Reviving Manufacturing Sector Key to Sustainable Growth: YES Bank

Share of manufacturing in India’s GDP has remained static at about 15% for over 30 years now and there is a clear need to bump it up to 22-25%.

Dec 11, 2014 04:12 IST India Infoline News Service

YES Bank Chief Rana Kapoor, while speaking at the Delhi Economics Conclave on Wednesday said that India has great growth potential and robust domestic demand in the manufacturing sector, and only reviving the manufacturing sector and carrying forward necessary reforms are imperative to bring India back to the high GDP Growth Path.

He added, “India is now well-poised for a revolution in the Manufacturing Sector, in line with the ‘Make In India’ Project as articulated by Prime Minister Narendra Modi. India has the potential to be a hotbed for creating new jobs, aided by robust domestic demand, abundance of resources, availability of low-skilled and semi-skilled labour force, increasing focus on R&D and a strong entrepreneurial culture.”

Share of manufacturing in India’s GDP has remained static at about 15% for over 30 years now and there is a clear need to bump it up to 22-25%. India’s share in global manufacturing (value added) is only about 1.8% and contribution of high-tech manufacturing is almost negligible.

In comparison, respective figures for China are 35% and 22%. In this regard, the PM’s ‘Make in India’ campaign is a groundbreaking initiative, where the Government plays the role of a ‘facilitator’ to achieve the vision of India becoming a global manufacturing hub.

Kapoor was of the view that  in addition to ‘Make in India’, focus should be on ‘Create in India’ since it is about creating products and brands through design and innovation backed by a strong manufacturing push. Industry and investors should seize this opportunity to reap benefits of India’s 3 key strengths of having a robust domestic demand, vibrant democracy and a demographic dividend.

Integration or dovetailing of FTP with Make in India Campaign will help in efficient realisation of greater objective making India a low cost global manufacturing hub.

Apart from broad based policy interventions, there is also an urgent need to focus on specific sectors where India has the potential to scale up or enjoys a distinct comparative advantage. The textiles sector for one is a mass employer with strong export potential. India must also build better private sector expertise in manufacturing super critical power plant equipments and reduce dependence on imports from China, and self reliance in strategic sectors like aerospace and defence. A domestic program for small civilian aircraft must be pursued to start with.

Highlighting the key benefits of reviving the manufacturing sector, Kapoor said, “A clear focus on reviving the manufacturing sector will result in an employment intensive growth trajectory, improvement in India’s trade balance and moreover, give a fillip to investment revival.” If we can accomplish this mission, it will definitely catapult Indian to a sustainable and inclusive growth trajectory, unparalleled in our country’s history. 

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