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Samsung’s expansion in Greater Noida is a big deal for Narendra Modi and a filip to his flagship programme
Where are the jobs?” is a constant refrain of the Opposition parties and especially Rahul Gandhi on his infrequent sojourns to India. But the Congress has a point even though they also spectacularly failed at building the jobs market when they were in power. India’s demographic dividend still stands the risk of becoming a major dilemma going forward with millions of unemployed and unemployable youth. One panacea to India’s lack of jobs was supposed to be Prime Minister Narendra Modi’s flagship ‘Make In India’ programme, a set of incentives for manufacturers of everything from consumer durables to fighter aircraft to make more of their products and acquire services from India.
Yet for years nothing changed, if anything India’s import dependence on certain products became worse. Three-quarters of the estimated $30 billion of consumer electronics and durables consumed in India annually is imported, mainly from China. Even many of the devices that have a ‘Made In India’ stamp were usually just assembled in India, workers often not doing much more value addition than turning screws. When Rahul Gandhi joked that every selfie a person took in India was like giving a job to a Chinese youth, he might have stretched the analogy a few steps too far, but the point was taken. India was living vicariously on Chinese imports of everything from toys to televisions. The irony of brands celebrating their Indian-ness while selling Chinese imports was lost on promoters, mainly in the smartphone space, gorging on hefty margins until the Chinese companies moved in themselves, squeezing out Indian brands.
But in Samsung’s expanded plant in Uttar Pradesh’s Greater Noida, which will become one of the world’s largest mobile phone plants, Narendra Modi has found a riposte. The new facility is expected to serve not just India but other emerging markets as well and by manufacturing over 120 million handsets annually, including many of the critical components in India, the expanded facility is expected to generate over 5,000 jobs. That is just a drop in the ocean to the quantum of jobs needed in India but this should give a boost to the ‘Make In India’ project and also a tool to Samsung in its fight against Chinese smartphone manufacturers, which have been flooding India. The South Korean firm will almost certainly lobby for higher import tariffs. At the same time, another South Korean firm, Kia Motors, is working overtime to ensure that their new factory in Andhra Pradesh opens as soon as possible to cater to India’s burgeoning car market, giving Narendra Modi a few case studies of ‘Make In India’ success. At the same time, German carmaker Volkswagen announced a ramp-up of Indian operations under its Czech band, Skoda, with a billion-Euro investment in Aurangabad and Pune. But a few stories do not a novel make, and the Government has to do much, much more to incentivise manufacturing in India and make India a favoured destination for new factories that cater not just to the domestic market but also global markets, especially as the world faces the very real potential of a trade war. One in which if India plays it smart, it might not be a net loser.
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