Day 33 – Q 4.Analyse the challenges that make Indian manufacturing less competitive globally? How can India ensure a greater share in global GDP from manufacturing?
4. Analyse the challenges that make Indian manufacturing less competitive globally? How can India ensure a greater share in global GDP from manufacturing?
भारतीय विनिर्माण को विश्व स्तर पर कम प्रतिस्पर्धी बनाने वाली चुनौतियों का विश्लेषण करें? विनिर्माण से वैश्विक जीडीपी में भारत एक बड़ा हिस्सा कैसे सुनिश्चित किया जा सकता है?
Manufacturing sector contributes around 17% to GDP. In WEF’s Global manufacturing index India ranks 30/100.
Indian manufacturing sector has positive elements like “favourable demographic dividends” for the next 2-3 decades. The cost of manpower is relatively low as compared to other countries. There are responsible business houses operating with credibility and professionalism. The country has a democratized polity vis-à-vis the rule of law and a strong consumerism intake ability of the domestic market. Thus, has lot of potential.
However, manufacturing sector faces various challenges making it less competitive like
- Infrastructure bottlenecks- power, transport increasing cost of production.
- Sector is dominated by MSME which suffer from issues like- lower productivity, obsolete technology, lack of finance facilities.
- Low skilled labour.
- Issues with factors of production like land acquisition, rigid labour laws leading to poor business environment, lower investment and ineffective use of invested capital.
- Lack of R&D in manufacturing sector.
- Protectionist measures by countries like USA make Indian products less competitive.
Measures that can enhance competitiveness and increase India’s share in global manufacturing
- Strengthening MSME sector by addressing their financial, managerial, marketing, technological issues. Incentivising certain sectors like textile, leather and footwear as has been done in recent Foreign Trade Policy.
- Rather confining to low level manufacturing, India need’s R&D to become global manufacturing hub in the long run. Linking industries and education institutions is key.
- As higher logistics cost reduces the competitiveness of Indian goods both in domestic as well as export market, there is a need for integrated logistics sector development. Infrastructure status has been granted to logistics sector.
- Focus on factor cost reforms to further improve ease of doing business ranking below 100.
- Training people with adequate skills.
Ex: skill India mission.
- Promoting sectors like food processing where India has huge potential.
Ex: SAMPADA scheme.
Make in India initiative commits to achieve an increase in manufacturing sector growth to 12-14 % per annum over the medium term, increase in the share of manufacturing in the country’s Gross Domestic Product from 16% to 25% by 2022 and importantly to create 100 million additional jobs by 2022 in the manufacturing sector alone. Addressing above mentioned challenges is critical to ensure success of this initiative.
Best Answer: Aishwarya Singh