India needs to create profitable investment opportunities and achieve greater economies of scale and scope to emerge as a global manufacturing hub, NITI Aayog Vice Chairman said on Thursday, stressing that most investments will have to come from the private sector.
Speaking at the release of a report titled Key Sectors to Position India as a Global Manufacturing Hub, the Vice Chairman said the government's role should be to remove impediments to investment rather than drive investment itself.
The report examines sectors with different opportunities and constraints, covering areas ranging from export competitiveness and employment generation to technological capability and strategic resilience. It argues that India's manufacturing push needs differentiated policy responses, as constraints related to raw materials, technology, infrastructure, market access, financing and supply-chain integration vary significantly across industries.
“I firmly believe that investment will come when there is profit. If they get the smell of profit, they will come,” says the V-C, adding that policymakers must remove barriers that prevent businesses from perceiving a profit opportunity.
He said India’s manufacturing ambitions cannot be achieved merely by increasing manufacturing’s share in GDP, but require building productive capacity, raising productivity, improving competitiveness and expanding the country’s presence in global markets.
The Vice Chairman also stressed the need for greater scale to compete with China. “Scale is a major problem. We are not trying to do enough things which can stand up to the Chinese scale,” he said, underlining the importance of both economies of scale and economies of scope.
The report identifies chemicals, textiles, telecom and network equipment, and solar PV manufacturing as key sectors with potential to strengthen India’s manufacturing capabilities. These sectors represent different aspects of the country's manufacturing ambitions, including export competitiveness, employment generation, technological capability and strategic resilience.
The report advocates differentiated policy responses, recognising that sectors face distinct constraints relating to raw materials, technology, infrastructure, market access, financing and supply-chain integration.
