Sansad TV: Making India a Manufacturing Powerhouse | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Introduction

India's manufacturing sector has evolved into a key driver of economic growth and job creation, exerting a far-reaching influence on other segments of the economy. From the fiscal year 2006 to 2012, India's manufacturing sector GDP expanded at an average annual rate of 9.5 percent. However, in the subsequent six years, this growth rate decelerated to 7.4 percent. By fiscal year 2020, manufacturing contributed 17.4 percent to India's GDP.

Opportunities for India

Measures needed

• Labor Reforms: The stringent labor laws in India have led corporations to prefer capital-intensive modes of production, despite the country's abundant labor force. Reforming labor laws is imperative to encourage labor-intensive modes of production.
• Promoting Labor-Intensive Sectors: Industries with a high demand for labor, such as the food processing industry, leather industry, apparel, electronics, gems and jewelry, financial services, and tourism, should be actively encouraged. Offering appropriate subsidies and tax incentives can incentivize their growth. The "Make in India" initiative is a significant step in this direction, promoting manufacturing.
• Strengthening MSMEs: Supporting and promoting the micro, small, and medium-sized enterprise (MSME) sector is essential. This can be achieved by easing regulations, providing subsidies, and ensuring easy access to credit. Initiatives like MUDRA have the potential to create much-needed jobs in India.
• Implementing Niti Ayog Action Agenda: The recommendations outlined in the Niti Ayog Action Agenda, which includes state-level labor law reforms and the creation of coastal employment zones (CEZs) akin to China's special economic zones, should be implemented thoroughly.
• Entrepreneurship: Economic policies should prioritize creating an environment conducive to youth entrepreneurship, thereby fostering job creation. India's goal should not be a few companies with substantial turnover but a multitude of companies contributing to the economy.

Government Initiatives

• Make in India: This initiative aims to position India as a global manufacturing hub.
• 'Zero Defect Zero Effect': Encouraging MSMEs to produce high-quality products using clean technology.
• 'Skill India': A comprehensive program for skill development, job creation, and entrepreneurship.
• Labor Reforms: Introducing labor reforms through initiatives like the Shram Suvidha Portal, Random Inspection Scheme, Universal Account Number, and Apprentice Protsahan Yojana.
• Defence Procurement Policy (DPP): Prioritizing indigenously produced defense products.
• Technology Acquisition and Development Fund (TADF): Facilitating the acquisition of clean, green, and energy-efficient technologies by MSMEs under the National Manufacturing Policy (NMP).
• Pradhan Mantri MUDRA Yojana (PMMY): Providing loans to small-scale businesses.
• Aatmanirbhar Bharat Abhiyan: Fostering an enabling environment for foreign investment, technological advancement, job creation, and export growth.

Way Forward

• Enhancing investor confidence.
• Improving physical infrastructure, including transportation and power supply.
• Prioritizing the electronic sector.
• Increasing access to finance for small enterprises.
• Streamlining business entry and exit procedures.
• Addressing the issue of inverted duty structure.
• Enhancing labor regulations' flexibility.
• Focusing on low-cost manufacturing.
• Increasing R&D expenditure in the industrial sector.
• Augmenting value addition at all levels of production.
• Reviewing FDI policies to encourage technology transfer, strategic alliances, and innovation.
• Implementing performance-linked tax incentives to stimulate job creation in the formal sector.
• Offering competitive remuneration to attract talent to the manufacturing sector.
• Revamping the educational curriculum to emphasize soft skills and value-based training in alignment with industry requirements.