How the Industrial Policy of India has evolved over the years
Make in India Initiative
- The goal of Make in India is to elevate the nation to the status of a top global hub for investment and production.
- The Department for Promotion of Industry and Internal Trade (DPIIT), under the purview of the Ministry of Commerce and Industry, is in charge of it.
- Potential partners and investors from all around the world are cordially invited to take part in the development of “New India.”
- Significant progress has been made by Made in India in 27 areas under Make in India 2.0, including the industrial and services sectors that are considered strategic.
Goals:
- to draw in foreign capital for further industrialization and expand India’s current industrial base to a level higher than China’s.
- Over the medium term, the manufacturing sector growth target is to climb to 12–14% annually.
- to raise the manufacturing sector’s percentage of the nation’s GDP from 16% to 25% by 2022
- to add 100 million new jobs by the year 2022.
- To boost export-led growth.
Four Bases:
- Novel Procedures
- Fresh Infrastructure
- Novel Industries
- Fresh Perspectives
Sectors of focus:
Concerns About Make in India (MII):
- Made in India (MII) does not evoke memories of the licence raj, independent industry, or industrialization that relied on imports.
- Concerns have been expressed over how MII is being applied in some industries.
- In particular, by increasing tariffs to offer protection and promote the establishment of domestic industry.
- There may be overstated concerns about protectionist tendencies expanding to other industries.
- Approximately 80–85% of the content on a mobile phone manufactured in our country is imported (India Cellular and Electronics Association, 2022).
- According to labour market studies, the unorganised sector in India has a large number of low-wage, low-productivity occupations that are primarily informal.
What actions are necessary?
- Being competitive in exports does not come from having a huge home market.
- All of the nations that have “taken off” ahead of us have competitive exports.
- A branding tactic known as “Made in India” aims to support companies that were founded using Indian labour, capital, land, entrepreneurship, technology, and other production aspects.
- It can only be successful if the MII procedure is successful.
- It is also necessary to articulate industrial policy beyond PLI for industries like toys, ready-made clothing, and footwear, to mention a few.
- Industrial policy is required to shape the plentiful factor of productive job creation in a labor-rich nation with middling educational attainment and skills.
- The solution to creating jobs for our abundant factor—women in particular—is labor-intensive manufacturing.
MII with the National Manufacturing Policy (NMP, 2011):
- It aimed to create 100 million new jobs in addition to increasing manufacturing’s share of GDP from the flat 15 percent it had been since the early 1980s to at least 25 percent.
- “To transform India into a global hub for design and manufacturing exports” was the stated goal. Stated differently, MII for everyone.
Production-linked incentive (PLI) programme and MII:
- Investments in important industries and cutting-edge technology are the goals of the PLI initiative.
- It guarantees effectiveness and introduces size and scale economies to the industrial industry.
- It makes Indian companies and manufactures globally competitive”.
Protectionist Policy Problems in the 1970s and 1980s:
- In the name of distributive justice and the underprivileged, it led to shortages, illegal markets, and widespread rent-seeking.
- Automobile, scooter, phone, and many other sector licences solely benefitted the manufacturers; the intended consumers, who had no other options, were left out in the cold.
- The producers who benefited from the protection made a concerted effort to prolong the system.
Way Ahead:
- Because there have been so few decent-paying jobs with some social protection, the story of growing unemployment has persisted.
- More than 99 percent of the 63 million MSMEs in India operate in the unorganised sector, where there is very little room for the creation of profitable jobs.
- Their meagre means of subsistence is hardly a formula for employment or growth.
- China serves as an illustration of how manufacturing scale affects employment growth.
- Making policy without data is like throwing darts without a blindfold.
- According to Kaushik Basu, the former chief economic advisor, economic policymaking should be guided by morality in order to create a better world, as well as intelligence in order to evaluate data.
- The latter should be used extensively in the lack of high frequency data on PLI, either on value added or employment generated.
- It will be advisable to continue India’s drive to excel in labor-intensive sectors whenever NIP is announced in the future.
- The industrial sector is still the greatest option for most people.
- With industrial strategies gaining acceptance even among once “freethinking” institutions and individuals, it is a chance for us.
