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Informist, Monday, Jul 22, 2024

 

--See firm local demand in near term aiding industry growth

--Uncertain global demand a risk to industry output growth

--India facing stiff challenges in growing its manufacturing base
--Need public policy to boost manufacturing competitiveness

--India needs to prioritise manufacturing sector

--India emerging as hub for Global Capability Centres

--Need to up demand for high-tech services in production

--Path to further industrialisation paved with deregulation
--Becoming global mfg base to lower India trade gap

--Govt's focus must turn to bottom-up reforms

--Uncertain global demand a risk to industry output growth

--India emerging as hub for Global Capability Centres

--Need to up demand for high-tech services in production

--Path to further industrialisation paved with deregulation

--Need private sector to invest in research, development 

--Industry, academia collaboration to help meet skill gap 

--Gloomy global growth risk for industrial commodities 

--Econ adviser: Output-linked sops delivering handsomely in key areas 

 

NEW DELHI – The government needs to prioritise the manufacturing sector as India is facing stiff challenges in expanding its manufacturing base, the finance ministry said in its Economic Survey for 2023-24 (Apr-Mar). Finance Minister Nirmala Sitharaman presented the survey in Parliament today.

 

"India faces stiff challenges in growing its manufacturing base. Public policy must do whatever it can to boost competitiveness," the ministry said in the annual survey. The statement comes a day before the Union Budget. Several industry bodies have demanded measures in the Budget to boost manufacturing, like the Production Linked Incentive scheme.

 

Currently, the government has Production Linked Incentive schemes running in 14 sectors, including electronics, automobile, textile, and steel. Sectors like leather, toys, and petrochemicals have also demanded Production Linked Incentive schemes.

 

Because of the Production Linked Incentive schemes, the 14 sectors have received investment of over 1.28 trln rupees as of May, which has led to production worth 10.8 trln rupees, the survey said.

 

The scheme has been more successful in the electronics sector, particularly large-scale electronics. It was launched in April 2020 with the highest outlay of 386.45 bln rupees for five years. Production Linked Incentive schemes have delivered handsomely in the key areas, Chief Economic Adviser V. Anantha Nageswaran said at a press conference.

 

The Production Linked Incentive schemes have boosted India's export capacity, especially of electronic goods. India's electronic goods export grew 23.6% in 2023-24 to $29.12 bln. "The bottom-up approach helps India establish a direct link between production units and meet national export obligations," the government said in the survey.

 

Going ahead, with adequate support from public policies, the government expects robust industry growth on account of strong domestic demand, the survey said. Industry was the brightest spot among the three broad sectors in 2023-24 with an estimated growth of 9.5%.

 

"The country is emerging as a hub for Global Capability Centres," the survey said. "However, the transformation lies in the fast-paced shift towards digital services like online payments, e-commerce, and entertainment platforms, as well as the increase in the demand for high-tech services as inputs in other productive activities."

 

There are two common requirements across industries that need to be addressed--incentivising research and development, and improving the skill levels of the workforce, the survey said. The private sector needs to consider increasing its investment in research and development, the survey added.

 

"With active collaboration between industry and academia and emphasis on vocational education in curriculums, India can meet the skill shortage more effectively than hitherto," the government said.

 

There is also a need to reduce compliance burdens to support industry expansion, the government said in the survey. The Centre and states can together help in reviewing, amending, relaxing, and annulling regulations that are messy, stifling, and counterproductive and raise the cost of operations, it added. "The path to further industrialisation in India is paved with deregulation."

 

However, uncertainties on the global front may pose risks to industrial growth, the survey said. "Headwinds persist in terms of uncertain global demand conditions and prices of key inputs for which India is import-dependent."  End

 

US$1 = 83.66 rupees

 

Reported by Krity Ambey

Edited by Rajeev Pai

 

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