Recently India has shown intent towards socio-economic revolution by not just initiating energy transition but also improving the functionalities of the inner mechanisms. However, considering the growth patterns of the dominant economic super powers in the world, it is important for India to focus on manufacturing to boost its growth while curbing its unemployment rate.
A sustainable future, which the efforts of global unity signifies will be undone if unemployment surges faster than development. And since India has 600 million people (more than half of its population) under 25 years (age), the country needs to make better and faster efforts at creating jobs. With consumerism on the rise, manufacturing can serve as the best way to quell the rise of unemployment.
Recent IT job slump that has hit India severely has added fuel to this fire. IT industry leaders in India like- Wipro Ltd, HCL Technologies Ltd, Infosys Ltd, US-based Cognizant Technology Solutions Corp., Tech Mahindra Ltd, DXC Technology Co., and France-based Cap Gemini SE laid off more than 56,000 employees in 2017 and counting. The situation is even considered as worse than 2008’s financial crisis. Adding together such scenarios create an image that needs serious rework and support to keep the economic standing of the country stable.
However, fortunately, India has a huge population of working age (600 million people- more than half of its population-under 25 years of age) inhabitants. This allows India to make the only move relevant enough to protect and improve its socio-economic structure, which is ‘Manufacturing’. For reference, we should highlight that- country like Japan is no longer a superpower due to decline of its working age population. These references identify the merit of selecting manufacturing as the primary component for growth and country wide economic success.
The Change is in Sight
Understanding the situation and the remedy, Government of India has already made efforts at improving country’s manufacturing sector. Results can be seen as growth of 7.32% at a CAGR of from FY12 to FY17.
Steel, fertilizer, cement, refinery products and energy sectors in India has shown incredible growth with new reforms and policies being enforced. However, if we are to select the best bet for investment into manufacturing, we should focus on energy industry. India’s energy industry has shown best turn around statistics with the country generating surplus of power for the first time in at least 13 years.
Recently India has claimed the 100th position in World Bank’s list of countries that have made considerable changes to become business compatible, drawing foreign investment. Last year India was 32 places below, and this year’s jump was possible due to country’s endorsement of economic reformation through welcoming industrial and technological adaptations.
Statistics show a total of 67% increase in FDI inflow into India in the last 3 years. And within August 2017, the country witnessed FDI inflow of near about $9.64 billion. This clearly signifies that the growth plan that Government of India supported, is working perfectly and leading the country towards growth. Focusing on manufacturing sector promises to create jobs, improve industrial structure, improve R&D structure, and ultimately support domestic manufacturing, allowing India to reduce forex outflow.
Dominant manufacturing giants like- China and the US have aggressively expanded their domestic manufacturing capacity, which has helped them to control (lower) the price of manufactured products while improving quality. This simple equation has led China and the US to claim large portions of the global market through exports, and made them leaders in the global market. Manufacturing success of these countries can be replicated within India by focusing on manufacturing.
Focusing on manufacturing has sector promises to create jobs (more than 64,000 jobs across manufacturing sectors between April and June in 2017 has been added). And initiatives like Make in India are indicating to add more jobs, bringing foreign investment within the country.
Boost in manufacturing sector in India can help the country grow. However, the focus should be on the most lucrative sectors such as- solar energy sector. For example: domestic manufacturing of Indian solar sector is able to offer energy security, position in the export market, and stands to save India huge amounts of money ($42 bn by 2030 from solar imports), kicking back the profits towards socio-economic growth. So, it is important for India to set priorities and take the right decisions in concentrating more efforts towards manufacturing within the best promising sectors for expected growth.