Make in India: Metro & Railways in India and the Make in India Campaign

Overview

Make in India is a Government of India initiative announced in 2014 by Prime Minister Narendra Modi to stimulate domestic manufacturing and increase investment in the country. Through this scheme, the government wishes to revitalise the sluggish industrial and manufacturing sectors and stimulate economic growth. The GoI also seeks to encourage foreign enterprises to invest and manufacture in India by strengthening the country’s ‘Ease of Doing Business’ index. The long-term goal is to gradually transform India into a global manufacturing hub while also simultaneously improve job prospects in the country.

The highlights of this scheme are mentioned in the table below:

Name of the Scheme	Make in India
Date of Launching	25th September 2014
Launched By	PM Narendra Modi
Government Ministry	Ministry of Commerce and Industry

Make In India – Focus on various Sectors

The campaign focuses on twenty-seven sectors outlined as under:

Manufacturing Sectors:

• Aerospace and Defence
• Automotive and Auto Components
• Pharmaceuticals and Medical Devices
• Bio-Technology
• Capital Goods
• Textile and Apparels
• Chemicals and Petro chemicals
• Electronics System Design and Manufacturing (ESDM)
• Leather & Footwear
• Food Processing
• Gems and Jewellery
• Shipping
• Railways
• Construction
• New and Renewable Energy

Services Sectors:

• Information Technology & Information Technology enabled Services (IT & ITeS)
• Tourism and Hospitality Services
• Medical Value Travel
• Transport and Logistics Services
• Accounting and Finance Services
• Audio Visual Services
• Legal Services
• Communication Services
• Construction and Related Engineering Services
• Environmental Services
• Financial Services
• Education Services

Need of Make in India

The government has chosen to focus on manufacturing and make efforts to boost production for a variety of reasons. The following are the most important:

1. The services sector appears to have led India’s growth and economic story over the last two decades. This strategy paid off in the short run, as India’s IT and BPO sectors rose sharply, helping the nation often referred to as the ‘back office of the world.’ Although the fact that the services sector’s proportion to the Indian economy increased to nearly 57% in 2013, it just accounted for a meagre twenty-eight percent as the percentage share of jobs and employment in the economy. Withstanding the fact, in order to increase employment, the manufacturing sector has been envisaged to be elaborated and expanded. This is because, considering the country’s demographic dividend, the services sector currently seems to experience low absorption potential of job opportunities.
   
2. Another reason for launching the campaign is India’s dismal manufacturing position. Manufacturing accounts for roughly 15% of the Indian economy overall. There is no need to compare with developed nations, the manufacturing share in the country’s GDP is also significantly lower even when compared to our East Asian neighbours. When it comes to goods, there is an overall trade imbalance. The services trade surplus barely covers one-fifth of India’s goods trade deficit. This trade deficit cannot be addressed alone by the services sector. Manufacturing will have to contribute. The government hopes to encourage domestic and foreign enterprises to engage in manufacturing in India, which will benefit the sector and create jobs at both the skilled and unskilled levels.
   
   Another reason for launching the campaign is India’s dismal manufacturing position. Manufacturing accounts for roughly 15% of the Indian economy overall. There is no need to compare with developed nations, the manufacturing share in the country’s GDP is also significantly lower even when compared to our East Asian neighbours. When it comes to goods, there is an overall trade imbalance. The services trade surplus barely covers one-fifth of India’s goods trade deficit. This trade deficit cannot be addressed alone by the services sector. Manufacturing will have to contribute. The government hopes to encourage domestic and foreign enterprises to engage in manufacturing in India, which will benefit the sector and create jobs at both the skilled and unskilled levels.
   
3. According to several studies and research, no other sector appears to have as a large multiplier effect on a country’s economic growth as manufacturing does. Because the manufacturing sector has more backward links, growth in manufacturing encourages growth in other sectors as well. This results in more jobs, investments, and innovation, leading to an overall better and higher standard of living of the people in an economy.

