India aims to become a global manufacturing power by focusing on “entirely new industries” such as solar technology, LED lighting, small cars, medical appliances and weapons, Financial Times reported, citing Minister of State for Finance Jayant Sinha.
“What we’re trying to do is massively build out India’s productive capacity,” Sinha told the newspaper in an interview.
“That is, in fact, a veritable supply-side revolution because what we are really trying to do is to position India for a decade or more of sustainable, non-inflationary 7-8 per cent GDP growth. It’s only if we can achieve those kinds of growth rates that we will be able to create the millions and millions of jobs we have to create every year.
India is the world’s third-largest economy after the United States and China, measured on a purchasing power parity basis, but manufacturing makes up only 15 percent of the gross domestic product.
Prime Minister Narendra Modi wants to boost its contribution to 25 to 30 percent of the GDP to help create a million jobs a month in a country with a population of 1.3 billion, the newspaper said.
However, his dream is being hampered by clogged transport infrastructure, a shortage of skills, outdated labor laws that discourage investors, and the reluctance of indebted Indian companies to take on new risks, according to FT.
In order to achieve Modi’s grand vision, the government will seek to meet the country’s vast domestic demand for everything from raw materials to vehicles and home appliances, and then develop internationally competitive industries in new sectors, Sinha said.
“When China became a tremendous electronics manufacturing hub, it did that for smartphones, for instance, which did not exist as a product category,” Sinha said. “It did that in laptops, which did not exist as a product category. They didn’t necessarily replicate what Japan was doing in automotive manufacturing.
“Similarly, I think there will be industries where India will become a global leader, but those are entirely new industries, for instance solar appliances, solar lanterns, solar home systems . . . India is already the world hub for small car design and manufacturing.”
Sinha added: “The Indian economic model is not the same as the Chinese economic model. Ours is a much more innovation-driven, bottom-up approach towards economic growth . . . We will rely on our innovative and world-class firms to be able to unlock these new manufacturing industries of the future.”
The first stage of India’s planned industrial revolution is likely to put more emphasis on public spending for infrastructure than on private investment in new factories.
The government plans to boost public investment by US$25 billion to US$50 billion in the 2015-16 fiscal year, while the country’s railway network seeks to invest US$100 billion in the next five years.
Energy Minister Piyush Goyal has launched a US$250 billion plan for power generation and transmission to double electricity output and achieve Modi’s promise of 24-hour electricity for all by 2019, the report said.
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