Roadmap for Answer Writing 1. Introduction (Contextualization) Begin by acknowledging India’s growing working-age population and the potential of labour-intensive manufacturing in addressing employment challenges. Provide relevant data to highlight the need for employment generation. For example: India’s working-age population (15-64 years) stood at 950.2 ...
Role of the Manufacturing Sector in the "Atmanirbhar Bharat" (Self-Reliant India) Initiative Introduction The "Atmanirbhar Bharat" (Self-Reliant India) initiative, launched in May 2020, aims to enhance India's self-reliance by boosting domestic manufacturing and reducing dependency on imports. The mRead more
Role of the Manufacturing Sector in the “Atmanirbhar Bharat” (Self-Reliant India) Initiative
Introduction
The “Atmanirbhar Bharat” (Self-Reliant India) initiative, launched in May 2020, aims to enhance India’s self-reliance by boosting domestic manufacturing and reducing dependency on imports. The manufacturing sector plays a pivotal role in this initiative by focusing on import substitution, domestic value addition, and self-sufficiency in critical sectors. This discussion explores the role of manufacturing in the initiative and assesses the implications for the sector’s performance, global competitiveness, and overall macroeconomic stability.
Role of the Manufacturing Sector
Import Substitution
Objective and Policy Measures: The Atmanirbhar Bharat initiative emphasizes reducing reliance on imported goods by promoting domestic production. The government has introduced several policies to encourage import substitution, including higher import duties on certain products and incentives for domestic production. For example, the Automotive Industry has seen increased tariffs on imported vehicles and auto components, encouraging domestic manufacturers like Tata Motors and Mahindra & Mahindra to expand their production capacities.
Impact on Domestic Manufacturing: Import substitution policies have led to a rise in domestic production in several sectors. The electronics sector has benefited from initiatives like the Production Linked Incentive (PLI) Scheme, which incentivizes local production of electronics and reduces the dependency on imports. Companies such as Samsung and Apple have increased their local manufacturing footprints in India as a result.
Domestic Value Addition
Enhancing Value Chains: The initiative promotes domestic value addition by encouraging companies to establish or upgrade production facilities within India. The PLI schemes for various sectors such as textiles, pharmaceuticals, and automobiles are designed to enhance local value addition and production capabilities. For instance, Reliance Industries has invested in expanding its manufacturing of specialty chemicals and textiles in India, thereby adding value to its production processes.
Case Example: The Pharmaceuticals Industry has seen significant growth in domestic value addition due to the Atmanirbhar Bharat initiative. The PLI Scheme for pharmaceuticals has encouraged companies like Dr. Reddy’s Laboratories to increase their domestic production of essential medicines and APIs, thus reducing reliance on imports and enhancing local value chains.
Self-Sufficiency in Critical Sectors
Strategic Sectors: Achieving self-sufficiency in critical sectors such as defense, energy, and healthcare is a key objective of the initiative. The government has implemented policies to promote domestic production and reduce reliance on foreign suppliers. For example, the Defence Production and Export Promotion Policy aims to increase the indigenization of defense equipment and reduce imports.
Impact on Critical Sectors: Self-sufficiency efforts have led to increased domestic production capabilities in strategic sectors. The Defense Sector has seen the development of indigenous defense equipment like the Light Combat Aircraft (LCA) Tejas and Bharat Drone, enhancing national security and reducing import dependency.
Implications for Sector Performance, Global Competitiveness, and Macroeconomic Stability
Sector Performance
Growth and Expansion: Import substitution and domestic value addition have driven growth and expansion in the manufacturing sector. For example, the textile industry has seen increased production and export competitiveness due to support from the Atmanirbhar Bharat initiative and PLI schemes.
Challenges: While the initiative has spurred growth, there are challenges such as higher production costs and the need for significant investment in technology and infrastructure. Addressing these challenges is crucial for maintaining sector performance.
Global Competitiveness
Improved Competitiveness: By focusing on domestic production and reducing import dependency, Indian manufacturing is becoming more competitive globally. The electronics sector’s increased local production under PLI schemes has positioned India as a potential global hub for electronics manufacturing.
Export Potential: Enhanced self-reliance and improved production capabilities can lead to increased export opportunities. For instance, the pharmaceutical sector has not only reduced import dependency but also strengthened its position in the global market by exporting high-quality medicines and APIs.
Macroeconomic Stability
Reduced Import Bills: Import substitution contributes to macroeconomic stability by reducing the import bill and improving the trade balance. The increased domestic production of critical goods, such as electronics and pharmaceuticals, lowers the outflow of foreign exchange and supports economic stability.
Economic Resilience: Enhancing self-sufficiency in critical sectors builds economic resilience by reducing vulnerability to global supply chain disruptions. The self-reliance in defense production has strengthened national security and economic stability by mitigating risks associated with foreign supply dependencies.
Conclusion
The manufacturing sector’s role in the “Atmanirbhar Bharat” initiative is crucial for achieving import substitution, domestic value addition, and self-sufficiency in critical sectors. While these efforts have led to significant improvements in sector performance, global competitiveness, and macroeconomic stability, addressing associated challenges and ensuring continued investment in technology and infrastructure are essential for sustaining growth. The initiative is positioning India as a more self-reliant and competitive player in the global manufacturing landscape, contributing to long-term economic stability and growth.
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Model Answer India's growing working-age population, expected to increase by about 9.7 million annually from 2021 to 2031, presents both an opportunity and a challenge. Labour-intensive manufacturing could help create jobs, but several barriers hinder this strategy. 1. Capital-Intensive Focus in ManRead more
Model Answer
India’s growing working-age population, expected to increase by about 9.7 million annually from 2021 to 2031, presents both an opportunity and a challenge. Labour-intensive manufacturing could help create jobs, but several barriers hinder this strategy.
1. Capital-Intensive Focus in Manufacturing
India’s manufacturing sector has been more capital-intensive than labour-intensive. The workforce in manufacturing shrank from 51 million in 2017 to 27.3 million in 2021, as industries focus more on automation and capital-heavy production processesmits the potential for job creation in sectors that traditionally employ large numbers of workers.
2. Policy Gaps and Lack of Support for MSMEs
While initiatives like Make in India and Production-Linked Incentive (PLI) schemes primarily target capital-intensive industries, the bulk of employment in manufacturing lies in MSMEs (Micro, Small, and Medium Enterprises). However, MSMEs struggle with inadequate banking, financial, and infrastructure support . There for policies that provide tailored support to MSMEs, especially in labour-intensive sectors like textiles, food processing, and footwear.
3. Structural Bottlenecks
India’s complex labour laws, restrictive land acquisition regulations, and high logistics costs (14% of GDP compared to under 10% in developed nations) further complicate the path to scaling labour-intensive manufacturing . These barriersnt and make manufacturing less competitive.
4. Competition from Emerging Markets
Countries like Bangladesh and Vietnam, which have benefited from lower production costs and better market access, are increasingly competing with India in global markets for labour-intensive products . India must address this rising coto retain its market share.
5. Unskilled Workforce and Technology Upgradation
A lack of formal skills training—only 21.2% of India’s workforce had such training in 2019 —limits productivity in labour-intensive secover, sectors like textiles have increasingly adopted automation, reducing the need for manual labour and hindering job creation.
To tackle these challenges, India must focus on supporting MSMEs, improving infrastructure, and upskilling its workforce, creating a more favorable environment for labour-intensive manufacturing to thrive.
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