The manufacturing capacity needs to be viewed as a strategic national asset and warrants a mission-oriented approach beyond purely incentive-based interventions, the Economic Survey has said.
The interventions may be considered even in the absence of immediate cost competitiveness for select sectors and technologies otherwise India risks remaining a ‘service provider’ to the developed world, vulnerable to technology denial regimes and supply chain shocks.
India cannot afford to be a client state and countries that control critical nodes —such as semiconductors, advanced materials and Active Pharmaceutical Ingredients – possess reverse leverage.
Global Value Integration
The next phase of industrialisation will require a shift from import substitution to the one focused on scale, competitiveness, innovation and deeper integration into Global Value Chains (GVCs).
Sequenced capability building is also critical for manufacturing competitiveness. This involves supporting progression from assembly to components, systems and design- or IP-intensive activities with time-bound milestones for localisation and value addition.
India’s ambition to be a globally competitive industrial hub will depend on the strength and scale of its industrial clusters. High-performing clusters globally are central to a nation’s export growth. Countries that have successfully integrated into GVCs have done so through a small number of highly competitive, globally connected clusters.
National Manufacturing Mission
The National Manufacturing Mission (NMM) that will be launched soon would focus on sector-specific interventions across 20 to 30 prioritised industrial clusters to double the share of manufacturing in the economy to 25% by 2035
For greater integration in GVCs the survey has also suggested changes in the way tax authorities examine export-import transactions. Currently, identical import transactions are often examined separately by income tax and customs authorities, resulting in duplication of compliance.
It has also said that implementation of Quality Control Orders (QCOs) should be grounded in reality particularly when they apply to raw materials and intermediate inputs.