Introduction:
India’s manufacturing sector has become an engine for economic growth and job creating with cascading impact on other sectors of the economy. Fiscal year 2006 to fiscal year 2012, India’s manufacturing-sector GDP grew by an average of 9.5 percent per year. Then, over the next six years, growth declined to 7.4 percent. In fiscal year 2020, manufacturing generated 17.4 percent of India’s GDP
Opportunities For India:
- Opportunities that appears to be emerging.
- While there is hope for a quick recovery in India, we have to make concerted efforts to realise this including an integrated multi-pronged approach through public policy support, private sector participation and citizens’ support.
- This presents a huge opportunity for India as many Companies plan to shift out of China. We need to prepare the ground forthwith to welcome such investment into India. We need to try and make life easy for investors.
Measures needed:
- Labour reforms: Labour Laws should be reformed as due to the stringent Labour Laws Corporates in India are preferring Capital intensive mode of Production in a country where labour is abundant.
- Promoting labour Intensive sectors:Labour intensive sectors like food processing industry, leather industry, apparel, electronics, gems and jewellery, financial services, and tourism etc. should be encouraged. Appropriate subsidies and tax incentives should be given to incentivise them. Make in India initiative a great step forward which will boost the manufacturing.
- Strengthening MSME: MSME sector should be promoted and supported. Easing regulations, subsidies will help. Also easy available of credit should be the priority. MUDRA has a potential to create required jobs in India.
- Implementing Niti Ayog action agenda: The Action Agenda has provided several good ideas for job creation, including labour law reforms at the state level. The report emphasizes the role of exports in job creation and recommends establishing coastal employment zones (CEZs), similar to China’s special economic zones (SEZs). This agenda must be implemented in letter and spirit.
- Entrepreneurship: The focus of economic policy must be on creating an enabling policy for youth to take up entrepreneurship and create more jobs in the market. India does not need five companies worth 5000 crores turnover but needs 5000 companies of 5 crore turnover.
- Make in India initiative with the primary goal of making India a global manufacturing hub.
- ‘Zero defect zero effect’ for MSMEs to deliver top quality products using clean technology.
- ‘SKILL INDIA’ – a multi-skill development programme with a mission for job creation and entrepreneurship.
- Labour reforms through a dedicated Shram Suvidha Portal, Random Inspection Scheme, Universal Account Number and Apprentice Protsahan Yojana.
- Defence Procurement Policy (DPP) under which the priority will be given to the indigenously made defence products.
- Technology Acquisition and Development Fund (TADF) under the National Manufacturing Policy (NMP) to facilitate acquisition of Clean, Green and Energy Efficient Technologies by MSMEs.
- Pradhan Mantri MUDRA Yojana (PMMY) for providing loans to small-scale businesses.
Aatmanirbhar Bharat Abhiyan: the right impetus:
- India could be their destination of choice, provided we offer a conducive environment.
- A conducive business climate with better infrastructure and logistics, simplified land and labour laws and single window clearances can enable India to develop a robust manufacturing ecosystem.
- This will help attract foreign capital, latest technology, create jobs and boost our exports.
- We must also focus on Skill and Scale to be both quality and cost competitive and serve a global customer base.
- Huge scope exists in sectors such as pharma, electronics, automobiles and defence machinery, not only to be self-reliant but also capture a decent slice of the global supply chain.
Way Forward:
- Investor’s confidence must be improved.
- Improving physical infrastructure from transport systems to the power sector is essential.
- Importance should be given to electronic sector.
- Improve access to finance for smaller enterprises.
- Making firm entry and exit easier.
- Inverted duty structure.
- Enhancing the flexibility of labour regulations.
- Low-cost manufacturing is important for India.
- If India has to raise its share of manufacturing in GDP to around 25%, industry will have to significantly step up its R&D expenditure. This must be addressed by the new industrial policy.
- The quantum of value addition has to be increased at all levels. Larger the value addition, greater the positive externalities.
- FDI policy requires a review to ensure that it facilitates greater technology transfer, leverages strategic linkages and innovation.
- Aim for higher job creation in the formal sector and performance linked tax incentives.
- Attractive remuneration to motivate people to join the manufacturing sector.
- Need to have a curriculum that focuses on soft-skills and value-based training that meets the demands of the industry.
