NEW DELHI: The Central government has set out a primary objective in the long-term plan for the country’s growth and to make it a $10 trillion economy by 2032.
However, some top bureaucrats have told the Prime Minister Office (PMO) that the manufacturing sector has to grow at around 12 per cent constantly over this period to achieve the target. Documents reviewed by
The Sunday Standard show that the manufacturing sector in India accounts for around 17-18 per cent of GDP and less than 2 per cent of global manufacturing. This is small compared to that of other nations. China’s manufacturing accounts for 34 per cent of its GDP, Thailand’s 36 per cent and Malaysia around 25 per cent.
“The fact that in India, the shift towards service sector has occurred even before the process of industrialization could mature has resulted in sluggish employment growth, with close to half of the workforce still dependent on agriculture and allied activities. Growth of manufacturing is considered absolutely imperative for economic growth, improvement in productivity and for creation of gainful employment opportunities,” the documents revealed.
Powered by evolving technologies, bureaucrats argued countries are increasingly organising their production, trade and investment decisions based on opportunities provided by the global value chains. They said that India too needs to integrate itself into various global value chains. India’s comparative advantage lies in labour intensive industries.
Bureaucrats have also suggested to the PMO that to get foreign manufacturing companies in India, the system must set the standards in major infrastructure sectors such as railways, urban transportation and other sectors to make it attractive for manufacturing facilities. Among many other sectors that the government is targeting to achieve is the information technology-enabled services, which is a sunrise industry and the demand is likely to be very high.
“Mining needs to be given a major push. The government may streamline overlapping responsibilities among regulatory bodies, which govern the mining sector and expedite approval processes. The focus of the policy should be to attract investment, both domestic and foreign, in exploration activities,” the proposed plan documents said.
The deliberation with PMO emphasised the need for major impetus in the Micro, Small and Medium Enterprises sector, which provides employment to over 80 million people in India.
This sector accounts for around 8 per cent of GDP, 40 per cent of total exports and 45 per cent of the manufacturing output. The real concern for policymakers is duality in this sector where industries have very high productivity, while in other medium enterprises, productivity levels are very low.
Trade ties
The manufacturing sector in India accounts for around 17-18 per cent of GDP and less than 2 per cent of global manufacturing. China’s manufacturing accounts for 34 per cent of its GDP.