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Source: The post is based on an article “Fixing the quality problem of Make in India” published in The Business Standard on 6th September 2022.
Syllabus: GS 3 – Industries and industrial policies
News: There are lots of programmes and incentives announced by the government of India to make India a global manufacturing hub. However, there are many challenges in achieving this goal.
Production-linked incentive schemes are an attempt to make Indian an attractive global manufacturing hub. However, the question arises, would these policies be more successful compared to the previous attempts.
Why is it important for India to become a global manufacturing hub?
First, the recent geo-political tension and supply chain disruption has made compulsory to reduce its dependence on China.
Second, it is not possible to find a solution to rising unemployment without focusing on the manufacturing sector. Manufacturing sectors play an important role in job creation.
What are the challenges, in front of India, in becoming a global manufacturing hub?
First, India has tried to reduce its dependence on China but the progress made by India is not upto the mark. It has not been able to attract big global strategic manufacturing investment.
Second, India’s dependence on China for inputs and manufactured goods has also increased.
Third, there are infrastructure issues, like, the cost and ease of doing business, high taxes as well as frequent policy changes.
Fourth, there are also regulatory failures in enforcing quality consciousness among manufacturers. Indian government and regulators have adopted lower manufacturing standards than developed countries. But they have not been able to enforce even those low standards.
For example, Indian automobile manufacturers export products with higher safety norms and at a cheaper price than the ones they sell in the domestic market.
Indian drug makers exporting medicines build and operate manufacturing facilities that pass the US Food and Drug Administration’s inspections, but the same medicines sold in the domestic market have far less regulatory scrutiny and made in factories with fewer quality controls.
The excuse often given for lower quality standards is that stricter norms could increase costs sharply, which is a baseless point.
It is often the taxes and infrastructure issues that add to the costs rather than higher quality standards.
Why don’t the government and manufacturers in the country focus on producing uniformly higher quality products?
Indian manufacturers did not have to worry about quality before the liberalization.
After the economic reforms of 1991, there was a large gap between what the Indian consumer expected and what consumers in developed markets demanded.
The Indian middle-class consumer often accepted products that their counterparts in developed countries rejected.
This was one of the reasons of adopting low quality standard by Indian manufacturers but the quality is critical in becoming a major manufacturing hub.
India needs to enforce stringent quality norms for goods produced within the country for both domestic and international consumers if it wants to become a manufacturing hub.
