India jumped onto the manufacturing bandwagon a few years
ago, eventually surfacing the prospects for a promising future in the industry.
Backed with favorable demographic dividends for the decades to come, and a
relatively low priced quality workforce at 0.92 USD per hour, we hold a firm
demographic advantage. The rapidly escalating infrastructure along with a
lucrative shift into skilled workforce makes it a potential hotbed for
investors. While pots of gold are being poured into this sector, it has also
captured the good will and the interests of the government. The ' Make in
India' movement has been as good as its word in luring many players into the
game, encouraging international and domestic companies to carry forth
manufacturing in India. Through various incentives, budget plans and
allowances, it has appealed to a businessman’s instinct on various scales and
in various sectors and further encouraged investors. PM Modi has rightly
pointed out that we have the 3 D's - Democracy, Demography and Demand up our
sleeve and we're all set to shake the business world.
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| Source: thenamopatrika.com |
But where does India really belong on the global
manufacturing scale? Could it join China, Japan, US and Korea at the top of the
ladder by 2025? Translating this into the economic jargon, it means increasing
India's manufacturing share in GDP from the current 17.4% to 25% by 2025, which
demands a lofty annual GDP growth rate of more than 6%. In contrast to China's
45% share in GDP, India still hangs below at a modest 17.4%. These statistics
drive a first nail into the coffin of the great Indian dream of being the next
manufacturing destination.
India having the second largest growing service sector compromises
the growth of employment in the manufacturing domain. Also, India's Economic
complexity index (ECI) ranks low at number 54 amongst the 144 countries. This
means that the diversity and complexity in the manufacturing export basket does
not meet the required standards i.e. while countries like Japan and Germany
manufacture driverless cars and multifunctional robots through astounding
advances in technology, India manufactures goods that could potentially be
manufactured anywhere across the globe. This factor yet again drags us one step
behind the game.
Diversifying our product range to develop capabilities in
core products will surely help us keep up pace. Setting up manufacturing units
of large capacities to incorporate specialty materials, nanotechnology,
embedded systems, precision devices, medical imaging equipment etc., along with
sound research and development centers are indispensable. Through massive
industrial sector reforms and redirection of employment towards manufacturing
sector rather than service sector, India stands a chance of belonging in the crème
de la crème of the manufacturing industry by 2025.
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