PMs vision to make India a Manufacturing Hub dream or a practical possibility?

Introduction

In the Independence day speech from Red Fort PM Narendra Modi gave delivered a new approach for Indians to cease exporting the raw materials and importing the manufactured products. He gave a new vision of converting India into a Manufacturing Hub. He boosted up our good spirit to come forward and show our excellence and team spirit and earn the credit for self and gain the fame for the nation. This approach means a lot for the economy of the country in addition to the development of the industrial sector in the country. His initiative towards starting up the manufacturing of products with the raw materials that we are exporting for a long time is worth giving a bold thought. Yet, these things are far more complicated than just building a dream vision. Is PMs vision of making India a Manufacturing Hub a dream or is that a practical possibility that could be accomplished with our best efforts?

Dream

- Indians are used to the lifestyle of earning their living by exporting raw materials and importing manufactured goods. It is difficult to change their mind-set.

- It is not very practical to set up these many manufacturing units for all the raw materials that we export. Setting up the units demands infrastructure.

- We need good amount of funds for the machineries and other requirements for establishing the industries and start up with the manufacturing process.

- We need to train the employees and staff for the organizations / manufacturing industrial set-up who can work and deliver the products on International Standards.

- We are already fighting our best to gear up the prevailing industries in order to nurture them with global level technology and deliver the end products on International Standards. It would be a much far off dream to start on with lot many manufacturing units.

Practical Possibility

- India is very rich in manpower which is the topmost requirement to start with new industrial set-up for the manufacturing process.

- Indians are hardworking. We have talents and efficiency to deliver the best output with minimal input. It is one of the reasons that Indians are hired universally for the employment. If we can work for some other nation, then why cant we join hands together to uplift our own dooming economy?

- Our brain power is very famous throughout the world. We have new ideas and layout plans for all types of tasks and also have the efficiency to implement the same in the practical way.

- If we can curb corruption, then we would end up saving plenty funds to accommodate and initiate many new employment opportunities.

- All we need is to boost up the Young India to have faith and confidence in their outlook and approach, who are our future stepping stones.

- The only reason that we have not been able to excel in this field is because we have never tried seriously. If we decide to start manufacturing, we can for sure do it.

Conclusion

We have arguments both in favour and against the setting up of new industries. With the corruption level in our country at present, the task of turning ourselves into the Mnufacturing Hub is undoubtedly a heavy and difficult. But there is a very nice proverb that we have learnt since childhood - "Where There is Will, There is Way". If we can join hands to give ourselves this new outlook, then we can not only check the corruption, but also make the PMs vision come true. Making India a manufacturing Hub could be the vision of Mr. Modi, but it will be a pride for every Indian.

RE: PMs vision to make India a Manufacturing Hub dream or a practical possibility?Teena Bhatia 08-19-2014 04:04 PM

Words remain words until and unless they are converted into actions. It is the same case with the PM Narendra Modis vision of 'Make in India'. It is a good thought to make India a manufacturing but again the problem is work is needed to convert the thoughts into actions. Merely speaking or dreaming doesnt help.

Indias manufacturing sector is in a bad shape. It has got number of drawbacks. At the present moment, it is necessary to focus on the ground realities. The global market is highly competitive and presently India is not able to present a stable industrial production data. It has to first work out to make the current conditions of the industry better and then should look out for making it a huge manufacturing hub.

It is a normal trend of every new government to make up promises. But promises are not enough for the industry. They need finances and the fact is cost of capital is quite high in India. There is no clarity on the matter of land acquisition. The exports of many companies are continuously seeing a decline from last some time. They dont have the purchasing power to acquire the advanced technologies.

As of now, there is a little hope that PMs vision to make India a Manufacturing Hub can turn into a reality. If it wants to, then the government has to come up with certain innovative measures. In China, the government buys the technologies on behalf of industrialists and they pay for it in small installments over a period of some years. Indias new government should figure out measures and implement them to convert the dream into practical reality.

Does India need FDI in Insurance?

Introduction

The BJP government is more towards focussing on the economy and its development, rather than concentrating on the consequences of their decisions and moves. Next to the real estate, the Foreign Direct Investment into the Insurance sector has initiated agitation into the insurance sector. The employees are already against the introduction of FDI into the insurance. The sudden change in the approach of the BJP led NDA government in getting the Insurance Law Bill passed, which had been presented by the UPA government in 2008, has stirred up the nation. Does India really need FDI in Insurance Sector?

Yes

- It will provide additional source of finance for insurance companies

- It will promote development of insurance sector by bringing in more products & features in this sector, by way of sharing knowledge with foreign investors

- Insurance companies funded by FDI may have lower cost of capital and better operating efficiency thus resulting in cheaper and better cover to end consumers.

- FDI in Insurance will introduce more competition in this market which will improve the services of the existing players also.

