After the Asian Tigers... Chinese Dragon... it is now the time of the Indian Lion!

MAKE

INDIA

IN

MAKE IN INDIA is an innovative idea that offers a win-win

manufacturing solution to both India and the developed world!
Manufacturing in developed countries faces two problems:
(1) Labour costs are very high, and (2) There are not enough
young people available for the jobs. This makes products
manufactured in the developed countries prohibitively expensive
even for their own wealthy consumers.

To make this idea a reality, the government has taken several

initiatives like

The solution until now was to manufacture in China because it

offered young labour at reasonable costs. Not any more. Chinese
labour has become expensive and the population is getting older.
The world is again looking for a manufacturing base thatll offer
the twin advantages.

offering targeted skills development for our youth, to make them

job-ready

Enter India. India has the largest population of young people in the
whole world, about 500 million! Our labour costs are also very
attractive by global standards. MAKE IN INDIA is an initiative
which recognizes this match of needs between India and the
developed world and endeavours to make India the worlds
manufacturing hub. This way we get jobs for millions of our youth
and the world gets an attractive manufacturing base!

Why make in India?

building robust roads, ports and rail infrastructure to help

transportation
easing power shortage through increased coal production and
efficient power transmission

bringing in reforms to make taxation simpler and ease the process

of doing business in India
getting into bilateral tie-ups with developed countries
MAKE IN INDIA will also naturally lead to increased exports and
reduced imports. It will lead to greater prosperity for Indians,
greater purchasing power and a bigger internal market for the very
products we will manufacture for the world. In time MAKE IN INDIA
will lead to MAKE FOR INDIA. Isnt this a very exciting investment
opportunity to participate in?

Labour - Highly affordable and available!

Addition to labour force 2014-2023 in Mn.

Million
120.0

Addition to labour force, 2014-2023

ILO Projections

100.0
80.0
60.0

India

(%)
100

80

80

80

plus

40

20.0

20

0.0

-11

India

Brazil

US

China

Korea

Japan

Russia

47

65 million people to enter the workforce in the next decade

The largest increase to the global labour force would come from India over the next few decades
As per another report by Morgan Stanley, India will contribute 25% of the worlds workforce by 2025
Low cost labour, an advantage for manufacturing sector exports

equals

China

90

60
40

20

20

-20
Currency depreciation 2009-2013

Source: Goldman Sachs, Sundaram Asset Management

Distributors Address:

68

60
40

33

-20

-20.0

India

China

(%)
100

60

40.0

India

China

(%)
100

11

-20
Wage rise 2009-2013

% Wage increase in USD

Source: CMIE, CLSA, Sundaram Asset Management

Indian export competitiveness has been helped by

Relative appreciation of Chinese currency against the USD
Higher wage inflation in China compared to India

Creating robust port, road and rail infrastructure

322 projects worth Rs.14 tr have been cleared so far by the project monitoring group (PMG)
Port development, integrated port facilities, coastal ferry services, inland water transportation being promoted by
the Sagarmala project
Rebidding stalled projects would provide at least 5,000 km of ready pipeline
Ongoing railway projects require $80 bn over the next 10 years. Government and private sources of financing
expected to rise over the 12th plan period (2012-17)
100% FDI has been allowed in railway infrastructure: construction, operation and maintenance of suburban corridor
projects through PPP

Enhancing power generation

Improving coal supply
Coal production - Government and private

Government

Private

1,600
1,400
1,200
1,000
800
600
400
200
0
FY10

FY11

FY12

FY13

FY14

FY20

Source: CMIE, CLSA, Sundaram Asset Management

Domestic coal production to double in 5 years

Ordinance to re-auction coal mines to benefit the power sector
Along with coal block auctions, the government may also allow commercial mining in the future
Coal India production to be ramped up to 1 BT in the next 5 years and private sector to 0.5 BT

Adding fresh capacity & minimising T&D losses

Grid strengthening & expansion of transmission capacity; proposal to amend Electricity Act, giving more power to state regulators
Deendayal Upadhyaya Gram Jyoti Yojana scheme for Rs.430 bn rupees for feeder separation/lowering of T&D loss
Proposed 25 solar parks with a minimum capacity of 500 MW each, targeting 20,000 MW over five years
Resultant benefits in power tariffs for industries

Pushing through land and labour reforms

Centre focused on pushing through the land purchase reforms in line with its vision of 100 smart cities
Cabinet approved metro rail projects cannot be denied operating rights by related ministries / PSUs on the relevant land sought
Steps have been taken towards ending the Inspector Raj ending the arbitrary inspection of labour inspectors
Companies will now have to submit 1 form as opposed to 16 earlier, simplifying the procedures involved
A single window portal with the labour ministry has been introduced
Raising the workers limit to form a representative union to 30% from 15%

Targeted skills development

Ease of doing business getting better

Vocational training has been one of the government's key

focus areas

Team Invest India set up to assist foreign investors, along with

the Make in India team

The National Skill Development Corporation (NSDC) is a PPP

by the government focusing on skill development (carpentry,
plumbing, welding etc.)

