Mains
Economy/Industry
India’s Manufacturing Sector
Context
Central Government had put forward its aim to increase manufacturing as a percentage of gross domestic product (GDP) from 15% up to 25% by 2025. But it’s far away from realisation. Albeit, it has decreased to 13% in 2022 (According to the World Bank Report).
About
State of Manufacturing Sector in India
● According to the government of India, As of 2023, the manufacturing sector accounted for 17% of the GDP.
● It also provided employment to more than 27.3 Mn individuals in India. The government plans to increase manufacturing's share to 25% of the economy by 2025.
● Under the existing FDI policy, nearly all manufacturing sectors allow for 100% FDI with an exception for certain prohibited sectors.
● The defence industry allows 74% FDI under the automatic route and 100% under the government route.
● Central government has also launched ‘Make in India’, to boost domestic manufacturing Industries.
● The government of India has also launched many Production Linked Incentive Schemes (PLI) to boost the manufacturing sector.
● Further, the government committed to increasing manufacturing as a percentage of gross domestic product (GDP) from 15% (2014) up to 25% by 2025.
● But as of 2024, the manufacturing sector has not yet crossed the 20% mark as a percentage of GDP.
World Bank Report, 2022 (Comparison of Developing World Economies)
● The World Bank data indicates that manufacturing is in relative decline. It makes up only 13% of the GDP in 2022.
● This compares unfavourably to markets such as Vietnam (25%), Bangladesh (22%), Malaysia (23%), Indonesia (18%), Mexico (21%), and, of course, China (28%).
Why is there a need to boost the Manufacturing Sector in India?
A. Need for ‘Employment Generation’
● India is now the most populous country in the world with a very high demographic dividend. 59% of the population of India is between 16-59 years of age group.
● The high population needs a large number of job creation which can only be done by uplifting the manufacturing industries and service sector.
● As the Service sector has provided huge employment in India and has reached almost its saturation, it is only the manufacturing sector which will pave the way for the unemployed section of society.
● The unemployment in the agriculture sector which has left a semi-skilled workforce with no work can only be countered by the manufacturing sector as the Service sector needs a highly skilled workforce.
B. Deficit in Goods Trade
● Despite a perception that India is “anti-trade”, India had a little over $1 trillion in goods trade in the last 12 months and a $250 billion deficit during that period.
● While hydrocarbon imports account for over one-quarter of India’s imports, manufactured goods such as electronics are a substantial import component.
● India enjoys a large surplus in services trade which is about $160 billion surplus in the last 12 months on $518 billion in total services trade.
● But, even though the services sector creates substantial economic output, it employs relatively few workers.
Global Impact of India’s Emergence as an ‘Industrial Powerhouse’
Countering Chinese Aggression
● China has been continuously pursuing a ‘Forward Policy’ on all fronts be it regional aggression for trade or land.
● Currently, India has been facing Chinese aggressive threats in its domestic market in the form of the ‘Dumping’ of Goods, making the market uncompetitive.
● Secondly, the Chinese ‘Belt and Road’ Initiative has been pursuing a ‘Debt Trap’ strategy to influence countries in the Asian mainland especially India’s neighbours such as Bangladesh, Pakistan and Sri Lanka.
● Hence, India’s emergence as a manufacturing superpower is the need of the hour to counter Chinese aggression.
Strengthening Western World Supply Chain
● India will import technology, raw materials and other factors of production such as Capital from the Western nations.
● It will hence help these countries to expand their supply chains and benefit from emerging Industrial Nations.
Steps to be Taken to Make India Industrial Powerhouse
Coordination Between Centre and State
● Most factors of production such as electric power, water, sanitation, labour regulations, land acquisition rules, and environmental regulations are primarily controlled by India’s State governments.
● This is where the new Indian government needs to provide a much higher degree of policy attention because different parties ruling centres and states may create hurdles for setting up of industrial units.
Need to update the Business Reforms Action Plan (BRAP)
● BRAP portal tracks real-time rankings of States & UTs based on Reforms implemented & Feedback received from the stakeholders.