- We have seen in the past as well, competition teaches new strategies, better management and more focus on customer satisfaction. So, this would ultimately benefit the customers.

No

- Higher stake holding by foreigners would mean higher foreign control on the insurance company, thus runs a risk of having some decisions which are not in the best interest of domestic consumers.

- Foreign Direct Investment is money put in to our country by financial institutions or individuals of another country, and thus some or most of the profit made would at some point move outside our country and invested or spent in another country or home country.

- Different countries have different regulations in insurance sector, Government may need to relax some regulations in order to encourage FDI which may not always be in best interest of the country.

- Non FDI funded domestic insurance companies may have higher cost of capital and they would need to find ways of competing with lower premium offered by FDI funded insurance companies.

- There are already a lot of players in the insurance field which means that the competition already exists and services are quite good. LIC is one of the best companies in insurance sector offering one of the best and quickest settlements to the customers. Not much of competition is desied in this field.

- If the government is worried about the customers, it should make the laws stronger to ensure that the customers do get their deserved and promised benefits.

Conclusion

There are always pros and cons of each decision, FDI will increase competition and basis economics would suggest that when the supply increases as compared to demand the prices will come down, thus benefiting the end customers. The insurance sector in India is still under developed as compared to developed countries, and despite private players now allowed to enter this sector, we only have a small number of providers. FDI would increase the number of insurance companies and may also make possible better plans at lower prices. But careful consideration is required to ensure that the investment stays for long term and does not get withdrawn, leaving the companies and their domestic customers in a miserable position, and not all profits are moved outside the country but some reinvested or spent in our country. Regulations need to be revisited to ensure that Insurance Companies are subject to relevant and strict governance.

RE: Does India need FDI in Insurance?Teena Bhatia 08-10-2014 07:42 AM

FM Arun Jaitley came up with the new proposal of increasing the FDI limit to 49% from 26% in the insurance sector. It is an encouraging move as the finance minister has presented the proposal with an additional rider where the management and controlling power will stay with the Indian partner company. So, it eliminates the risk of foreign companies getting the control over the sector.

In the competitive industry, it has become really tough for the Indian promoters to invest the additional capital in the sector. And investment is must for higher growth. The increase in FDI limit will solve the problem. It will allow the industry to have additional investment capital of Rs 7,800 crores. Another significant factor is the investment will come through the Foreign Investment Promotion Board (PFIPB) route. The increase in FDI cap will attract the investment capital from foreign promoters.

The increase in FDI limit in retail posed the threat to the existing small and mid-sized companies. But it is an entirely different story in insurance sector. The step will help the small and middle-level companies. It will pave way for new products, better structure, effective customer service mechanism and a deeper insurance penetration in India especially in the rural markets. The hike can be said the start of better days for the insurance industry.

FDI in real estate beneficial for the common man?

The new government has gifted the people with many hopes of "Acche Din". They expected the first budget of PM Modi led government to be a big bang. With all the positive and fair announcements it cannot attract the needed smile. Amidst the expectations and reality, the one sector that got all the required attention was Foreign Direct Investment in real estate. It is one of those steps that can bring the economy closer to the coveted dream of better days. So what is your opinion on the matter? Is FDI in real estate is beneficial for the common man?

Yes

FDI in real estate will allow the people from the middle and lower-middle section of society to get their own house.

The minimum built-up area is relaxed to 20,000 square meter from the previous set 50,000 square meter. The new change will attract the foreign funds that will further pave way for quality and affordable housing.

The upper limit on FDI is raised to $10 billion from $5 billion. It will again attract cheaper funds that will allow the timely completion of the projects.

Relaxing FDI norms is about easy availability of fund flows that will provide strength to the Indian currency and will keep a check on inflation.

Investor sentiment matters a lot in real estate sector. FDI will work as a booster for investor sentiments and will enhance sales.

The foreign funds will provide strength to the internal structure of investment bringing in more transparency in the system.

Laborers will benefit from FDI in real estate as the MNCs pay premium over domestic-term wages.

No

FDI in real estate is not a welcome step as the major big companies are already having huge debts in their balance sheets.

The FDI in real estate dropped below $1.3 billion in last one year as compared to $3.1 billion between the period April 2012 and March 2013. The already set bar is not crossed, and government has raised the bar which will bring no benefit to economy and people.

The multinational companies can create a cloud burst like the Lehman brothers did long back in year 2007. It will hamper the economic prospects of India.

The decline in FDI in last one year is also a signal of the number of scams that took place during UPA government. Politicians are making money and no real benefit is reaching to common man.

The FDI in real estate will hamper the progress and functioning of local businesses and they have to make changes in operations in terms of costs.

In the long run FDI affects the balance of payment negatively from the time the investor covers its initial outlay. Later on, it is the host country that gets the actual capital returns.

Initially the labor will benefit from premium wages but in the long term it will disrupt the local employment market.