Various Initiatives

1. For the first time, railways, insurance, defence, and healthcare equipment sectors have been opened up for greater FDIs (Foreign Direct Investment).
2. The maximum FDI ceiling in the defence sector under the automatic route has been raised from 49% to 74%. On May 16, 2020, Finance Minister Nirmala Sitaraman announced an increase in the FDI.
3. Hundred percent FDI has been approved under the automatic route in construction and certain rail infrastructure projects.
4. There is an Investor Facilitation Cell that aids investors from the time they arrive in India till they leave. This was established in 2014 to provide services to investors at all stages, including pre-investment, execution, and post-delivery.
5. The government has taken several steps to enhance India’s ranking in the ‘Ease of Doing Business’ index. In 2019, India climbed 23 points in the Ease of Doing Business ranking to 77th place, making it the highest-ranked country in South Asia in this index.
6. The Shram Suvidha Portal, as well as the eBiz Portal, have been launched. The eBiz portal provides one-stop access to eleven government services related to launching a business in India.
   
7. Other permits and licences needed to start a business have also been eased. Reforms are being implemented in areas like property registration, tax payment, obtaining a power connection, contract enforcement, and insolvency resolution.
   
8. Other reforms include the licencing process, time-bound clearances for foreign investor applications, automation of processes for registration with the Employees State Insurance Corporation and the Employees Provident Fund Organisation, state adoption of best practices in granting clearances, reducing the number of documents required for exports, and ensuring compliance through peer evaluation, self-certification, and so on.
   
9. The government intends to improve physical infrastructure mostly through PPP investment. Investment in ports and airports has increased. In addition, dedicated freight corridors are also being developed.

The government has initiated plans to build five industrial corridors, which is currently under progress. These corridors shall spread and run through the length and breadth of the country, with a strategic emphasis on inclusive development that would supplement industrialisation and urbanisation in a structured manner. The corridors are as follows:

1. Delhi-Mumbai Industrial Corridor (DMIC)
2. Amritsar-Kolkata Industrial Corridor (AKIC)
3. Bengaluru-Mumbai Economic Corridor (BMEC)
4. Chennai-Bengaluru Industrial Corridor (CBIC)
5. Vizag-Chennai Industrial Corridor (VCIC)

The various schemes

Several schemes and programmes have been initiated to support the Make in India initiative. These schemes are discussed below:

(i) Skill India: The programme aims to train ten million individuals in diverse sectors in India every year. To make ‘Make in India‘ a reality, the vast amount of human resource available must be up-skilled. This is significant because India’s formally skilled workforce accounts for barely 2% of the population.

(ii) Start-up India: The basic aim behind this project is to create an ecosystem that promotes the growth of start-ups while also driving long-term economic growth and generating large-scale employment.

(iii) Digital India: The goal is to make India a knowledge-based and digitally enabled economy.

(iv) Pradhan Mantri Jan Dhan Yojana (PMJDY): The objective envisions financial inclusion ensuring affordable access to financial services such as banks savings and deposit accounts, remittances, credit, insurance, and pensions to a vast group of society and people.

(v) Smart Cities: The project attempts to rejuvenate and transform Indian cities. The goal through various sub-initiatives is to build and create hundred smart cities in India.

(vi) AMRUT: The Atal Mission for Rejuvenation and Urban Transformation is abbreviated as AMRUT. Its goal is to improve basic public services and make 500 Indian cities more livable and inclusive.

(vii) Swachh Bharat Abhiyan: Swacch Bharat Mission has been one of the most successful campaigns of the government. The aim of this campaign is to make India cleaner and to promote basic sanitation and hygiene.

(viii) Sagarmala: The focus and objective of this scheme is to enhance ports and promote port-led growth in the country.

(ix) International Solar Alliance (ISA): The ISA is an alliance of 121 countries, the majority of which are sunshine countries that lie entirely or partially between the Tropics of Cancer and Capricorn. This is India’s initiative to promote solar technology research and development and to formulate policies in this area.

(x) AGNII: AGNII, or Accelerating Growth of New India’s Innovation, has been initiated to propel the country’s innovation ecosystem by linking people and supporting the commercialisation of innovations.

Key Objectives

The key objectives of Make in India mission has been envisaged as under:

1. Raise the growth of manufacturing sector by twelve to fourteen percent, taking every year into account and on an annual basis.
2. Creating 100 million additional jobs in the manufacturing sector by 2022.
3. Increasing the share of the manufacturing sector’s contribution to GDP by twenty-five percent until 2022.
4. Developing necessary skill sets among urban poor and rural migrants to promote inclusive growth.
5. An increase in domestic value addition and technological depth in the manufacturing sector.
6. Having a growth that is environmentally sustainable.
7. Augmenting and strengthening the Indian manufacturing sector’s global competitiveness.

