Be Mains Ready

Approach

Approach:

• Provide some data that highlights persistent slowdown in India's industrial sector and briefly highlight the significance of manufacturing in the growth profile of a country.
• Highlight issues in current manufacturing setup of India
• Provide way forward prescribing reforms in India's industrial sector.

Fodder points

• Stagnant share of manufacturing in India's economic profile i.e. 18.2% in 2019 and it was near 18% in the 1980s.
• Also, provide a comparative analysis of other emerging economies can be stated: like China and Brazil to establish the significance of manufacturing in economic growth.
• Key issues in India's manufacturing sector:
  
  • Acute skill shortage
  • Regulatory cholesterol: land and environmental clearance problems
  • Rigid labour laws
  • No attempt at self-regulation by the industry against corrupt practices
  • Infrastructure Deficit
  • High Cost and Non-Availability of Commercial Bank Credit
  • Premature de-industrialization due to the dumping of manufactured good from developed countries.

Reforms needed in India's manufacturing sector

• Promotion of Indian small and medium enterprises
• Industries to take lead in Skill India
• Vocational training to be made part of the school curriculum.
• Structural reforms by the government: for example GST is a step in the right direction but needs to be more simplified.
• Promotion of sunrise industries
• Policy, financial and regulatory support to startups in manufacturing sector through start-up India, Stand-up India, SEZs etc. National Investment and Manufacturing Zones.
• The alternative funding mechanism for large infrastructure projects.
• Labour laws reforms

Summarize answer by stating economic survey 2018 recommendation that India must now switch to the export-led economy for economic growth, but export-led growth has to be backed by strong manufacturing setup.