● This portal has not been updated since the COVID-19 pandemic, showcasing the state of reforms in India.
● The central government needs to induce a sense of competition among the states in terms of attracting investment in manufacturing portals through such initiatives.
Model Industry Laws
● The central government must enact model industrial laws to make states follow them to attract investments in the manufacturing sector.
● It will also minimize the Red Tapism and improve coordination between different ministries.
Decentralized Industrial Development
● India needs to follow decentralized industrial development by sharing the benefits of manufacturing industries in an equitable way. It can be ensured by moving away from a few industrial corridors to the hinterlands.
● This approach will also help to reduce regional inequalities in India in terms of development.
● Government initiatives such as ‘One District, One Product Scheme’ are fine examples of such development plans.
Conclusion
There is a need to formulate new policies to expand the scope of manufacturing industries in India. The centre-state coordination in policy formulation for manufacturing industries is the need of the hour. Although Service sectors are generating revenue for India, the advent of Industry 4.0 characterized by Artificial Intelligence bots and the Internet of Things (IoT) has led to a narrowing down of employment generation. The Business Processing Outsourcing (BPO) and Knowledge Processing Outsourcing (KPO) jobs have been taken down by AI-enabled bots. Further, the post-pandemic slowdown in the IT sector has also led to unemployment on a large scale. Hence, India needs to boost its manufacturing industries to generate employment and revenue.
Source: The Hindu, Invest India, Indian Brand Equity Foundation (IBEF)
Prelims
Awards and Honours
Order of Saint Andrew the Apostle
Context
Indian Prime Minister Narendra Damodar Das Modi has been conferred the Order of Saint Andrew the Apostle by Russia.
About
‘Order of Saint Andrew the Apostle’ is the highest civilian award in Russia similar to Bharat Ratna in India.
The award for the PM was announced before the pandemic in 2019, for “exceptional services in promoting special & privileged strategic partnership between Russia and India and friendly relations between the Russian and Indian peoples.”
Order of Saint Andrew the Apostle
● It is the highest civilian award in Russia. It is given to prominent government and public figures, military leaders, and outstanding representatives of science, culture, art, and various sectors of the economy for exceptional services to Russia.
● It can also be awarded to heads of foreign states for outstanding services to the Russian Federation.
Saint Andrew
● The name of the award has been derived from Saint Andrew, who is believed to be one of the apostles or 12 original followers of Jesus.
● After Christ’s crucifixion, the apostles are said to have travelled great distances to spread his message.
● Saint Andrew travelled to Russia, Greece, and other places in Europe and Asia. He founded the Church of Constantinople, which later led to the establishment of the Russian Orthodox Church.
● More than 90 million people follow the Church in Russia, out of the country’s total population of around 140 million.
● Order of Saint Andrew was established by Tsar Peter the Great (1672–1725) in 1698 after the Patron Saint of Russia.
● The order was abolished in 1918 following the Russian Revolution owing to its royal origin.
● However, it was re-established in 1998 by an Executive Order of the President of Russia.
Other Foreign Recipient
Chinese President Xi Jinping and former President of Kazakhstan, Nursultan Nazarbayev have also received the award before PM Modi.
Source: The Indian Express
Mains
1. “There is a need to boost up India’s manufacturing sector to generate employment and reduce deficit in goods trade.” Elucidate.
Prelims
1. Consider the following statements with reference to India’s Manufacturing Sector;
1) The contribution of India’s Manufacturing Sector as a percentage of GDP is 25%.
2) It employs more people than any other sector of the Indian economy.
3) The ‘Make in India’ Programme has been launched to boost the domestic manufacturing Industry in India.
Which of the following statements is/are Correct?
A. One Only
B. Two Only
C. All Three
D. None
Answer: A
2. Consider the following statements with reference to the Order of Saint Andrew the Apostle:
1) It is the highest Civilian Award in Italy.
2) It is given to foreign nationals only.
3) PM Narendra Modi is the only foreign leader who has been conferred with this prestigious award.
Which of the following statements is/are Incorrect?
A. One Only
B. Two Only
C. All Three
D. None
Answer: C
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