The fluctuating growth in manufacturing sector has been a major cause of concern for industrialisation in the country. While the emerging economies of Indonesia, Malaysia, Thailand and the Philippines have experienced manufacturing growth ranging from 5 to 14% in 2010-2014 and China could achieve an average growth rate of 9-10% during the period, India’s manufacturing was hovering at 5-8% and declined to 2.3% in the recent past.
Share of engineering exports in total exports of the country was stagnant in the last 5 years and in a number of manufacturing segments, like machinery and equipment (NIC: 29), electrical equipment (NIC: 31), transport equipment (NIC: 35) and furniture (NIC: 36 ), India was fast turning into assembler of imported equipment from the status of manufacturer with consequent loss in employment, income and revenue generation activities.
Although the manufacturing competitiveness council stated to enhance share of manufacturing in GDP to 25% in the next decade and talked of setting up National Manufacturing Investment Zones, the sector continued to exhibit poor show. The country, therefore, desperately needed a national strategy to focus on recreating and vastly improving the manufacturing base of India of which it was proud of only a few years back. The Make in India programme is to be examined from this angle only. Unfortunately, it is currently being placed and equated with issues like trade protectionism, import restrictive measures, etc.
A similar kind of apprehension was nurtured in the earlier years also by some of the critical wings of the government who went on relaxing import tariffs and barriers without taking concrete measures to rejuvenate the ailing manufacturing base of the country. The attempt to correlate trade liberalisation measures and signing of FTAs to enhance import flows in the country with boosting up of demand for manufacturing was backfired with disastrous consequences for the sector.
US economy is shaping up well on the back of its highly productive and innovative manufacturing sector that would partially regain the markets lost to the Chinese, Japanese and the Koreans. US steel industry is highly sensitive to the adverse impact on its industrial base by rampant imports from China, CIS and also India. This aspect of US growth is hailed by many analysts of international repute as reflective of vigilance on unfair trade and support for the domestic industry.
As a corollary, would not India’s attempt to manufacture in India the goods and services that can match the global standards in price, quality and services without impairing the free and fair trade measures get adequate support by all the internal wings of the government?
In the modern era, no country aspires to manufacture all the items on its own, instead concentrates on producing goods that have domestic resource base, both in terms of labour, capital and technology. Shortfall in any of these means of production can always be imported, keeping in view the ultimate cost competitiveness of the final product.
If it is not, no entrepreneur would ever think of continuing with the venture.
Indigenisation of foreign technology to improve the production process for rolling out quality products, skilling the large workforce entering the job market and engaging them in productive segments that would also provide them career growth are some of the objectives behind Make in India strategy. If in the process, it makes it unnecessary to import some items and India decides not to become an attractive destination only for utilising surplus capacities of some other countries in the world, the same cannot be equated with trade protectionism.
If India can boast of holding largest share of working age population (15-64 years) in the next decade, we must also lay emphasis to set up labour-intensive small and medium manufacturing units that can provide world class equipment and components to lend support to other big conglomerates in both domestic and global markets.
The author is DG, Institute of Steel Growth and Development. Views expressed are personal.
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