make in india

Operations Management

AssignmentAnalysing The Impact Of “Make

In India” Campaign On Automobile Industry

Industry Statistics• The automotive industry accounts for 45% of the country's manufacturing

gross domestic product (GDP) and 7.1% of the country's GDP.• India is currently the seventh largest producer in the world with an average

annual production of 23.36 Million vehicles.• The Indian automobile market is estimated to become the third largest in

the world by 2016 and will account for more than 5% of global vehicle sales.• 100% Foreign Direct investment (FDI) is allowed under the automatic route

in the auto sector, subject to all the applicable regulations and laws.

Why Do We Need Manufacturing?

• Manufacturing can create a lot of jobs. • Manufacturing can create jobs for uneducated too. • It can really complement our service industry and can create a double

dynamo of growth.• Manufacturing superiority is essential for research to national security.

How Can India Use Its Strength?

• Chinese wages are already moved up quite high and big manufacturers are moving to the next cheap .

• India has a large pool of educated people that is not fully tapped yet. Many of them want to work in manufacturing. They can produce a high-tech manufacturing hub.

Impact • General Motors’ recent announcement of a $1 billion additional investment

for its Indian subsidiary, Chevrolet India.• Reports also suggest that Austrian motorbike manufacturer KTM-

Sportmotorcycle is now going to use the country as the production hub.• Also, the foreign Direct Investment (FDI) into the automobile industry has

witnessed a massive 164 per cent growth, in the seven-month period from the launch of Make in India initiative – on September 25, 2014.

• A lot of carmakers have been using the Indian soil as their manufacturing hub. Hyundai is the country’s second-largest carmaker but in terms of export – it stands way above than any other carmaker

Reasons to Invest By 2016 India is expected to be fourth largest automotive market volume in

the world. Tractor sales in the country are expected to grow at CAGR of 8-9% in the next

five years. Two-wheeler production has grown from 8.5 Million units annually to 15.9

Million units in the last seven years. Global car majors have been ramping up investments in India to cater to

growing domestic demand.  India’s car market has the potential to grow 6+ million unit annually 2020. A strong support from the government in the setting up private players such

as Hyundai, Suzuki, GM are keen to set up an R&D base in India.

R&D Incentives

Industry/private sponsored research programs:A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act. A weighted deduction of 200% is granted to assesses for any sums paid to a national laboratory, university or institute of technology, or specified persons with a specific direction, provided that the said sum is used for scientific research within a program approved by the prescribedA weighted tax deduction of 200% under section 35 (2AB) of the Income Tax Act for both capital and revenue expenditure incurred on scientific research and development. (Expenditure on land and buildings are not eligible for deduction).Concessional excise duty of 6% has been extended up to 31st March, 2016 Union Budget 2015-16 for manufacturers of batteries supplying to producers of electrically operated vehicles.Exemption from BCD on lithium ion automotive batteries for the manufacture of lithium ion battery packs for supply to manufacturers of hybrid and electric vehicles.

Challenges That The 'Make In India' Could Face

1. Creating healthy business environment will be possible only when the administrative machinery is efficient. India has been very stringent when it comes to procedural and regulatory clearances. A business-friendly environment will only be created if India can signal easier approval of projects and set up hassle-free clearance mechanism.2. India should also be ready to tackle elements that adversely affect competitiveness of manufacturing. To make the country a manufacturing hub the unfavourable factors must be removed. India should also be ready to give tax concessions to companies who come and set up unit in the country.3. India's small and medium-sized industries can play a big role in making the country take the next big leap in manufacturing. India should be more focused towards novelty and innovation for these sectors. The government has to chart out plans to give special sops and privileges to these sectors.

4.India's make in India campaign will be constantly compared with China's 'Made in China' campaign. The dragon launched the campaign at the same day as India seeking to retain its manufacturing prowess. India should constantly keep up its strength so as to outpace China's supremacy in the manufacturing sector.5. India must also encourage high-tech imports, research and development (R&D) to upgrade 'Make in India' give edge-to-edge competition to the Chinese counterpart's campaign. To do so, India has to be better prepared and motivated to do world class R&D. The government must ensure that it provides platform for such research and development.

Kenichi Ayukawa• “Cost of production in India increased because of various

government policies,procedures,regulations and the way some of the laws are implemented,” said Kenichi Ayukawa,Managing Director and CEO,Maruti Suzuki india Ltd , at the ‘make in India’ campaign.

Ambani• Ambani said in this campaign that in order to succeed ,it

was important to be open to capital and expertise from all over the globe, and implementation of GST will make India one market and strengthen overall make in India program.

GST• Goods and services tax is a value added tax(VAT) to be

implemented in India, the decision on which is pending.• It will replace all the indirect tax levied on goods and

services by the Indian state and central government.• Indirect tax:-custom duty, central excise duty, service tax,

sales tax, VAT, securities transaction tax.

‘Made in china’ campaign launched with ‘make in India’

• Coinciding with the prime minister Narendra Mode's ‘make in India’ pitch, the Chinese government has launched a ‘make in China’ campaign with a host of tax concessions in an effort to retain its manufacturing process.

• China will encourage high tech imports, research and development(R&D) to upgrade ‘made in china’, a decision by Chinese central government said.