Sambhav-2025

Approach Briefly introduce the importance of manufacturing in India’s economy. List and explain key challenges, supported by facts and data, and suggest measures to address them. Conclude suitably.

Introduction

The manufacturing sector is pivotal for India’s economic growth and aspirations to become a global economic leader. Despite contributing 17% to GDP, the sector struggles to achieve global competitiveness, requiring targeted interventions to address key challenges.

Body

Key Challenges Faced:

• Infrastructure Bottlenecks: High logistics costs (14% of GDP) compared to global benchmarks (~8% in China).
  • Inadequate industrial connectivity hampers supply chain efficiency.
  • Example: Delay in completing industrial corridors impacts export-driven industries.
• Skill Deficiency: The workforce lacks adequate skills for advanced manufacturing technologies like AI and IoT.
  • Example: India ranked 132^nd in the Global Skills Report 2023, indicating a significant skills gap.
• Low Technological Adoption: Limited investment in R&D (~0.7% of GDP) restricts innovation and productivity.
  • Dependence on outdated machinery reduces manufacturing efficiency.
• Dependence on Imports: Over-reliance on imported components, particularly in electronics and machinery, raises production costs.
  • Example: India imports 70% of its electronic components, reducing its export competitiveness.
• Policy and Regulatory Challenges: Complex land acquisition and rigid labor laws deter foreign and domestic investments.
  • Lengthy dispute resolution affects the ease of doing business.
• Environmental Concerns:
  • Use of outdated technologies leads to high emissions, attracting penalties and compliance costs.

Measures to Overcome Challenges:

• Infrastructure Development: Fast-track PM Gati Shakti to enhance multimodal connectivity and reduce logistics costs.
  • Develop export-friendly SEZs with world-class facilities.
• Measures needed: Modernize manufacturing with Industry 4.0, expand PLI schemes, enhance exports through trade agreements, develop infrastructure, and promote skill training tailored for textile and leather industries.
  • PM MITRA Parks, PLI for Textiles, and SAMARTH Scheme aim to boost production, exports, and job creation in these sectors.
• Skill Enhancement: Strengthen Skill India Mission with a focus on emerging technologies.
  • Introduce industry-specific training programs in sectors like semiconductors and EVs.
• Promote R&D and Technology: Incentivize R&D investments through tax benefits and public-private partnerships.
  • Initiatives like SAMARTH Udyog Bharat 4.0 to facilitate Industry 4.0 adoption.
• Encourage Domestic Manufacturing: Expand PLI schemes to reduce import dependency and increase exports.
  • Success of Apple’s $14 billion India output under Make in India initiative.
• Simplify Regulatory Frameworks: Implement single-window clearances and streamline land and labor reforms.
  • Enforce faster contract enforcement under the Arbitration and Conciliation Act.
• Green Manufacturing: Promote sustainable practices through subsidies for clean energy technologies.
  • Transition to energy-efficient processes in textiles and chemicals.

Conclusion

By addressing infrastructure gaps, improving skills, and promoting innovation, India can position itself as a global manufacturing hub. Reforms and initiatives like Make in India and the PLI scheme will drive sustainable growth and enable the sector to compete globally.