NEWS HIGHLIGHT
Theme : Growth & Development
Paper:GS-3
the manufacturing sector in India has faced a number of challenges, including a lack of infrastructure, a shortage of skilled labor, and difficulties in obtaining credit. In addition, the sector has been hit by a slowdown in global demand and increased competition from countries such as China.
TABLE OF CONTENT
- Context
- Growth Drivers of Manufacturing Sector in India
- Challenges for Manufacturing Sector
- Road Ahead
Context : the manufacturing sector in India has faced a number of challenges, including a lack of infrastructure, a shortage of skilled labor, and difficulties in obtaining credit. In addition, the sector has been hit by a slowdown in global demand and increased competition from countries such as China.
Growth Drivers of Manufacturing Sector in India :
- Increased Investment: In Budget 2022-23, the government allocated Rs. 2,403 crore (US$ 315 million) for Promotion of Electronics and IT Hardware Manufacturing and Rs. 757 crore (US$ 104.25 million) for Faster Adoption and Manufacturing of Hybrid and Electric Vehicle inIndia (FAME - India) in Budget 2021-22.
- Competitiveness: India has all the necessary ingredients for its major industrial push - a huge semi-skilled labor force, multiple Government initiatives like Make in India, high investments and a big domestic market.Government incentives like free land to set up base and 24*7 power supply is making India competitive on a global scale.
- Robust Demand: By 2030, Indian middle class is expected to have the second largest share in global consumption at 17%. The appliances and consumer electronics (ACE) market in India is expected to grow to USD 21 billion by 2025 from USD 11 billion in 2019.
- Potential to Become a Global Hub: India’s manufacturing industry is already moving in the direction of industry 4.0 where everything will be connected, and every data point will be analyzed.
- Indian companies are at the forefront of R&D and have already become global leaders in areas such as pharmaceuticals and textiles.
- Areas such as automation and robotics are also receiving the required attention from the industry.
Challenges for Manufacturing Sector :
- Inadequate Tech Based Infrastructure: Technology-based infrastructure, especially for communication, transportation, and skilled manpower are important for enhancing manufacturing competitiveness.Telecom communication facilities are mainly confined to big cities. Most of the State Electricity Boards are running in loss and are in deplorable condition.
- Access to Credit for MSME: The Micro, Small and Medium-sized enterprises (MSME) sector appears to have less favorable access to credit and higher costs for working capital compared to medium and large-scale industrial and service sectors.
- Skilled Labour Shortages: There is a lack of trained and skilled labor in the manufacturing sector in India, which limits the growth of the sector.
- Complex Regulations and Poor Supply Chain: The manufacturing sector in India is subject to a number of complex regulations like license, tender, audit, which can be a burden for businesses and hinder their growth.Also, the sector is often plagued by poor supply chain management, which can lead to inefficiencies and increased costs.
- Competition from Other Countries and Imports: India's manufacturing sector faces intense competition from other countries, which can make it difficult for domestic businesses to compete on the global market.Also, India is still dependent on foreign imports for transport equipment, machinery (electrical and non-electrical), iron and steel, paper, chemicals and fertilizers, plastic material etc.
Road Ahead :
- Promoting Export-Oriented Manufacturing: Encouraging the development of export-oriented manufacturing could help Indian businesses tap into new markets and increase their competitiveness.
- Fostering Innovation: Supporting research and development in the manufacturing sector, and promoting the adoption of new technologies and processes, could help drive innovation and boost productivity.
- This could involve providing funding for R&D or implementing policies that encourage the adoption of new technologies.
- Improving Access to Finance: Making it easier for small and medium-sized enterprises (SMEs) in the manufacturing sector to access credit and other forms of financing could help support their growth and development.
FAQs :
-
What are the Challenges of the Manufacturing Sector?
ANS.
- Inadequate Tech Based Infrastructure: Technology-based infrastructure, especially for communication, transportation, and skilled manpower are important for enhancing manufacturing competitiveness.Telecom communication facilities are mainly confined to big cities. Most of the State Electricity Boards are running in loss and are in deplorable condition.
- Access to Credit for MSME: The Micro, Small and Medium-sized enterprises (MSME) sector appears to have less favorable access to credit and higher costs for working capital compared to medium and large-scale industrial and service sectors.
- Skilled Labour Shortages: There is a lack of trained and skilled labor in the manufacturing sector in India, which limits the growth of the sector.
- Complex Regulations and Poor Supply Chain: The manufacturing sector in India is subject to a number of complex regulations like license, tender, audit, which can be a burden for businesses and hinder their growth.Also, the sector is often plagued by poor supply chain management, which can lead to inefficiencies and increased costs.
- Competition from Other Countries and Imports: India's manufacturing sector faces intense competition from other countries, which can make it difficult for domestic businesses to compete on the global market.Also, India is still dependent on foreign imports for transport equipment, machinery (electrical and non-electrical), iron and steel, paper, chemicals and fertilizers, plastic material etc.
-
Does India have the Potential of becoming a Global Hub ?
ANS. India’s manufacturing industry is already moving in the direction of industry 4.0 where everything will be connected, and every data point will be analyzed.
- Indian companies are at the forefront of R&D and have already become global leaders in areas such as pharmaceuticals and textiles.
- Areas such as automation and robotics are also receiving the required attention from the industry.