Prime Minister Narendra Modi, with much fanfare and global events had catapulted  his Make in India campaign into the global arena. However, with his demonetisation drive, it seems that Make in India may be undoing itself. 

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For two years, he sifted through world capitals asking companies to 'Make in India'. Projecting India as a low-cost and efficient manufacturing hub was one of his core agenda to create jobs in the country.

Weakest order expansion since July

Manufacturing woes continue after the withdrawal of higher currency as a report by Nikkei India Manufacturing PMI on December 1 said that this has been the ‘weakest expansion in new orders since July.’

“The withdrawal of high-value banknotes in India reportedly hampered manufacturing growth in November, with companies signalling softer increases in order books, buying levels and output. Concurrently, inflation rates for both output charges and purchase costs eased since October,” the report said.

In a previous report by Nikkei the November data highlighted an eleventh consecutive monthly improvement in manufacturing conditions across India, with the headline seasonally adjusted Purchasing Managers’ Index (PMI) at 52.3.

“One factor contributing to the downward movement in the PMI was a softer expansion in new business inflows. Order books rose at a moderate pace that was the slowest since July,” the report said.

Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at IHS Markit and author of the report, said, “PMI data for November showed that the sudden withdrawal of high-value banknotes in India caused problems for manufacturers, as cash shortages hampered growth of new work, buying activity and production. However, whereas some may have anticipated an outright downturn, the sector held its ground and remained in expansion mode. Furthermore, although many surveyed companies commented that further disruption is expected in the near-term, the demonetisation of the rupee is anticipated to ignite growth in the long-run as unregulated companies leave the market.”