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28 Sep, 14
28 Sep, 14

Indian Manufacturing Sector: On the Path of Progress

The article states the reasons for the spurt in the growth and expansion of the manufacturing sector in India and draws attention to its impact on employment.

By

By Kashyap Arora

Edited by Nandita Singh

The one factor which has been constantly highlighted in context of the Indian Economy is its service driven growth and lack of labor intensive manufacturing industries. However, with the vision of India’s current Prime Minister, India  can soon be seen giving tough competition to economies such as China at the manufacturing front. An important factor, which emphasizes the importance of flourishing manufacturing sector especially for the Indian economy, is the widely contrasting figures of contribution to the GDP and employment generation by the service and the agriculture sector. In some regards, the vision of India’s Prime Minister derives inspiration from the prior experience of China and the East Asian economic model, who themselves share many of the features of the Indian economy. However, to embark on the path of expansion, especially on the manufacturing front, India will need to act swiftly on multiple long pending issues.

These issues, which require urgent attention, include facilitation of the requisite infrastructure to promote the manufacturing sector in India. In this regard, it is extremely important for Mr. Modi to tap into the foreign sources of capital. However, Mr. Modi has already shown initiative and taken important steps (such as liberalization of defense manufacturing) towards increasing the foreign direct investment in India. Foraying deeper into the current state of India’s infrastructure, more positive initiatives seem to be on card, especially with respect to the system of transportation.

Mr. Modi has also shown initiative towards easing the stringent Indian government regulations and norms so as to make it easier for foreign companies to set up their industries and manufacturing units in India. Further, urbanization has also been given its due share with the vision of establishing a vast number of smart cities in India, which in turn will go a long way in making India a lucrative option with respect to advancement of labor skills. However, labor laws in India still need more attention, especially keeping in context their outdated nature and the difficulties faced in hiring labor by the global companies operating in India.

Thus, looking at the initiatives taken by India’s current Prime Minister, it can be concluded that India will definitely be embarking on a journey of expansion in the manufacturing sector, especially with the labor cost increasing in China and some of the groundwork done by the previously elected government such as planning of the Industrial corridors. However, an important aspect to keep in mind is the time taken to get the expansion started in a full-fledged manner, as well as its initial impact on India’s overall development and its employment sector, especially given the high expectations the citizens harbour.

An economist from University of Warwick, Kashyap is an avid reader, writer, and tactician with a real zeal for economics and finance. He has also professionally represented and worked for some of the most prestigious organizations such as Standard and Poor, and HDFC. It is his passion which drew him towards “The Indian Economist”, where he aims to study aspects of Indian economic and polity scenario from a different perspective and derive more involvement from his readers, thus, laying down the  foundation for a highly aware future generation.


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