Recently released The World Bank’s survey report on ‘Doing business 2018’ has portrayed India in a brighter hue, positioning the country 32 places up on Global Competitiveness Index. Although, that puts India in the 100th position, it clearly endorses the economic reformation within the country and eagerness to become a knowledge based, technology driven economy.
The initiatives that have helped India scale these heights can be traced back to 2014, when Government of India under the leadership of Hon’ble Prime Minister Mr. Narendra Modi launched economic policies, focusing on ‘reform, perform, transform’. Statistics showing total 67% increase in FDI inflow into India in the last 3 years and around $9.64 billion FDI inflow in August 2017 alone 1 testify the success of the growth plan that Government of India supported. Making India more suitable to establish and enhance businesses has huge implications on the socio-economic growth of the country.
India: A Growing Manufacturing Hub
In the last 4-5 years India has executed nearly half of the 37 reforms, that were adopted in 2003. From facilitating the delays in getting construction permits, simplifying finance acquisition, registration of property, paying taxes, protecting minority investors, developing skill through training, resolving insolvency, and enforcing contracts; Government of India has acted aggressively on these issues, making the country a lucrative platform for manufacturing. Recent initiatives have enhanced India’s manufacturing sector 7.32% at a CAGR of between FY12 and FY17. And in FY 16-17 the sector showcased an incredible growth rate of 7.7% over the previous financial year. The manufacturing goods highlighted 2.4% growth1 in wholesale price index between April 2016 and January 2017. Besides refinery products, steel, fertilizer, and cement, electricity generation also grew in India, and in FY 17-18, India is estimated to generate surplus of power for the first time in at least 13 years. Thermal energy capacity showed 60 GW growth and renewable energy capacity added 23 GW.
Make in India program, launched by the Prime Minister of India, Mr Narendra Modi has made quite an impact in improving the manufacturing scenario within India. Most notably, policy initiatives, supply side reforms, green corridors program, mandate enforcements, and solar parks policy favoured towards Indian solar energy sector saw huge growth in manufacturing (8400 MW) and installed solar (13.1 GW) capacities in India.
And the current overall manufacturing growth rate of India is estimated to make India the fifth largest manufacturing country in the world by the end of 2020.
More Focus Will Yield Faster and Better Results
Government initiatives like- protecting MSMEs, opening up the economy to foreign budget (received US$ 70.51 billion FDI by June 2017), establishing Centres of Excellence (CoE) and R&D facilities for innovation, strategic partnerships with foreign companies to reduce learning curve 1, and offering subsidies to encourage growth have boosted the manufacturing sector in India. And as global consumption level is growing with population, this is the right moment for the country to focus more on manufacturing and claim the global export market, just like China, US have.
Dominant solar countries like- China and the US have aggressively expanded their domestic manufacturing capacity, which has helped them to control (lower) the price of manufactured products while improving quality. This simple equation has led China and the US to claim large portions of the global market through exports, and made them leaders in the global market. Manufacturing success of these countries is powered by a synchronized growth in skill development, financial investment and infrastructure quality improvement (R&D). This simple yet effective equation has helped them to control the global market and increase profits through exports.
Boost in manufacturing sector in India can help the country reach that position, but the focus has to be continuous and unwavering. Especially towards the most lucrative and in-demand sectors such as- solar energy sector. Domestic manufacturing of Indian solar sector is able to offer energy security, position in the export market, and stands to save India huge amounts of money ($42 bn by 2030 from solar imports), kicking back the profits towards socio-economic growth. So, priorities have to be set and more focus on ‘top of the list’ sectors is needed to help India rank with the top three growth economies and manufacturing destination of the world by the year 2020.
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