facturing powers from their early beginnings as agrarian economies. With industrialization, they saw a rapid rise in their economic growth, employment and prosperity. The industrial revolution in Great Britain is the most celebrated example. The most recent and dramatic experience of evolving from an agrarian economy to a strong industrialized economy is that of China. Exceptions to this phenomenon – of attaining riches without an industrial base – are nation-states that were abundantly endowed with natural resources. These thinly-populated nations achieved very high levels of prosperity without the economic push of a strong manufacturing sector. The same nations now find themselves at the mercy of price fluctuations of those very resources that led to their riches.
India needs strong push in manufacturing
Where does India stand on the manufacturing ladder today? From the 2017 World Bank figures, the share of the industrial sector (including construction) in value-added terms in India’s total GDP stands at 26%. In comparison, Thailand is at 35%, Vietnam at 33% and South Korea at 36%. Sri Lanka and Bangladesh keep India company at 27% and 28% respectively. China (40%) and Indonesia (39%) are the leaders in Asia. China’s strategy through MIC is to move its manufacturing sector into even higher value-added areas through R&D, innovation, sustainability, marketing and structural reforms. Manufacturing is much more than creating widgets in some smoky factory, with toiling workers driven by heartless owners. It is a complex matrix combining two vital processes. One part applies human labour, technology and ingenuity to raw materials, to create saleable goods. The other part connects these goods with markets where customers are willing to buy them. Therefore, if ‘Make in India’ is to be a success and attain its goal of a 25%
Ravi Bhoothalingam has spent many years in the Indian and international corporate sector. He is currently a director of several companies and also Treasurer and Honorary Fellow of the Institute of Chinese Studies, Delhi.
If ‘Make in India’ is to be a success and attain its goal of a 25% share for manufacturing in the country’s GDP by 2022, India must ensure the coordinated working of expanded and improved infrastructure, logistics, skilled manpower, innovation and R&D share for manufacturing in the country’s GDP by 2022, India must ensure the coordinated working of expanded and improved infrastructure, logistics, skilled manpower, innovation and R&D. Two final elements are “the ease of doing business” (to eliminate administrative bottle-necks) and “connectivity” to link India’s factories to markets — both
domestic and international. To be true, ‘Make in India’ has not shown vibrancy in its short life so far. The reasons are manifold. These include both the protectionist climate in the world today, as well as poor conceptualization and implementation of the program within India. But diagnosing ‘Make in India’s’ ills
September-October 2018 ▪