Significant Progress

The Make in India initiative has achieved various milestones. Some of the notable accomplishments are as follows:

1. The implementation of the Goods and Services Tax (GST) has simplified the taxation structure for businesses. The GST has given the Make in India campaign a boost.
   
2. The Digitization scheme has been a mammoth success, and it is continuously gaining momentum not only in India but across the world. Many countries have recognised the Indian UPI digital system and have allowed transactions in respective countries through UPI gateway. Similarly, Indian RuPay credit card is gaining international acceptance.
   
   Recently, RuPay achieved a major milestone of issuing 25 million RuPay – Discover global cards. In addition, Taxation, company development and incorporation, and a variety of other activities have been made available online, streamlining the overall process and increasing efficiency. This has improved India’s position in the EoDB index.
   
3. The new insolvency code, known as the Insolvency and Bankruptcy Code 2016, has helped consolidate all insolvency laws and rules into a single legislation system. This has brought India’s bankruptcy code at par with global and international standards.
   
4. Financial Inclusion initiative like Pradhan Mantri Jan Dhan Yojana (PMJDY) has been an ambitious program launched by the Government of India under Make in India campaign to ensure access to financial services like bank accounts, remittances, credit, insurance and pension in an affordable manner to every citizen especially. Nearly 48 crore accounts have been opened under the scheme so far. The scheme, ever since its launching, made remarkable progress. The total balance in PMJDY account crossed 2 lakh crore recently as a major milestone.
   
5. India’s EoDB index has been benefited from FDI liberalisation. Increased FDI inflows are expected to result in the creation of employment, revenue, and investments. 
   
6. Infrastructure and connectivity have garnered considerable focus with the help of schemes like Bharatmala and Sagarmala, as well as different railway infrastructure development schemes and programmes.
   
7. BharatNet is a telecom infrastructure provider established by the government of India to improve digital networks in rural areas of the country. This is perhaps the largest rural broadband projects in the world.
   
8. India is ranked fourth in the world for its ability to harness wind power and sixth in the world for its ability to harness solar electricity. In terms of installed renewable energy capacity, India ranks fifth in the world.

The Various Advantages

The Make in India programme has resulted in a number of positive outcomes for the country. The following are some additional benefits that have been an outcome of this scheme.

• Creating new job opportunities.
• Increasing GDP by accelerating economic growth.
• With more and more countries recognising the Indian RuPay, UPI payment and financial service system and with an increase in FDI inflows, rupee is expected to strengthen.
• Small manufacturers and entrepreneurs have been significantly benefitted by financial inclusion programs and schemes like Mudra Yojna, Start-Up India etc. With nation improving on the Ease of Doing Business index, a greater influx of capital is expected through investors from all sections, both domestic and abroad. Accordingly, with the arrival of various investors from different countries to invest in India, an up-gradation of technologies is also expected with exchange and know-how of the latest technologies in various fields that would accompany the investors.
• As a result of the Mission’s various initiatives, India has risen in the EoDB index. Similarly, establishing manufacturing centres and companies in rural areas is helping and promoting the growth of these communities.

Major Challenges

Despite the campaign’s success in various circles, there have been a number of concerns as well that need to be addressed on priority. There are also other hurdles as well that the country must overcome if it is to meet the ambitious goals set by the establishment. Some of the concerns may be stated as under:

• India has more than sixty per cent cultivable land. The over emphasis on industry can have a negative impact on agriculture. It has the potential to permanently destabilise fertile land.
• It is also considered that fast industrialization (especially with the emphasis on ‘going green’) might contribute to natural resource depletion.
• Local farmers and small entrepreneurs may be unable to compete with foreign players as a result of welcoming large-scale FDI.
• The campaign’s emphasis on manufacturing may result in pollution and adverse environmental effects.
• There are significant gaps in the country’s physical infrastructure facilities. For the campaign to be effective, it is vital to improve the country’s infrastructure while simultaneously addressing issues such as corruption at the grassroots level. India may learn from China, which increased its share in global manufacturing from 2.6% in the 1990s to 24.9% in 2013. China rapidly expanded its physical infrastructure, such as railways, roads, power, and airports.

