[Answered] Skill India without Make in India is an empty agenda. Critically analyse. Also highlight steps taken by the government to promote manufacturing in India. Why has it not been successful?

As per the Labour Bureau Report 2014, the present skilled workforce in India is only 2 %, which is much lower when compared to the developing nations.

India has a sizeable youth population who require skill training and subsequent employment;this can be achieved through a 2-pillar strategy:

Skill India : create 100 Million new jobs by the end of 2022
Make in India : make India a manufacturing & design hub

  • Both these initiatives are interdependent, i.e. enhancing youth skills without boosting the manufacturing sector will not deliver desired results. Therefore, we are facing a dual challenge of developing skills and utilizing them in a proper way.

What are the impediments in the success of Skill India Mission:-

The Economic Survey 2014-15 has concluded that:-

  • A major impediment to the pace of quality employment generation in India is the small share of manufacturing in total employment.

Insufficient absorption of labour:

  • LABOUR FORCE grew  0.4% during 1999-2000 to 2004-05 but compounded annual growth rate in employment was 2.8 percent
  • LABOUR FORCE grew  2.9% during 2004-05 to 2011-12 but compounded annual growth rate in employment remained 0.5 percent ONLY

Why Skill India needs Make in India:-

To absorb the skilled manpower created in Skill India mission, India needs domestic labor intensive industries.  

And aim of make in India program to transform India into a manufacturing & design hub, can realize the skills of created manpower.

Steps taken by government to promote manufacturing in India:

 

  • Ease of doing Business: The government is keen on introducing information technology in the manufacturing/industrial sector. The eBiz portal comprises of nearly 50 services that serve as a one-stop shop for delivery of services to the investors and addresses the needs of business and industry from inception through the entire life- cycle.

 

 

Policy Measures: National Manufacturing Policy, National Capital Goods Policy, National IPR Policy, Disinvestment Policy : They will serve as guidelines when taking steps to improve India’s manufacturing sector

The government also rolled out the Goods and Services Tax Bill to improve the tax regime in the country and encourage domestic manufacturing.

 

  • Liberalization in FDI norms:
  • FDI Policy in Defence sector liberalized and Foreign Investment cap raised for 26% to 49%. Portfolio investment in Defence sector also permitted upto 24% under the automatic route.
  • 100% FDI under automatic route permitted in construction, operation and maintenance in specified Rail infrastructure projects.
  • Construction & Development Sector. Amended policy includes easing of area restriction norms, reduction of minimum capitalization and easy exit from project.
  • 100% FDI on automatic route is now allowed for manufacture of medical devices, effective from 21.01.2015. Medical devices are no longer subjected to sectoral restrictions applicable for FDI in pharmaceuticals.  
  • The permissible FDI in insurance sector and pension sector has been raised from 26% to 49%, effective from 02.03.2015 and 24.04.2015 respectively, in which 26% FDI will be through automatic route and higher equity up to 49% would be permitted through the Government route.

 

Challenges:

  • Global slowdown has had a considerable impact on the demand for Indian goods/services – thus impacting manufacturing too
  • Investors are still apprehensive regarding labor laws and bureaucratic hassles in India
  • Inverted duty structure has also impacted the scope for manufacturing; especially the RE sector
  • PSBs are heavily burdened by Non Performing Assets and are unable to take further risks; thus cutting down finance options
  • Lack of skilled labour, industry standards and absence of a regularized IPR/patenting framework has also restricted manufacturing.
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