{"id":34056,"date":"2018-10-30T15:39:29","date_gmt":"2018-10-30T10:09:29","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=34056"},"modified":"2018-10-30T15:39:29","modified_gmt":"2018-10-30T10:09:29","slug":"future-gdp-growth-to-come-from-manufacturing-prabhu","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/future-gdp-growth-to-come-from-manufacturing-prabhu\/","title":{"rendered":"Future GDP growth to come from manufacturing : Prabhu\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/indianexpress.com\/article\/business\/economy\/future-gdp-growth-to-come-from-manufacturing-suresh-prabhu-4934620\/\"><span style=\"font-weight: 400;\">Future GDP growth to come from manufacturing : Prabhu<\/span><\/a><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><b>Context:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Commerce and industry minister Suresh Prabhu recently said that services industry had grown at the expense of manufacturing and agriculture and his government would look at increasing the share of manufacturing to 25 per cent in an expanded GDP.<\/span><\/p>\n<p><b>Problems of India\u2019s manufacturing sector:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Some of the issues pertaining to manufacturing are :-<\/span><\/p>\n<ol>\n<li><b>Cheap imports:<\/b><span style=\"font-weight: 400;\"> After Globalisation reforms, Indian market is flooded with foreign products especially Chinese. This hinders growth of domestic firms.<\/span><\/li>\n<li><b>Labour laws: <\/b><span style=\"font-weight: 400;\">India has more labour laws combining centre and states. This leads to harassment and undue interference in industrial activity by bureaucracy.<\/span><\/li>\n<li><b>Lack of skilled manpower: <\/b><span style=\"font-weight: 400;\">India severely lacks skilled professionals .Only 2.5% of India have received skill training, compared to Japan (75%) and Germany (80%).<\/span><\/li>\n<li><b>Lack of capital:<\/b><span style=\"font-weight: 400;\"> High Non Performing Assets\u2019 of banks have reduced flow of money to industrial credit.<\/span><\/li>\n<li><b>Lack of technology:<\/b><span style=\"font-weight: 400;\"> Indian firm spend than 10% in Research and Development.<\/span><\/li>\n<li><b>Infrastructural bottlenecks:<\/b><span style=\"font-weight: 400;\"> poor road and rail connectivity. Erratic power supply. all this adds to high logistics cost decreasing competitiveness of Indian goods<\/span><\/li>\n<\/ol>\n<p><b>India\u2019s position in ease of doing index:<\/b><\/p>\n<ul>\n<li>For the first time ever, India has jumped 30 positions to become the top 100th country in terms of\u00a0 ease of doing business rankings\u00a0this year. This was announced by the World Bank Group&#8217;s latest Doing Business 2018: Reforming to Create Jobs report in Delhi on 31, October 2017.<\/li>\n<li>Last year, India had moved just one point, from 131st position among 190 countries to 130th position.<\/li>\n<li><span style=\"font-weight: 400;\">India has embarked on a fast-paced reform path and has acknowledged a number of substantial improvements.<\/span><\/li>\n<\/ul>\n<p><strong>I<\/strong><b>ndia&#8217;s potential \u00a0:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India has a massive workforce, an emerging supply base, and access to natural resources needed in production<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The country could become a viable manufacturing alternative to China in industries ranging from apparel to auto components and might even dominate some skill-intensive manufacturing sectors<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If India\u2019s manufacturing sector realized its full potential, it could generate 25 to 30 percent of GDP by 2025, thus propelling the country into the manufacturing big leagues, along with China, Germany, Japan, and the United States.<\/span><\/li>\n<\/ul>\n<p><b>Concerns \/ Challenges \u00a0:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Although the country\u2019s manufacturing exports are growing its manufacturing sector generates just 16 percent of India\u2019s GDP\u2014much less than the 55 percent from services<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">a majority of India\u2019s largest manufacturers don\u2019t return their cost of capital a factor that dampens investment in the sector<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Indian manufacturers lag behind their global peers because of lower productivity<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Challenges associated with land acquisition, rigidity in labour laws, and poorly skilled manpower.<\/span><\/li>\n<\/ul>\n<p><b>Bottlenecks:<\/b><\/p>\n<ol>\n<li><span style=\"font-weight: 400;\">Use of primitive technology or under utilization of technology.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Poor infrastructure.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Over staffed operations.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">\u00a0Expensive financing and bureaucracy.<\/span><\/li>\n<\/ol>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In the era of globalisation, competing in international markets has become a challenge for the country&#8217;s private as well as state-owned firms.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Challenge posed by the growing Chinese clout by selling products at globally competitive prices.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Purchasing Managers&#8217; Index (PMI) &#8212; a gauge of manufacturing performance &#8212; fell to 52.1 in September from 52.6 in August, indicating that growth in the sector lost some momentum.<\/span><\/li>\n<\/ul>\n<p><b>National Manufacturing Policy<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The Planning Commission has recently released the draft of the country\u2019s first ever National Manufacturing Policy. The objective of the National Manufacturing Policy is to boost the country\u2019s share of industrial production, employment; development of world-class infrastructure and investments in India\u2019s manufacturing space.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The draft policy envisages establishment of <\/span><b>National Investment and Manufacturing Zones<\/b> <b>(NIMZ)<\/b><span style=\"font-weight: 400;\"> equipped with world-class infrastructure that would be autonomous and self-regulated developed in partnership with the private sector.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Cabinet approved the revised proposal of the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry to put in place a National Manufacturing Policy.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The major objectives of the National Manufacturing Policy are to increase the sectoral share of manufacturing in GOP to at least 25% by 2022; to increase the rate of job creation so as to create 100 million additional jobs by 2022; and to enhance global competitiveness, domestic value addition, technological depth and environmental sustainability of growth. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The policy envisages specific interventions broadly in the areas of industrial infrastructure development; improvement of the business environment through rationalization and simplification of business regulations; development of appropriate technologies especially green technologies for sustainable development and skill development of the younger population. <\/span><\/li>\n<\/ul>\n<p><b>Way ahead:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is need to get new manufacturing ideas into India and identify 6-7 greenfield areas to focus on that India can leapfrog globally.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Skill India, Make in India, Digital India will help in this regard. SIDBI bank, MUDRA bank etc. need to step up their contributions to extend extra credit to spur manufacturing sector, and government should improve labor laws, and implement insolvency and bankruptcy code properly.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Indian manufacturing sector need to be part of the global supply chain and benefit from these linkages.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There should be a mid-term review of the foreign trade policy.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government plans to invite pension funds, sovereign funds and investors to India for round-table talks.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Future GDP growth to come from manufacturing : Prabhu\u00a0 Context: Commerce and industry minister Suresh Prabhu recently said that services industry had grown at the expense of manufacturing and agriculture and his government would look at increasing the share of manufacturing to 25 per cent in an expanded GDP. Problems of India\u2019s manufacturing sector: Some&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/future-gdp-growth-to-come-from-manufacturing-prabhu\/\">Continue reading <span class=\"screen-reader-text\">Future GDP growth to come from manufacturing : Prabhu\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-34056","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704931881},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34056","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=34056"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34056\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=34056"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=34056"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=34056"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}