| Introduction: Contextual introduction. Body: Explain the significance of making India a global manufacturing hub. Also write some hurdles in achieving this goal. Conclusion: Write a way forward. |
Favorable demographic dividend over next 2-3 decades, availability of low-cost labor, and a strong domestic market provide an opportunity for India to turn into a global manufacturing hub. By 2030, India can add more than $500 billion a year to the global economy.
Significance of making India a global manufacturing hub:
- The weakening of manufacturing in many developed nations has caused social divisions and devastation of communities. So, this will ensure higher economic growth and better living standards for people.
- Manufacturing provides more room than services for less-skilled and less-educated individuals. For instance, the prospects are not bright for less skill-intensive services such as tourism, aviation, and tourism traffic, which are badly hit by COVID.
- It is essential for mass employment and income growth.
- A thriving manufacturing sector will also generate additional benefits and help India, to distribute wealth more equitably and to contain its burgeoning trade deficit.
Challenges to emerge as a manufacturing hub:
- Complex labour laws: Large-scale exclusions of workers from labour law, violence and arrests are the reasons for India’s poor performance.
- Complex taxation system:as well as a huge amount of paperwork and corruption. India started out with an overly complex GST, which has dampened investor sentiment and created tremendous compliance burdens on small and medium sized enterprises (SMEs).
- Land acquisition difficulty: Stringent land acquisition laws and inflexible labour regulations make it difficult for India to attract investors in the manufacturing sector.
- Power deficit:Greater availability of power is needed to realise the dream of becoming a manufacturing hub. India is running short of power with a deficit of 5.1%.
- Un-skilled human capital:India lags far behind other nations in imparting skill training.
- Credit crunch: Access to finance continues to remain the biggest challenge for MSMEs as the loans sanctioned by the Government are not disbursed properly. Banks and Non-Banking Finance Companies (NBFCs) have been reluctant to lend collateral free loans to MSMEs with the fear of no repayment.
Given the potential of manufacturing sector and the need to shift workforce from primary sector, Government of India has come out with ‘Make in India’ initiative to make India global hub of manufacturing, research and innovation.
