Manufacturing India: Hope from 2014

The preparation for the battle almost a new Mahabharata in 2014 has already started. Ads in media have started boring the aam aadami. I don’t how much will be its influence on changing the actual voting preferences of individual voters.

However, I am really very happy that among a large number of issues under discussion, the necessity of the growth of Indian manufacturing sector for the development of the country’s economy is occupying some space.

Rahul Gandhi during the recent interview with Arnab Goshwami of ‘Time Now’ on January 27 Monday had at least one statement that I liked:

“taking everybody together I want to put India on the manufacturing map, I want to make this the centre of manufacturing in the world. I want to make this place at least as much as a manufacturing power as China.”

“How do we bring jobs to millions of people. For example, every single person who comes to me from abroad, Japan, France, Germany, America and tell me ‘Listen, we need an alternative to Chinese manufacture’. We’re very happy with what the Chinese give us, but we need another port. There’s global energy saying we want to move manufacturing to India. The Congress party, the UPA Govt have built the corridors, we’ve built the North-South, East-West corridor. We built 3 times the roads the NDA built. Why are we not having a discussion on those topics?”

Unfortunately, the present Congress-led government in last ten years couldn’t get manufacturing sector moving ahead for global competition. As in other areas, it came out with a National Manufacturing Policy no doubt, but nothing significant happened on ground. Every one kept on importing Chinese goods. Even big Indian companies kept on buying Chinese goods instead of encouraging local manufacturers. Big business houses have shunned manufacturing sector. Even Wipro and HCL stopped manufacturing.

Arun Jaitley reacting to Rahul’s vision on manufacturing replied: “What has the UPA done in the last 10 years in this regard. China’s core competence is low cost manufacturing. Consumers prefer to buy goods which are cheaper. To make the manufacturing sector in India competitive, the manufacturing sector needed to be incentivized in terms of a modest interest rate regime, a world class infrastructure, competitive cost of utilities particularly power, trade facilitation, a globally competitive taxation regime, quick decision making and labour regime flexibility. Even though the last of these is politically more challenging, has the UPA government even moved an inch with regard to the other reforms required. The answer is a clear ‘No’.”

However, it is heartening that BJP has also endorsed the importance of manufacturing sector.

As reported, BJP President Rajnath Singh has said that if the party-led NDA government comes to power, their foremost priority will be to promote the manufacturing sector. Speaking at BJP’s national council meeting, Singh said they would aim to increase the share of manufacturing in India’s GDP to 20%. He said the current account deficit (CAD) was burgeoning because the manufacturing sector was being ignored. At present, the share of manufacturing in the GDP has been 15-16%.

“The CAD has increased because our imports have increased, while our exports have decreased. This has happened because the manufacturing sector has not been promoted… To settle the CAD, we will increase the share of manufacturing in GDP to 20%.”

Narendra Modi also expresses his vision to make India a manufacturing hub for electronics and IT products. “In order to see a thriving manufacturing sector, we would need to make hubs where both labour and infrastructure are not a problem. We can think of innovative ways to encourage such hubs and incentives that draw big names to come to India. We will need to nurture highly trained people and give them the right environment where they can grow. Emphasis on R&D and IPR creation is also the need of the hour.”

One can hope the statements wouldn’t turn out into just election gimmicks and in national interest, some hard work is done on ground to bring back the glory of Indian manufacturing.

One can hope better deal for manufacturing sector from Narendra Modi with his contribution in making Gujarat an important manufacturing hub.

The new government must encourage manufacturing at high end in aviation, defence covering all areas-army, navy and airforce, railways, telecom and electronics. It also must aim to take manufacturing to rural households to add into the family earnings for improving the quality of life.

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