‘The real impact of Make in India will be on small factories’
NEW DELHI: The union government has taken the right steps to turn around business sentiment, but it will take some time before results show, particularly in the infrastructure sector, said Sunil Mathur, MD and CEO, Siemens, on the sidelines of the World Economic Forum’s India Economic Summit. Excerpts from an interview: What are your views on the initiatives taken by the Narendra Modi government? I am getting right feeling from the new government’s moves. He (Modi) is doing the right things, taking the right steps, which are wide reaching, which are visionary. I think we’ve got to give him his time, a year to year-and-a-half, particularly for the infrastructure sector. What are the specific issues for which the government needs eds time? Let us look at thehe power sector. There are coal and gasas supply issues; there are power plants that are not able to produce because of lack of fuel. There here are plants stuck k because of land d and environment ent issues. If you look at the ones that are held up for fuel, you have to give the government a chance to get the coal (and gas) issue sorted out, how the power purchase agreements are structured and negotiated. For projects held up due to land and environment issues, there are two ways: clean the surface and solve the problems of only those plants currently held up; or go to the root cause and find a permanent solution. I believe the government is not skimming the surface, but trying to go to the root cause. All these will take time. Isn’t the current economic environment conducive for the government to take more courageous reformist steps? I don’t know what courageous steps you are talking about. Creating the right environment is what he (the PM) is concentrating on. What I find refreshing is that he is not concentrating on taking a decision on every case. Rather, he is trying to create the right environment. If he creates the right environment,
then companies will decide for themselves what will be the right time for them to invest and the take the leap of faith.
Foreign institutional investors (FIIs), for instance, move around the world depending on sentiment and safety. Since the new government has assumed office, FII inflows have gone up, though it may be just around the sentiment. People are feeling safer to invest in India. Is there a rise in investment enquiries since the new government assumed office? Not yet. I believe it will take a year. Investment enquiries haven’t gone up on the long-cycle projects, although there are increased enquiries on the short-cycle business. On large projects such as railways aand power transmission and distribution, there has not been any major increase in investment enquiries.
But, if you look at capex (capital expenditure) for manufacturers, people are wanting to decide on whether to go in for expansion, automation or for setting up manufacturing plants. Those enquiries have begun to come. What are your views on the government’s signature ‘Make in India’ initiative? I think it is a very insightful aand intelligent step. In the general chatter about Make in India, people usually look at the large companies like ours. I believe the real impact of Make in India will be in the small-and-medium enterprises (SMEs).
For example, we have got 23 factories and about 10,000 suppliers. More than 50% of these are SMEs. A lot of what we use in the manufacturing process, is manufactured by such SMEs.
Unless we get these firms up and running, there is no way we get into the GDP growth level of 9-10% we are looking at. Manufacturing growth is central to hitting 9%. That can come only if we are able to make every single SME part of this process by supporting them with technology, skillsets and financing. Commitment is required from large companies to help the SMEs with which they are dealing. This can also come in the form of a very structured corporate social responsibility programme.