• Prime Minister Narendra Modi recently held a virtual interaction with Ministers and asked them to put the economy on a growth trajectory which can transform India into a global manufacturing hub especially considering China in today’s scenario.
• The idea is to promote local brands and goods.

What is the current status of India in terms of the manufacturing sector ?

• In 2018, as per UN data, China accounts for 28% of the global manufacturing output and it is the largest manufacturer in the world, overtaking the US in all the sectors from drugs to electronics.
• As far as India is concerned, in the last few years small manufacturers have metamorphosed towards becoming small traders due to tough labour laws, high expenses, etc. and they found China as a lucrative to import and market in India.
• Even there is a lack of research in the MSME sector due to which a large space of manufacturing is lost.
• Thus, it can be an opportunity for India to reposition itself in the global manufacturing hub by giving hand holding and flexibility to the MSME sector.

What needs to be done in order to make India a global manufacturing hub ?

• Though India has many success stories in the specific sector, there is need of policy reformation at the first stage which may become a weapon for solving various issues related to the manufacturing sector.
• In the current scenario, Share of manufacturing sector towards India’s GDP is only about 16-17% which was also prevalent in the 1990’s which reflects that India is not able to nail its gap since the last 30 years and for which there needs to be recognition  of our strength which lies in labour’s productivity skills.
• The labour incentive activities should be focussed and can be located in clusters near the ports in order to reduce the logistic cost.
• Exports should be enhanced in order to ensure the sustainability of the manufacturing sector.
• The exchange rate needs to be balanced in order to boost the exporters and it may also help in bringing the foreign investments.
• India should go for signing of free trade agreements (FTA’s) with various countries especially with the European Union(EU) which may help for them to access the market in India.
• As India has been a great achiever in the manufacture of 2-wheelers it can replicate the same model to the sectors as well.
• As far as industries are concerned, the various compliances should be eased in order to remove the element of mistrust.
• There is a need for the labour reforms by getting away slightly from the descriptive approach like certain provisions of factories act.
• Industries should be given flexibility as well as the principle of self certification can be implemented with the random check.
• Hence, there is a need for credibility and consistency in the policy making by providing a handhold to the most hitting sectors like MSME with the principle of trust and verification.

How to ensure the compatibility of Indian products at the Global level ?

• The foremost thing to ensure the quality of the Indian products is the expansion of research and development in the field of industrial sector.
• Eg: India spends around 0.7% for research and development in industries while a small country like Vietnam spends around 2% due to which there is a shift of companies from China to Vietnam instead of India.
• In order to ensure the quality, our exports need to be consistent which inturn will provide the competitiveness of our product in the global market.
• The exports can be enhanced by the collaboration at the diplomatic level, ministerial level and independent level (eg: including the Industrial chambers like FICCI) as well as the state governments.
• Though India has already developed 3500 R&D hubs, there is a need to create an academic partnership in order to enhance the manufacturing capacity.
• Thus, Research and development through academia-industrial engagement is the key for India to be a manufacturing hub.

Way Forward :

• The goal can be achieved by focussing on labour intensive sectors like agriculture, textiles, tourism, mining, leather, etc. and by a cluster based approach which can help in handling the various expenses which inturn can attract more labourers who can contribute for India becoming a manufacturing hub.
• It can be achieved in a mission mode so that every independent consumer is responsible towards fulfilling it.
• The exchange rate policy needs to be looked upon and R&D has to be increased from 0.7% to 1.4%.
• The decisions should be introspective instead of being defensive especially for the labour reforms as well as MSME sector.
• The focus should be on atma nirbhar Bharat which is aimed at making India a self reliant country which may help us in reducing our imports.

Conclusion :

• India needs to recognise its strength and should go for an overdried approach by taking all the stakeholders on the boat.

https://www.youtube.com/watch?v=7APMTTNHicQ