| | APRIL 20199when Maruti collaborated with Su-zuki a few decades back, resulting in the auto sector boom. According to an India Cellular and Electronics Association (ICEA) study, India has saved almost Rs.3 trillion by sub-stituting imports with domestic as-sembling during the last four years. On its part, the government to a large extent has walked the talk in cutting red tape, which helped India break into the top 100 nations in the World Bank's Ease of Doing Business rankings, jumping 30 places in the last two years. Howev-er, FDI declined to $39.966 billion in 2017. It is proof of the fact that though the positives from the Make in India initiative has been signifi-cant, there have been shortcom-ings which are inevitable with such large-scale governmental projects.However, there are latent det-rimental effects too that FDI can trigger. FDI will warrant relaxation of trade controls in favour of for-eign enterprises. This will eventu-ally bestow huge economic power to foreign enterprises and work against local small businesses. One also needs to take cognizance of the fact that 12 million millennials are being added to the workforce ev-ery year. India will be home to 20 percent of the world's working-age population by 2025. At an approx. 600 million working-age popula-tion, almost 50 percent of India's population need to be sustainable employed.What More Needs to Be DoneTo maintain economic growth, India needs to reduce its depen-dence on agriculture. Most coun-tries have adopted the industrial-ization route to boost per capita incomes. Manufacturing industry can be a huge contributor to GDP. Manufacturing contributes to al-most 30 percent of China's GDP. The comparative figure for India is about 15 percent, in this context, the Indian government has already set a challenging target of increas-ing the manufacturing share to 25 percent of GDP by 2025.The push for indigenous man-ufacturing industries needs to be evaluated against what it will take to be a manufacturing powerhouse. A single dimensional strategy cen-tred on cheap labour and low costs will not hold good because costs will rise eventually. The strategy needs to continually focus on pro-ductivity and reduce complexity in the supply chain. To flourish, the industry needs good connectivity in terms of road, rail and ports. An AssoCham report points out that, we could save almost $50 billion if logistics expenses are decreased from 14-9 percent of India's GDP. Energy, management processes, technical and engineering skills, robust labour policies - India obvi-ously leaves a lot to be desiredhere. A major impediment to the general progress of local manufac-turing is unfulfilled contracts. The industry would welcome policies that will ensure strict adherence to contracts, as it will result in a major boost to manufacturing. As per World Bank report, India ranks 164 amongst 190 countries in en-forcing contracts, and still takes an average four years for a conflict to be resolved.Rapid technological develop-ments add to the complexity. While technology will aid productivity enhancement, on the flip side, au-tomation, digitalization and robots will reduce the availability of jobs at the lower end of the value chain. It is to be recognized that econom-ic growth is a play of productivity improvements and no longer syn-onymous with increase in jobs. This warrants an ecosystem which sup-ports continuous skilling, skill im-provements and up-skilling.India needs policies that can go a long way in promoting pro-duction of high-value components, which will also include a strong innovative culture and incentives for research and development of global standards. Having said that India still requires a more business friendly policy regime sans sudden changes in industrial strategies. A Deloitte's report forecasts that, In-dia will jump six ranks to No.5 in its study titled 2020 Predicted Manu-facturing Competitiveness. Make in India yet holds tremendous poten-tial to make the same happen. INDIA NEEDS POLICIES THAT CAN GO A LONG WAY IN PROMOTING PRODUCTION OF HIGH-VALUE COMPONENTS, WHICH WILL ALSO INCLUDE A STRONG INNOVATIVE CULTURE AND INCENTIVES FOR RESEARCH AND DEVELOPMENT OF GLOBAL STANDARDSPadmanabhan Iyer
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