18th May 2024 (11 Topics)
India's Manufacturing Landscape
Context
Finance Minister Nirmala Sitharaman said that India needs to ramp up its manufacturing sector to increase its share in the global value chain and become 'Atmanirbhar'.
Current Status of India's Manufacturing Landscape
- India’s manufacturing sector contributes 17% to GDP and employs 27.3 million workers.
- Government aims to raise manufacturing's share to 25% by 2025.
- India's emergence as a manufacturing powerhouse presents long-term investment opportunities.
- Strengths:
- Dominant sectors: textiles, automotive components, pharmaceuticals, and generic drugs.
- Recently emphasized sectors: electronics, aerospace, defence, and renewable energy.
Challenges for India:
- Industrial Infrastructure: Improvements seen in industrial parks and economic zones. However, challenges remain in logistics and power supply.
- Skill Development and Talent Shortage: Skilled workers available, particularly in IT and engineering. There is need for continuous investment in advanced manufacturing skills. Labour laws and vocational schools also need reform.
- Manufacturing Diversification: Traditionally strong in certain sectors. However, push for diversification into newer sectors is crucial for balanced growth.
- Labour-intensive rather than capital-intensive: Manufacturers often use low cost of labour to offset the significant initial investment required for automation. It leads to a multitude of issues (labour-related problems, increased non-value-added time, heightened health, safety, and environmental concerns, and ultimately, a decline in product quality levels)
- Ease of Doing Business: Progress made but room for improvement in labour laws, land acquisition, and bureaucracy.
- Global Competitiveness: India faces stiff competition from countries with established manufacturing sectors like China, South Korea, and Taiwan.
Conclusion:
Despite challenges, India's manufacturing sector holds promise, especially with emphasis on diversification and skill development. Addressing infrastructure gaps and improving ease of doing business are crucial for sustained growth and global competitiveness.
Fact Box: Recent Initiatives to boost Manufacturing Sector:
|
PYQQ1: Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard. (2023) Q2: Account for the failure of the manufacturing sector in achieving the goal of labour-intensive exports rather than capital-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports. (2017) |
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