The Make in India fair in Mumbai was on fire for many reasons over the past week. On the first day, the stage actually did catch fire. But that paled in comparison to the Rs 15 trillion pledges for investment made over the week. However, do not look at this money as an instant payload.
In reality the money will come in gradually, over a couple of years. There is also the matter of how many of those pledges will actually see the light of day. When current PM Narendra Modi held Vibrant Gujarat years ago, only 13 percent of pledges turned into deal implemented. Research conducted by free-market institutes show that the rate of conversion has been low. No state exceeded a 20 percent conversion rate.
So by that measure, there will perhaps not be more than a Rs 3 trillion investment over the next few years from this Make in India event. This figure is not a small one.
But for years now, companies have been turned off by the amount of red tape and bureaucracy that hampered the setting up of operations. While India cannot just open the door and not check those who come in, there has to be a balance between adequate checks and ease of applications. There is enough evidence at play here to suggest that India needs to look at removing red tape if it wants foreign investment to come into the country and boost the economy.