Make in India in Railways: Metro Coaches – A Success Story

When the first line of the Delhi Metro opened in 2002, the coaches were supplied from Germany and South Korea as CBUs (Completely Built Units). After twenty-one years, ninety percent of the coaches that run on the ten lines of the nearly four hundred km network of India’s largest and the world’s eighth-longest Metro network are built in India. The contract requirements of DMRC, which set a ceiling on the upper limit of 25 percent for production abroad with the balance to be made in India, permitted this indigenization of Metro coaches. As a result, multinational manufacturers such as Bombardier and Alstom established their businesses, subsidiaries and joint ventures in the country.

According to the International Association of Public Transport (UITP), a non-profit advocacy organisation for public transportation authorities and operators, policymakers, scientific institutes, and the public transportation supply and service industry, the capital costs of Metro coaches manufactured in India are significantly lower than those in the rest of the world. According to UITP estimates, the capital cost of an Indian-made coach is roughly INR 89.4 million (US$ 1.35 million), which is much lower than the cost in Vancouver (US$ 2.5 million) and San Francisco (US$ 2.30 million).

Bombardier Transportation at Savli near Vadodara, Alstom Transport India in Sricity near Chennai (Tamil Nadu), and Bharat Earth Movers Limited (BEML) in Bengaluru are the three metro coach manufacturing facilities in India already operational. Other organisations, including Hitachi, Mitsubishi, Hyundai, and a couple of Chinese firms, have also established consortiums with one or more of these three companies.

Bombardier Transportation

Bombardier has been a supplier to Indian Railways for over three decades and opened the Metro Coach production facility in Savli in 2008. The company actively participates in the Make in India programme by offering locally built rail vehicles, products, and solutions for both Indian and overseas markets. Apart from being a significant supplier to the Delhi Metro, to which it has delivered nearly thousand coaches to date, Bombardier has begun exporting Metro rail coaches to Australia, as well as components to Brazil, Australia, and Saudi Arabia. In addition to the Savli location, the company also has a transportation engineering services centre in Gurgaon. Bombardier’s India unit received its first export order in 2012 for the supply of components for trains in Adelaide and has since then supplied and delivered components and railway coaches for projects in Australia’s Victoria and Queensland, Brazil’s Sao Paulo, and Saudi Arabia’s Riyadh. It also provides engineering services to its parent company’s projects in Germany, Switzerland, China, and the United Kingdom.

Bombardier also has supplied enhanced rail control for the new, automated Delhi Metro route 7, which is a significant milestone because it is a completely automated route that will eventually run driverless trains. To ensure safe and reliable automatic train operations, all four stages of Line 7, or the Pink Line, that have opened in the last 14 months are equipped with the Bombardier Cityflo 650 communications-based train control solution. To enable centralised train supervision, Cityflo 650 employs advanced radio networks and moving block operation.

Alstom Transport

Alstom marked a key milestone in December 2018 by completing the export of the final of 22 Metropolis trains for Sydney Metro, delivered from its Sricity manufacturing facility. Alstom was awarded a contract in 2014 to supply 22 six-car trainsets and the CBTC signalling system for the North West Rail Link, Australia’s largest public transport project and the country’s first fully-automated Metro network. Alstom’s engineering base in Bengaluru tailored the Metropolis and Urbalis applications to the specific needs of Sydney Metro in order to provide people with rapid, safe, and dependable services. 

Sricity, which began production in 2014, has already established high quality and operational safety standards via excellence in innovation and sustainable manufacturing practices. The factory, which has an annual production capacity of 240 automobiles, has delivered coaches to the cities of Chennai, Kochi, and Lucknow. It has already started construction of its second export order for the light Metro project in Montreal and production for the Mumbai Metro Line 3. Alstom’s Sricity manufacturing facility is now one of the group’s global manufacturing centres of excellence for rolling stock, following the quality standards maintained and on-time delivery of the trainsets for various projects globally.

