Manufacturing Sector in Developing Economies and Future of Make in India

Historically manufacturing has worked as a most important engine of economic growth and development, particularly in developing economies. It has been empirically proven that, there is positive correlation between the degree of industrialization and the level of per capita income in developing economies. Manufacturing sector in developing economies is regarded as the largest absorber of labor force but ironically the employment share of manufacturing in the India`s GDP has been pitiably low for almost the entire post-independence period of development. Manufacturing is generally seen as a synonym to industrialization which is driven by huge capital requirement. But in the absence of sufficient national savings, the developing economies find it difficult to finance their investments. These economies are in constant need of foreign capital in form of both direct and indirect investment. But inflow of foreign capital depends on many factors such as macroeconomic factors, institutional factors, political factors and socioeconomic factors. Keeping this view the Government in India launched Make in India campaign in September 2014 with an aim to transform India into global manufacturing hub. It would be interesting to see how it responds through make in India campaign and is able to achieve its objectives. An attempt is made through this paper to examine the   major developing economies of world on the basis of factors affecting FDI. The trend so studied has helped to build a premise for Make in India.  The study also projects the outcomes of the initiative for India based on the analysis of business environment of India.