Context

• In the context of a rapidly evolving global economy, manufacturing and trade are shifting towards innovation-driven, medium-high- and high-tech products.
• This transformation is fuelled by advancements in research and development (R&D), the growth of complex supply chains, and the need for a highly skilled workforce.
• With major global players such as the United States introducing high tariffs and redefining their manufacturing strategies, countries like India face an urgent need to adapt by setting the right fundamentals.
• Therefore, it is important to explore the challenges and strategic approaches India must adopt to revitalize its manufacturing sector, focusing on productivity, technical education, core engineering, and the creation of a robust innovation ecosystem.

India’s Manufacturing Challenge: A Global Comparison

• Despite consistent policy efforts since the economic liberalization of 1991 and more recent initiatives like the National Manufacturing Competitiveness Programme (NMCP) and Make in India, India continues to lag in key manufacturing indicators.
• In 2023, the per capita value added in Indian manufacturing stood at a mere $0.32K, compared to the global average of $2K.
• Similarly, productivity was $8.9K in India, far below the world average of $32K. While India's total value added in manufacturing is $461 billion, China and the United States lead with $4,658 billion and $2,497 billion respectively.
• Moreover, R&D-linked productivity highlights the gap between India and both developed and emerging economies.
• The U.S. boasts a figure of $159K, Germany $103K, Taiwan $79K, and even Malaysia and China report significantly higher figures than India.
• These statistics underscore the pressing need for India to increase per capita value addition and enhance productivity to remain competitive in the global manufacturing landscape.

Approaches India Must adopt to Revive Its Manufacturing Sector

• Reimagining Technical Education for Industrial Transformation
  • One of the foundational pillars of industrial competitiveness is education, specifically, technical education.
  • While engineering institutions in India have contributed significantly to human capital development, they now require a paradigm shift to meet the demands of a rapidly innovating manufacturing sector.
  • A fundamental rethink is needed, starting with entrance examinations.
  • Instead of testing mere endurance and rote memorisation, entrance exams should be designed to assess creativity, problem-solving abilities, and interest in fundamental knowledge.
  • The current academic culture, heavily focused on grades, theoretical inputs, and lecture notes, often sidelines the development of innovative and critical thinking.
  • Graduates, while adept at solving predefined problems, lack the ability to visualize complex, real-world engineering challenges.
  • To bridge this gap, technical education must prioritise hands-on experience and practical application.
  • At least 50% of the engineering curriculum should be dedicated to laboratory work, workshops, and live projects, complemented by the development of state-of-the-art facilities such as tool rooms, R&D assembly lines, and product design studios.
• Emphasising Core Engineering Disciplines
  • While emerging fields such as artificial intelligence (AI) and information technology (IT) have garnered significant attention, the essence of a strong manufacturing sector lies in the robustness of core engineering.
  • India needs to refocus on strengthening fundamental branches such as civil, mechanical, electrical, automobile, chemical, textiles, and biotechnology.
  • These disciplines form the backbone of machinery, infrastructure, and systems development.
  • Developing robust engineering units will not only support large-scale equipment production but also facilitate rapid infrastructure creation across varied geographical terrains.
  • This calls for substantial investment in engineering R&D and the creation of a sophisticated, responsive supply chain that can support diverse manufacturing needs.
  • The integration of AI and IT should be seen as an enabler, not a replacement, for core engineering competencies.
• Building an Innovation Ecosystem for Manufacturing
  • Global success stories like Silicon Valley in the United States or the industrial rise of East Asian economies are anchored in the development of comprehensive innovation ecosystems.
  • In India, while the services sector has thrived due to an enabling startup ecosystem, manufacturing lacks similar institutional support.
  • This imbalance can be addressed by developing state-specific manufacturing parks equipped with plug-and-play capabilities, R&D facilities, and in-house prototype development labs.
  • Such industrial parks should offer facilities for design, product certification, performance testing, and access to advanced software and instrumentation.
  • Engineering colleges should play a crucial role by aligning their curriculum with the needs of industry, focusing on skill development and innovation-driven education.
  • Manufacturing startups must be incentivised to cluster around these facilities, fostering collaborative development.

The Way Forward: Strategic Investments and Policy Framework

• Transforming India’s manufacturing sector demands not just isolated reforms but a systemic transformation supported by strategic investment.
• First, R&D expenditure must be increased from the current 0.65% of GDP to at least 2% to build advanced research capabilities.
• Second, an additional 1% of GDP should be allocated to develop world-class industrial infrastructure.
• Lastly, a dynamic and flexible policy framework is essential, one that continuously evolves in response to global trends and encourages innovation across all levels of the manufacturing ecosystem.

Conclusion

• India stands at a critical juncture in its industrial journey. While the country has made commendable progress in several areas, a fundamental shift is needed to harness the full potential of manufacturing.
• This requires a multidimensional approach, strengthening technical education, reinvesting in core engineering disciplines, building a conducive innovation ecosystem, and making bold investments in infrastructure and R&D.
• Only through a concerted effort across these domains can India hope to close the productivity gap, increase global competitiveness, and secure its place in the high-tech, innovation-driven manufacturing future.