Q) “Time for action to make India a global manufacturing hub.” Analyse
Answer
Prime Minister gave a mantra ‘vocal for local’ during his address to the nation. The idea was to promote local brands and goods.
Opportunities for India:
- 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 individuals support.
- As many Companies plan to shift out of China that presents a huge opportunity for India. We need to prepare the groundwork to welcome such investment into India.
Government Initiatives for promotion of manufacturing sector:
- 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
Challenges in manufacturing sector:
- India’s manufacturing activity contracted as lockdown led to a slump in demand and massive supply chain disruptions.
- The numerous regulatory blocks, unfavourable land and labour laws, inadequate transport, communication and energy infrastructure, among others.
- India faces stiff competition from South-East Asian and other South Asian countries.
- Global technological and environmental changes.
Way Forward:
India could be their destination of choice if it offers a conducive environment for investors. The following measures may overcome the above challenges
- The 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.
- 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 wants to raise its GDP share in manufacturing around 25%, industry will have to significantly step up its R&D expenditure. This must be addressed by the new industrial policy.