Make in India in Time

Context: While the government has announced a slew of measures to make Indian industry grow, India must create many more jobs in manufacturing to enable average wage levels to rise.

Challenges to the growth of Manufacturing in India:

• Lagging behind in the manufacturing spectrum: China has surpassed India since the similar level of economy in the 1990s
  • China’s manufacturing sector is almost ten times larger, and 27.2% of China’s economy as compared to only 13.7% in India
• Skewed Globalization: While globalization has eased the flow of materials and financial investments, it has restricted the transfer of technology protected under ‘intellectual properties’.
  • This makes the value addition in large factories deemed as shallow, and the investments remain volatile since they can move to other countries with cheap labour and high subsidies.
• Low wage potential: Low skill services and agriculture, which have been providing many jobs so far, have limited potential for high wages.

Way Forward:

• Plugging into the Global Supply Chains (GSCs): Some policy lessons can be learnt from Bangladesh and Vietnam who are getting ahead in labour-intensive sectors that are moving out of China.
• Quickly acquiring complex technology and management capabilities: as done by Japan after World War 2 by focussing on manufacturing. (Developing discipline of organization learning).
• Treating labour as an Asset: Workers should not be treated just as ‘labour cost’ but as a human being capable of leaning and improving manufacturing systems’ capabilities.
  • For E. Lee Kuan Yew wanted wage levels in Singapore to rise so that standards of living could improve; thus high-value manufacturing complemented concomitant levels of skill development

Conclusion: A strategic imperative for growing India’s high-value manufacturing sectors — machine tools, telecom equipment, defence gear is the country’s security.