Make in India – Yet to Spur Manufacturing

Make in India – Yet to Spur Manufacturing

India is an agricultural country. Its dominance in agriculture dates back to the Rigveda. The fact that India stands second in the world in terms of farm output speaks volume of this field in the country. But with the increasing Globalisation, Industrialisation  nd Modernisation, many people in India are shifting their base to the manufacturing and service sector.

This has resulted in a steady decline in the economic contribution of agriculture to the country’s GDP with India’s broad based economic growth. There is a remarkable shift from agriculture sector to languishing manufacturing sector in the country. New age policy makers have realised that it is high time that India should be made a global manufacturing hub to generate better employment opportunities, accelerate country’s economic growth and position in the world scenario.

However, this task is not going to be a piece of cake. With a view to making India abase for labour-intensive manufacturing, the policy makers and the government need to undertake some major vital reforms. These include regulation of education, employment and infrastructure policies.

With regard to this, India faces a serious competition from its neighbour China, where wage rates are plausibly high. So for attaining growth, India should consider displacing China as a global, low manufacturing hub by exploiting the wage competitiveness, by strengthening the infrastructure and advancing skills and by encouraging flexibility in the labour markets.

Manufacturing is extremely important and necessary for employment and expansion of trade. This is a good enough reason for India to focus on manufacturing. India lags significantly in its share of manufacturing in gross domestic product with only 16%, in comparison to 34% and 31% of China and South Korea respectively. The chaos in the Indian political scenario with stubborn policies and laws has distanced many investors to make things in India. The government apathy to poorly defined land acquisition rules, labour laws, environmental clearances and inappropriate administration can easily be attributed for this slump in the manufacturing sector.

The Parliament’s Standing Committee on Commerce has questioned the country’s low manufacturing growth despite initiatives such as Make In India, Startup India and FDI reforms that are now more than two years old. The committee, led by BJP MP Bhupender Yadav, expressed concerns about manufacturing growth averaging just 1.6% in the five years till 2015-16 and a 0.5% contraction in the sector in the first 9 months of FY17, in a report tabled in Parliament in March 2017.

To bring out the economy out of recession and a stagnant phase, manufacturing sector is the key. India faces a serious problem of improper and inappropriate wage distribution. This is also a reason for the dark disparity between the rich and the poor in our country.

With majority of the workforce being contractual and some earning on daily wages, their living standards and income are just a fraction of what a blue-collared worker is earning. A major upheaval is the need of the hour where each and every worker earns a decent amount to buy himself a living.

Now in order to generate consumer demand, these things need to change. As many eminent industrialists foresee, foreign investment should be encouraged. Multinational companies should be encouraged to relocate their base to our country by luring them with cheap labour force, availability of raw materials and land.

According to the India Cellular & Electronics Association (ICEA), India has saved Rs 3 lakh crore in 4 years by local manufacturing of mobile handsets, replacing imports of completely-built units (CBUs) with locally assembled and manufactured mobile handsets. In 2017-18, over 225 million handsets were assembled/manufactured in India, which was roughly 80% of the total market requirement,” the ICEA said in a report.

The ICEA estimates local mobile handset manufacturing will generate mobile phones collectively valued at Rs 1,65,000 crore by 2018-19 and pegs the turnover at 290 million handsets in the same period.

Indian firm Dynamatic Technologies manufactured critical components for H-47 Chinook, one of the world’s most advanced multi-mission, heavy-lift transport helicopters. This delivery marks a significant milestone in the success of the Make in India programme and the country’s commitment towards building indigenous manufacturing capabilities.

In another development, the Defence Acquisition Council (DAC), chaired by Defence Minister Nirmala Sitharaman approved procurement of services for modernisation of armed forces amounting to around Rs. 46,000 crores. The initiative may be termed as the biggest push to the ‘Make In India’ programme of Union government.

India has been working hard for a few years and is soon going to give China a run for its money. India is gradually overcoming all its shortcomings such as power costs, roads and transportation, telecom costs, taxes and tariffs cost etc. It is leaving no stone unturned to be on the global manufacturing platform, but still a combination of many factors including a quantum leap in foreign direct investment needs to be done for India to reach its ambitious goal of becoming a manufacturing hub.

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