Conclusion

The recent changes done in FDI sector in real estate are certainly a welcome sign. The introduction of premium international standards in terms of technology, material and design in regard to construction will boost the sector. The funds will be available at low cost and workforce will be more trained with latest means. The only concern area is the impact of FDI in long term. Government should make sure that in long term the policy should not become destructible for Indian economy.

RE: Is FDI in real estate beneficial for the common man?Deepa Kaushik 08-5-2014 01:59 PM

There are advantages and disadvantages for most choices; foreign direct investment is no exception. It will bring in money from other countries in the form of investment in real estate projects, and possibly new technology & know how. Like a 15 floor hotel constructed in 6 days in China, sounds very surprising as we have experience of seeing a small flyover construction taking years.

On the downside, foreign investors would give a hard time to our domestic real estate companies who would need to compete projects funded by FDI where finance is not a major concern area whereas our domestic companies need to raise money, chances are that the projects funded by FDI would have lower cost thus would be able to offer lower prices to retail customers as opposed to our domestic companies who may need to figure out ways of cutting down their costs to market their units.

From an end customer point of view, I still think it is a positive move and hope the potential for lower cost is not diminished or eliminated in facilitation payments to authorities.

RE: Is FDI in real estate beneficial for the common man?sushanth 08-5-2014 09:32 PM

In housing, initially rupee value may increase during investment but in long run it declines to larger extent when we buy a house.

FDI in real estate may give rise to a situation similar to Israel and Gaza conflict where jews have legally occupied lands and now dominating the local people. Hence foreign relations damages.

Should single-point GST be implemented?

Indian government wants to focus on three important areas. They are DFC, Aadhaar and GST. Here, we are going to have a debate on the last factor that is the Goods and Service Tax. If it is implemented in India, it will be one of the biggest and significant tax reforms in India. Centre government will soon seek consensus with the states on the matter of implementing single-point GST. The bill will be presented in Parliament in winter session. What is your view on the matter? Should GST be implemented in India?

Yes

A single-point GST is the only way that can integrate the different state economies and bring them on same platform to boost overall growth.

India has got multiple layers of taxation making it really tough for the government to handle them in an effective way.

It will be a great relief for the state government as well as the centre government as it will divide the tax burden in a well balanced way between manufacturing and services.

If GST is implemented then all the taxes will be charged on the manufacturing costs that will ultimately help the people to get the products at lower prices.

India needs a transparent tax administration that is free of the corrupt and unethical practices. GST will be the first step towards achieving the objective.

No

If India wants to implement GST just to create a transparent tax system, then again the efforts will go in vain as businesses will conveniently find a mid-way to dodge taxes.

GST system is successful in Singapore and Germany but then they are the regions run by a single party whereas India has got a unitary setup.

Indias asymmetric federalism is comparable only with the United States of America and even it doesnt support the idea of GST.

The administrative mechanism of India will destroy the benefits of GST. It failed to handle the merger of Indian Airlines and Air India effectively then how do you expect to handle the integration of different tax services of more than 20 odd states.

Instead of becoming an effective tool of rationalization of the government, GST will become a tool of convenience for the businesses.

Centre government will have to pay a huge amount to the states governments to compensate the CST loss till the time GST is effectively implemented. It will be a huge loss to the economy.

Conclusion

The answer to this debate is simple. If the thing is not broken then there is no need to fix it. In a country like India, where federal structure is really complex, it is wise to change the tax system to a limited extent. But asking for a single point GST is beyond the scope of India. Unified market works well in the regions where there is no diversity. In India, it is a completely different game. So, instead of wasting the time, money and efforts on discussing GST, the government should rather focus on rationalizing the existing tax system. It will pay off in the long run.

RE: Should single-point GST be implemented?Deepa Kaushik 07-31-2014 07:52 AM

Single point GST is a very nice step initiated by the Government. If this gets passed, it would be highly beneficial for the end-user. The GST has been good so far in all the countries those implemented the same. India can definitely move its step ahead to promote this single-point GST.

With its implementation, the tax would be levied at a single nodal point and the end-user would benefit as the net selling price would come down. The tax levied at the various slabs are indirectly charged from the customers, which might have a possibility to pop-down. This would be a good balancing mechanism between the production and consumption units.

Talking of the corruption as a hindrance for the move, it will prevail as a set default. Though the number of mid-monkeys might reduce with such a single point taxation, still the corrupt people would definitely pave their way in. Even after deducting the allowances of the corrupt mid-agents, still we might hope for some reduction in the selling process of the goods with the implementation of single-point GST.

RE: Should single-point GST be implemented?sravani 08-1-2014 02:25 AM

Hi frdsIn my point of you not only state government economy will increaseing ,central government tax will reducing then reserve bank should reduce intrest rates in our country then economical growth and finacial growth will incresing then rupee value should highthanking you................