12 week turnaround time for granting security clearances for

industrial licenses

Several leading manufacturers have tie-ups with the NSDC

and various ITIs for industry-specific training

Online single window eBiz created for providing clearance and

filing for compliance. Unified web portal for firms to comply with
16 central labour laws

GST - a game changer

Online clearances for environment and forests. 17 states have

their respective online portals through the PMG

Given the positive impact of a GST on government revenues,

trade and prices; studies suggest a consumption-side

Bilateral tie ups to boost trade growth

Productivity impact of > 100 bps on GDP

China to invest $20 bn in industrial parks and infrastructure over

the next five years

Fiscal revenue impact of > 70 bps on GDP

Japan to invest $35 bn in clean non-renewable energy, urban

transport space and defense equipment manufacturing over the
next five years
US industry to lead partner in building smart Indian cities in
Rajasthan, AP and UP, and provide locomotive technology and
equipment
Russia signs 7 intergovernmental and 13 commercial agreements
and helping to build 20 nuclear reactors in India
MoUs with Russia and Tata Power, IDFC, Oil India, FICCI, ESSAR
and many more

The above initiatives are expected to increase the share of manufacturing in GDP from 15% to 25%

Sectors that will benefit

Hence, Make in India will lead to

Make for India

More
manufacturing
jobs

More output
and sales

More
disposable
income
Project
More
performance
purchasing
(M&E,
Feasibility,
power
Impact)

35%

High Growth
Arms & Ammunition

30%

Transportation
25%

Medium Growth

Engines+
Electronics
Pharma
Electrical
Engineering Goods
Wood
Metals
Rubbers
& paper
& Plastics

20%

MAKE FOR
INDIA
More
demand

Decadal growth Rate (% CAGR)

Make in
India

Competitive advantage and decadal growth for sectors

15%

Agri+
Chemicals

Footwear
Ceramics & Glass

10%
0.0

0.5

1.0

Revealed Competitive Advantage

1.5

Low Growth
Textile & Apparel
2.0

Leather

2.5

3.0

Source: JM Financial, Sundaram Asset Management

Number of sectors experiencing medium growth are yet to see the benefits of
competitive advantage
The Make in India initiative would give them the needed boost

Sectors that will benefit

Sectors

Auto components
Automobiles
Aviation
Biotechnology
Chemicals
Construction
Defence manufacturing
Electrical machinery
Electronic system
design and manufacturing
Food processing
IT and BPM
Leather
Media and entertainment
Mining
Oil and gas
Pharmaceuticals
Ports
Railways

Highlight

One of the leading global auto part manufacturer and the 2nd largest steel producer by 2015
To be the 4th largest automotive market by 2015 with annual sales of 6 mn+ by 2020
Worlds fastest growing aviation market with 163 mn passengers
3rd biggest biotech industry in APAC with the 2nd highest number of USFDA approved plants
3rd largest global producer of agro-chemicals
Plans 100 new smart cities and expects $1 tr investment by 2017
3rd largest armed forces in the world with defence spends of $37 bn
Looking at a $100 bn industry by 2022
$29 bn consumer electronics market by 2020
199 mn cultivated hectares and 42 mega food parks in the pipeline
$225 bn industry by 2020
$11 bn industry with 10% of world leather production
3rd largest TV market in the world plans to be a $220 bn film industry by 2018
302 bn tonnes of coal reserves, 6th largest bauxite reserves and 5th largest iron ore reserves
2nd largest refiner in Asia and the 4th largest global consumer of crude oil and petroleum products
20% of global generics exports and the 3rd largest Pharma market by 2020
800 mn metric tons in cargo capacity and 60 operational non-major ports
Worlds 3rd largest network, handles 3 mn tonnes of freight and 23 mn passengers every day

Roads & highways

4.9 mn km of roads and highways and plans 100,000 km of national highways by 2017

Renewable energy

5th largest wind energy producer and plans 20,000 MW of solar power production by 2022

Space
Textiles
Thermal power
Tourism and hospitality
Wellness

One of the most cost effective space programs and has launched 40 satellites in 19 countries
Worlds largest producer of jute and cotton and 63% of world market share in textiles and garments
5th largest producer and consumer of electricity
7 mn foreign tourists and 18 bn domestic travellers
Industry growth of 20%

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