In the last decade, the Government of India has shown great initiative and decisive decision making to lift India out of its economic and social binds to transform the nation into a superpower. Policy reformations, bringing in foreign investment, and initiatives to promote domestic manufacturing has produced positive change. However, the damaging blow dealt to India’s economy by COVID-19 pandemic presents a different scenario altogether, where India can no longer afford to grow in a relaxed pace but have to invoke aggressive measures immediately to restore itself.
What Would Be The Path Forward?
Manufacturing is the only path forward that can help our country solve employment challenges, increase industrialization, bring in R&D choices, increase FDI flow, generate revenue from exports. In a nutshell, make India self-reliant! The ideology behind the new ‘Aatmanirbhar Bharat’ initiative.
The import-substitution policies in the Government’s post-Covid-19 stimulus package, specifically in the MSME and defence sectors highlight country’s intent to focus on and enhance exports. Although, this is a tried and tested path previously shown by the East Asian economies, particularly Taiwan and China (Import-Substitution Industrialisation policies), that has resulted in exponential economic growth from 1960s to 1990s; we need to understand that these initiatives did not cut off trade relations with other countries but sought to procure only raw materials rather than intermediate/finished goods. Thus, allowing domestic industries reciprocal access to foreign markets, and the resulting growth in the share of exports.
Undoubtedly, India needs to maximize its export capacity, and aggressively boosting domestic manufacturing can make Aatmanirbhar Bharat a $5-trillion economy in less than 5 years. However, a three-pronged approach is needed to see this vision into reality.
The Immediate Need for Scale
Focusing on manufacturing is the right path but there is also an immediate need for quickly increasing scale of production capacities within priority/lucrative industries like solar. Since there are already manufacturing giants like China competing in the global market, India needs investment in manufacturing to enhance the scale and become globally competitive (India’s global share in manufacturing is 3%, China’s 20%).
There is a distinct correlation between operational excellence and industry growth. To enhance scale, India would not just need investment, it needs investment in the right areas. In addition to the investment, focusing on bringing flexible labour laws, significant operational improvements/more of automation, quality control, reducing order fulfilment delays, reducing tax and duties, offering incentives can help India gain manufacturing scale.
Research shows that only structural improvements in India’s manufacturing operations can bring 15 to 20% improvement. So, it is clear that realizing other listed changes will bring transformative change in India’s manufacturing sector. Also, it is important to focus investment on priority or lucrative sectors such as solar.
Why? well, because investing in promising sectors such as solar can save the country $30-35 Billion of forex reserves with an investment of $5-6 Billion in solar manufacturing.
Skill Development Can Power Scale
65% of India’s population is below 35 years of age. This equips India with a strong workforce to support the manufacturing sector. With investment in structuring education and opening up skill development platforms India is uniquely poised to realise its demographic potential.
For that to happen,
For example, India needs 1,116,400 skilled professionals in solar manufacturing, design, construction, maintenance, business development, and commissioning to make green energy growth restore the economy. That is only possible when huge number of skilling programs are present.
In current job scenario where industries like- Auto manufacturing, Retail, Auto Dealerships, Restaurant, Steel, Education etc have lost considerable number of jobs, I believe focusing on promising industries like solar can create new jobs, solve India’s energy issues and reduce billions ($120 bn in 2019) of forex outflow in fossil fuels.
Speed of Implementation Is Important
With ‘Aatmanirbhar Bharat’ campaign, India has again taken a positive step to fortify India as a manufacturing hub and restore country’s economy. The only way to transform this vision into reality is not just taking actions, but taking them immediately. The urgency that COVID-19 has brought in our society has also made us extra focused on taking actions that can change the scenario for good. I believe India can use this sense of urgency to push the country back on track by taking immediate transformative actions to invest and promote manufacturing.
Bringing the long-awaited manufacturing policy, reducing importing, prioritizing promising sectors like solar, simplifying processes, reducing bureaucratic hurdles, offering flexible financing facilities, implementing simple quality control, creating industry champions to inspire others, reducing taxes and duties on manufacturing, and offering export incentives can really help in ushering the change.
I believe the ‘idea of change’ is a powerful tool that can transform nations beyond imagination. That’s what ‘Aatmanirbhar Bharat’ campaign is to us! However, I feel that it is our responsibility to aid the Government to achieve this milestone, in the best way we can. I am certain that with ‘Aatmanirbhar Bharat’ here to help us, we can make India a superpower through identifying, promising and contributing in development of manufacturing in the promising industries.
