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India's manufacturing goals conflict with Modi policy

Monday, January 5, 2015

Significance

The ordinance aims to facilitate land acquisition for infrastructure development as well as Prime Minister Narendra Modi's 'Make in India' manufacturing campaign. Launched recently amid a bleak industrial growth scenario, the campaign seeks to make India a global manufacturing hub. However, measures such as the land ordinance are inadequate to realise this as yet largely undefined goal, especially given the tough global economic conditions that have developed since 2008.

Impacts

  • There is limited room to boost export competitiveness with currency devaluation due to India's heavy import dependence.
  • The government is likely to dilute labour laws to woo investors, at the expense of its own longer-term vision for manufacturing.
  • The new ordinance could facilitate land acquisition in some states, but the wider infrastructure deficit is an abiding constraint.

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