Some of the top existing companies include Larsen & Toubro, Tata Steel, BHEL, Isgec Heavy Engineering, Godrej Boyce, Siemens, Bosch, Cummins, Greaves Cotton, Thermax, Kirloskar Brothers, Elgi Equipments and General Electric. All of them are old firms. Some are of overseas origin. India can become a global manufacturing hub if only it can attract large foreign direct investments in the field on highly attractive terms the way the People’s Republic of China did in the 1980s and 90s. And, in the process encourage long-term domestic and foreign players in the field as it has done in the automative sector.

The government’s policy initiatives in the last 10 years or so have been mostly on the services sector expansion giving an impression that nothing much need to be done in the area of manufacturing. The country has been happily going into imports and distribution. The imports rose from $449.97 billion in 2010 to $ 639.01 billion in 2018. New jobs are created mostly in the services sector. Start-ups have been producing billionaires every year. The manufacturing sector has been shrinking. Currently, it accounts for only 17 percent of India’s GDP. It employed over 50 million Indians in 2016-17. And, by 2020-21, manufacturing jobs declined by 46 percent to 27.30 million.

This indicates that the sector has been fast losing momentum in the recent years. The trend is alarming. Government projects continue to suffer from time and cost overruns. Recently, some of the central ministers were quick to be on the Twitter to express extreme happiness over the commissioning of India’s first home-built stealth guided-missile destroyer ship for its Navy. However, what seemed to remain untold was that it took some 10 years since the project was cleared by the union cabinet and almost eight years to construct the destroyer since the time its keel was laid. At least for the next 15 years, the manufacturing sector should act as the prime mover of India’s GDP.

To make India a strong engineering-manufacturing hub, the country must have a large metals industry — both ferrous and non-ferrous — and low-cost electricity. There is no dearth of young, educated manpower. The building of world class roads, sea ports, airports, rail network, bridges and social infrastructure is important to drive the manufacturing growth. China has been the world’s best performer in this regard over the last 25 years. Today, seven of the world’s 10 biggest ports by cargo volume are in China. The remaining three are in Singapore, the Netherlands and South Korea. The Port of Shanghai is the world’s biggest based on cargo throughput. Shanghai is not even a sea port. It’s located at the mouth of the Yangtze River covering an area of some 4,000 sq.kms. Sadly, India chose to neglect its most important British-time Calcutta port on the river Hooghly, a victim of poor dredging and illegal sand mining over the years. Though India’s Golden Quadrilateral Highway Network is among the world’s longest, the quality of its surface and driving ease are yet to match those long highways such as Pan American, Australia’s Highway 1, Russia’s Trans-Siberian, Trans Canada, China National Highway 010, US Route 20 and Route 6, and US I 80 and I 90.

While few are aware of the policy contribution of the government’s NitiAayog to help make India a global manufacturing hub, the McKinsey Global Institute did an excellent job in its report on India’s manufacturing sector and how it could become an engine for economic growth and jobs—if it can specialise. It spoke about eleven high-potential value chains that could more than double India’s manufacturing GDP in a few years. “Their potential comes from several factors. First ,these value chains need to be well positioned to capitalise on India’s advantages in raw materials, manufacturing skill, and entrepreneurship.

Second, they can tap into four market opportunities: export growth, import localisation, domestic demand, and contract manufacturing,” said the report. Lastly, the value chains stand to benefit from a fresh, focused approach to industrial policy. This would entail far-reaching bureaucratic reforms. The new reforms should specifically catalyse the growth of India’s manufacturing value chains by helping them lift their productivity, secure know-how and technology, and gain access to capital. With these reforms, and complementary actions by manufacturing companies, the report estimates that the eleven value chains could more than double their GDP contribution to $500 billion in seven years, while powering extensive job creation at a time when the COVID-19 crisis pushed millions below the poverty line.

Interestingly, the World Economic Forum’s White Paper entitled ‘Shifting Global Value Chains: The India Opportunity,’ produced in collaboration with Kearney, too found India’s role in reshaping global value chains (GVC) and its potential to contribute more than half-a-trillion dollars in annual economic impact to the global economy by 2030. The White Paper presents five possible paths forward for India to realise its manufacturing potential. The insights presented reflect the perspectives of leaders from multiple industries in the region. It listed five possible solutions to help create globally competitive manufacturing companies. They are known to both the government and the industry. According to Francisco Betti, head of ‘Shaping the Future of Advanced Manufacturing and Production’ of the World Economic Forum: “For India to become a global manufacturing hub, business and government leaders need to work together to understand ongoing disruptions and opportunities, and develop new strategies and approaches aimed at generating greater economic and social value.”

Few disagree that a thriving manufacturing sector could potentially be the most critical building block for India’s economic growth and prosperity in the coming decade. One only wonders why the government is sitting over such an important initiative and continuing to neglect the potential while talking frequently in public about the need for making India a global manufacturing hub. The Modi government has already spent seven years in the job. The next Lok Sabha election is not due before May 2024. It is still not too late to initiate a drastic industrial reform to help make the country a global manufacturing hub. (IPA Service)