Executive Summary

Executive Summary

                   In 1990, India and China had almos t the same GDP per capita. Since then, driven by its manufacturing sector, China’s economy has grown much faster than has India’s and its GDP per capita on a PPP basis is 90% higher than India’s GDP per capita. To achieve faster rates of economic growth India urgently needs to strengthen its own manufacturing sector.

                    The growth in manufacturing sector is dependent on the investment climate. The structural reforms since 1990s have made some progress. Despite recent setbacks, it is universally acknowledged that the reforms process in India cannot be reversed and sooner or later these reforms will be implemented. However, the long term competitive ability of Indian firms would depend on production efficiency. Production efficiency, in turn, is dependent on ability to develop, import and adapt new technologies among other factors.

                     India has made significant progress in various spheres of science and technology over the years and can now take pride in having a strong network of S&T institutions, trained manpower and an innovative knowledge base. Given the rapid pace of globalisation, fast-depleting material resources, increasing competition among nations and the growing need to protect intellectual property, strengthening the knowledge base is an important issue. While India’s technical talent is recognized world over, there have been serious institutional gaps in promoting industry-research institutions interaction.

 

                    This report takes a critical look at the Indian manufacturing sector with respect to the technology and scientific resource availability. Critical high growth manufacturing sectors like food processing, auto components, pharmaceuticals, light engineering etc have been profiled. The current technology status, technology development initiatives and future imperatives have been identified to propel Indian manufacturing industry achieve high growth rates.

Manufacturing Sector in India

Manufacturing: Brief Introduction

According to a study by global management consulting firm McKinsey and Company, the manufacturing sector in India could grow six-fold to US$ 1 trillion, by 2025. The rising demand in the country and the aspirations of multinational companies (MNCs) to establish low-cost plants in India, are seen as reasons for this possible growth. Up to 90 million domestic jobs could be created by that time, with the sector generating about 25–30 per cent of the country’s gross domestic product (GDP). India’s rapidly expanding economy gives domestic entrepreneurs and international players vast opportunities to invest and grow.

India’s manufacturing sector is vital for its economic progress. Its contribution to the GDP is 16 per cent, with the potential to grow more. The government has realized the importance of this sector to the country’s industrial development, and has taken a number of proactive steps to further enhance the industry.

Today, India’s attractiveness as a manufacturing centre for foreign companies is all too apparent. Overseas mobile phone and automobile companies already have manufacturing plants in India. Luxury brands such as Frette and Louis Vuitton are looking to do the same, as is major aircraft maker Airbus.