The manufacturing sector is the key to a nation's economic progress.In India,manufacturing constitutes 16 percent of its GDP,which is low for a nation aspiring to be an economic superpower. Growth in manufacturing is essential as it creates labour-intensive jobs.The growth story in China is largely shaped by manufacturing contributing about 30 percent of its GDP.The central government has rightly put in place 'Make in India' initiative sending out strong signals to the domestic and foreign investors.However,several bottlenecks should be addressed upon so as to convert the slogan into a viable model.First,manufacturing is a holistic concept.That said,we need to bridge connectivities associated with manufacturing.Critical infrastructure has to be laid down by building roads,ports and ensuring uninterrupted power supply.This is the prime responsibility of the central government so as to attract the private investors.
Second,growth in manufacturing would remain a distant dream unless it is supported by skill development and consequent labour reforms.India is endowed with a favourable demographic dividend that needs to be rightly channelised.The necessary steps include establishing skill development centres,vocational training at the secondary and higher education level and encouraging innovative solutions.the labour reforms should be carried out in a manner which proves to be a win-win situation for both the employers and the employees.
Third,manufacturing and innovation goes hand in hand.The World Bank survey shows that the biggest difference between wealthy countries and BRICS was the intangible capital.The intangible capital comprises of innovation,Research and Development(R&D),goodwill and intellectual property assets.India has been ranked an abysmal 76th in Global Innovation Index report.Strenghening IPR laws and increasing funding in the areas of research-based higher education and innovation are the long-overdue initiatives.
The good news is the World Economic Forum's Global Competitiveness Index has placed India a top-notch country in terms of availability of engineers and scientists.Moreover,India is a cheap supplier of young labour force including women.Should there be a determined leadership and necessary investments,India has the potential to be a front-runner in manufacturing.
To promote manufacturing, India should improve the business environment by facilitating ease of doing business.The measures include reforms in land laws, labour laws and taxation laws.Further,at times, certain protectionist measures would protect the domestic industries and incentivise domestic manufacturing. For instance, regulations on imported steel by hiking import duties would help domestic steel industries.Apart from tariffs, mandating local content requirements and providing export related incentives is likely to further the concept of 'Make in India'
ReplyDelete