Alstom has also been recently awarded a contract by Mumbai Metro Rail Corporation Limited (MMRCL) to supply a CBTC signalling system for the Mumbai Metro‘s Line 3. The contract, which builds on prior rolling stock and power supply contracts won and awarded for the same line, is worth more than €100 million. Alstom shall outfit Line 3 with Urbalis 400, the company’s most recent generation of CBTC signalling equipment. Unmanned train operation (UTO), computer-based interlocking and centralised train supervision, platform screen doors, and the electrical and mechanical supervisory control and data acquisition system (E&M SCADA) are all included as per the contract.

The BEML 

The Rail Coach manufacturer of BEML Limited, located in Bangalore, India, was the first all-steel integrated rail coach manufacturing unit set up and established by the Government of India in 1948. It was established with the support and technological know-how offered by M/s MAN of Germany to produce passenger rail coaches (of broad gauge) for Indian Railways.

BEML, a public sector undertaking of the Government of India, and Rotem (now Hyundai Rotem) signed a Technical Collaboration agreement in 2002 during the implementation of DMRC’s first urban transit project for its Phase-1, and BEML became the first to indigenously manufacture Metro Cars for DMRC RS1 contract, manufacturing 220 units of Metro cars. BEML later received a developmental order from DMRC to develop 8 units of intermediate cars in order to indigenise the manufacturing and integration of Metro train sets. BEML’s position as an indigenous source of Metro cars has been strengthened by the successful execution of this development order.

BEML’s three production lines have provided over nearly 1,500 Metro cars for various projects in India so far. BEML extended its role and presence in the Metro Business as an outcome of its experience in the manufacture, integration, and testing of Metro cars, and it now commands a significant market share in India. Encouraged by India’s good track record in manufacturing world-class Metro coaches, all three players have begun further indigenisation, with the main subsystems of Metro coaches indigenised. Window glasses, battery boxes, brake blocks, bogie frames, vacuum circuit breakers, propulsion systems and signalling systems, among other components, are made in India.

The Delhi Metro is the largest of sixteen currently operational or active Mass rapid transit or metro systems in fifteen cities across India. As of March 2023, India had 859 kilometres of operating metro lines and 16 systems. In the last ten years, the country’s metro rail services have grown at an exponential rate. The expansion is set to accelerate further, with more than 1,000 km of new metro lines planned to connect over 30 cities by 2025. More and more cities in India are working on Metro plans today, extending from Srinagar in the north to Thiruvananthapuram in the south, while dozens more are in need of one, opening up a vast avenue for additional business in the sector in the near future.

Recent Achievements & Latest Update

Russian and Indian Railways have reached an agreement to build Vande Bharat trains as part of the Make in India campaign. In March this year, the Russian-Indian consortium of Transmashholding (TMH) and Rail Vikas Nigam Limited (RVNL), which operates as an extension of the Ministry of Railways, won the tender for the manufacturing, supply, and maintenance of 120 passenger electric trains (1920 cars) for India. The $1.7 billion contract is believed to be the largest foreign order in Russian railway engineering.

After formally endorsing the planned agreement in mid-May this year, TMH had claimed that everything would be built in India because India has a make-in-India act that necessitates localisation. The Transmashholding, which competed in the tender through its Metrovagonmash facility in the Moscow Region’s Mytishi, stated that the first sample of the train would be available in two years, with the first delivery of Vande Bharat Express trains expected within the next five years.

The overall cost of rolling stock under the tender, including maintenance organisation over a 35-year period, might reach $6 billion. Transmashholding also signed a deal in March this year for the supply of 28 new modern metro cars for the Belarusian subway after representatives from the Minsk Metro visited its production site. Between 2020 and 2023, the Russian conglomerate will also supply sixty cars for the Baku Metro in Azerbaijan’s capital.

TMH signed a 1 billion Euro contract with the Egyptian National Railways in 2018 for 1300 passenger cars, with production taking place in Russia and Hungary. Trains with new passenger cars run daily between Cairo and Alexandria (208 km), Asyut (380 km), and Sohag (473 km). The Vande Bharat Express, India’s first indigenous and locally-produced semi-high-speed train, is a huge effort made by the government to strengthen and acknowledge the ‘Make in India’ project as an impressive success story. The train, which is outfitted with cutting-edge passenger facilities, has significantly transformed the country’s passenger travel experience. Till July 2023, a total of twenty-five Vande Bharat trains are operational in the country. In the next five years, four hundred Vande Bharat trains have been planned to run across the country on various routes.