. Any company which can establish a foothold is sure to gain much. Although India is still plagued by certain drawbacks like power shortage and difficult tax laws, there is a promise of better days and lucrative deals. With projects in the pipeline which generates massive revenues, like infrastructure and digital, the first companies which enter the Indian market now will get a larger share of the pie.
