An Industrial Revolution in the Making

Although the “Make In India” campaign initiated by the Prime Minister Narendra Modi to bring about an evolution to various sectors is quite beneficial, it still lacks a few major insights that would boost its effectiveness.

It is quite evident that the growth of small and medium scale industries is only possible if under invoicing in imports is minimized. This can be accomplished by various methods such as making import licences difficult to procure through the enforcements of norms like minimum revenue for companies eligible for applying import licences, cancelling all import licenses that have been redundant for more than 6 months with immediate effect and separating import and export licences so that exporters do not face the problems which have been caused by importers.

Since the problem is 2 fold and involves under invoicing in India and over invoicing in china, the solution will need to involve a common Chinese and Indian custom clearance server so that both china and India clear goods at same value. If this is implemented automatically the buyer will ensure that Chinese companies do not over value and similarly Chinese companies will ensure Indian companies do not under value.

It is also important to reduce the amount of bureaucratic obstacles surrounding custom offices by restricting the entry of corrupt collection agents into collection offices and clearing office yards, increasing the salaries of deserving custom officers and providing better working conditions for them, immediately stopping the system of buying transfers and posts in customs, bringing in more young people at IRS levels, giving heavy rewards to officers who catch corrupt officials, setting harsh punishments for corrupt officials and installing video surveillance in custom offices are also important measures that need to be incorporated into the “make in India” campaign. Effective measure also include quickly concluding  civil litigations of customs, setting strong examples by giving harsh punishments to customs officials caught taking bribes and making offences of his nature strictly non bailable.

The Government should also invest in making industrial parks similar to china and giving them on rent or lease to  anyone who wants to set up a factory on the basis of strict merit  with a clause that anyone who doesn’t pay rent for 3  months must vacate immediate thereby reducing the legal hassles. The Government should also ensure that all inspectors in industries should be converted into guides for industries and data collection agents only. Before taking any action against any entrepreneur all inspectors should have first guided the entrepreneur for a minimum of 3 times before taking any harsh action and collected realistic data’s of the actual situation of industry and sectors and provided input to Government about what is successful and what Is failing.

Other measures that can be taken up include reducing the import duty and interest rates for raw materials and finished products in order to boost manufacturing, for smaller industries that need to import machinery, Using VDS to bring black money back into main stream circulation and creating zones like Hong Kong inside India with good infrastructure of roads and other amenities so that traders can help market goods manufactured by factories as in today’s world not all factories have the time and skill to market their products.

Another important aspect that needs to be looked into is the stainless steel industry that is facing closure due to the dumping of goods from China. In order to restore balance to this sector, the government needs to undertake measures that include increasing import duties to safe guard local industries from unhealthy competition until proper infrastructure is in place and making ISI mandatory in all imported items, wherein manufacturer has to be an ISI approved company. There should also be an internal inspection only once a year and no certificates to be given to foreigners.

Authored by Ashish Mutneja, Director, Quantum Hi Tech Merchandising Pvt Ltd.