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Q. Issues in manufacturing sector: Discuss the issues of manufacturing sector in India.
Mar 16, 2017 Related to : GS Paper-3

Ans :

Introduction-

Currently about one million people in India are adding to the workforce every month, hence to create jobs at that rate manufacturing sector in India must grow rapidly. It also helps in reducing the pressure of population on agricultural lands and to bring about more equitable growth. The week operating condition in India is affecting the quality as well as cost in India.  

Issues of manufacturing sector-

  • The amount of investment including from foreign direct investment has been so far quite inadequate. 
  • Companies to evade taxes, shows the lower profit in their accounts than actually made, which leads to black money generation. 
  • Black money generation, by deliberately not complying with tax laws, and the attendant corruption, has an adverse impact on making India a competitive manufacturing destination.
  • The process of generating black money, and sustaining it over years, necessarily involves payment of bribes. The payment of bribes, and legal proceedings that become necessary to deal with harassment, further increases the costs of production and reduces competitiveness. 
  • The perception that doing business in India requires giving bribes keeps away many investors, especially from abroad, which directly affects the inflow of FDI in manufacturing sector.
  • Siphoning profits out of the company leads to lower balance-sheet profits and internal resource generation and, thereby, a weaker balance-sheet. The ability of such organisations to access bank loans and raise capital in the market, and make investments is impaired. 
  • Lower generation of internal resources also results in lower expenditures on R&D and technology up-gradation, maintenance of assets and employee welfare, due to these factors Growth and competitiveness are naturally affected.


What can be done-?

  • To improve the manufacturing sector growth, the supply base needs to become capable of consistent quality and increasing volumes of production.
  • It needs conducive environment with low tax rates, absence of bribery, corruption and neatly defined laws to end the harassment from the regulators.
  • Investors’ confidence must be improved by creating competitive environment, which will attract much needed FDI inflows in India.

Conclusion-

Manufacturing sector is very important to provide jobs for ever increasing job force in India, bur today manufacturing sector in India is suffering from various issues. Though governments come up with various policies like Make In India, but it need to address core problems as discussed above, then only Manufacturing sector in India will grow at the required rate and will provide jobs for ever increasing job force. 

 


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