Leader of Opposition Rahul Gandhi, who arrived in the US on a three-day visit, has made a big statement on the unemployment problem in India. Comparing it with China, he said that India did not pay attention to production, hence there is a problem of unemployment here.
Rahul Gandhi said, ‘China has focused on production in its country. That is why there is no problem of employment there. Most of the things in India are ‘Made in China’. This policy of China makes it successful in providing employment.’
He also spoke on the manufacturing sector. Rahul said, ‘All the ports and defense contracts are being handed over to just one or two people, due to which the condition of the manufacturing sector in India is bad.’
Apart from Rahul’s statement, if we look at India’s manufacturing sector, it has grown a lot in the last few years. It is expected that by 2030, India will export ‘Made in India’ goods worth 1 trillion dollars. How big is India’s manufacturing industry? How many people get employment from it? And how can the country beat China in this? Let’s understand.
India and manufacturing
– Before Independence: Most of the products were handmade. These were sold all over the world. The first attempt to make iron by burning charcoal was made in Tamil Nadu in 1830. Jamsetji Tata started the Tata Group in 1868. During the First and Second World Wars, industrial development in India took place rapidly because it helped the British.
– After Independence (1948-91): India focused on industries by introducing five-year plans. An industrial policy was introduced in 1956. Iron, steel, heavy engineering and fertilizer industries grew rapidly. However, due to the license raj, government factories did not function as they should have.
– After the 1991 reform: In 1991, India opened up its economy. The end of the license raj opened the way for private industry. However, after this, more attention was given to services rather than goods, which had a negative impact on the growth rate of industrial production. However, the government promoted manufacturing through MSME.
– 2014 to 2024: The ‘Make in India’ scheme was launched in 2014 under the Modi government. Its aim is to turn India into a manufacturing hub. To increase manufacturing, the PLI scheme was launched, under which companies get incentives. Corporate tax was reduced. The Mudra scheme was introduced with the aim of promoting the MSME sector.
How big is India’s manufacturing sector?
The manufacturing sector accounts for 17% of India’s GDP. According to the IBEF report, India’s manufacturing industry is expected to grow by 40% between June 2022 and June 2024.
At the same time, a report by Colliers released in December 2023 shows that by 2025-26, India’s manufacturing sector will cross $1 trillion.
According to the data of the Commerce Ministry, India exported goods worth a total of $776.68 billion in 2023-24. Out of this, $437 billion was exported from the manufacturing sector. There has been a decline of 3% in exports related to the manufacturing sector as compared to 2022-23. In 2022-23, $451 billion was exported from the manufacturing sector.
Foreign investment (FDI) is also increasing rapidly in the manufacturing sector. During the monsoon session in August this year, the central government had told the Parliament that between 2014 and 2024, more than $165 billion of foreign investment has come in the manufacturing sector. Whereas, between 2004 and 2014, FDI of about $98 billion had come. That is, compared to 2004-14, a growth of 69% has been recorded in FDI in the manufacturing sector between 2014-24.
How many jobs does the manufacturing sector provide?
The number of people employed in the manufacturing sector in our country has increased by 114% in four decades. A recent report of the Reserve Bank shows that in 1980-81, there were 2.95 crore people in India who worked in the manufacturing sector. By 2022-23, their number increased to 6.31 crore. Of all the people employed in India, 10% are associated with the manufacturing sector.
According to the central government, more than 30% of the jobs in the MSME sector are in manufacturing. According to the data, 35% of the jobs in this sector are in trade and 32% are in manufacturing.
In July this year, an Indeed report claimed that new employment opportunities are rapidly emerging in the manufacturing sector in India. Indeed’s sales head Sashi Kumar believes that since India is now trying to become a global manufacturing hub, there are many opportunities for both businessmen and job seekers in this sector.
Can India compete with China?
The economic condition of India today is the same as that of China in 2007. According to the World Bank, China’s GDP in 2007 was 3.5 trillion dollars. India’s GDP is almost the same now. China’s per capita income in 2007 was approximately 2,700 dollars. Whereas, the per capita income in India at this time is approximately 2,500 dollars.
The economic progress that China has made has happened after 2008. After that, China attracted the youth towards the manufacturing sector. The result was that the number of people employed in the agriculture sector decreased and increased in the manufacturing sector.
But now India is also emerging as a manufacturing hub. Currently, the share of manufacturing in GDP is 17%, which has been targeted to be increased to 25% by 2025.
In the last few years, due to tension and trade war with China, many big companies have turned towards India. There is a lot of potential in defense and electronics manufacturing. India has set a target of defense export of $ 5 billion by 2025. Similarly, the electronics manufacturing sector is expected to reach $ 300 billion by 2030. Top companies like Amazon and Apple have already invested in manufacturing in India.
Last year, when Apple announced setting up a manufacturing plant in India, the Chinese newspaper Global Times called it a major ‘concern’ for China.
Colliers had claimed in its report last year that Gujarat could emerge as the biggest manufacturing hub. In this report, it was said that Gujarat, Maharashtra and Tamil Nadu could be the biggest choices for investment.
Gujarat because land is available at cheap rates for industrial development. Connectivity is good and companies get incentives from the government. On the other hand, not only is the infrastructure good in Maharashtra, but subsidy is also given for setting up industry here. Whereas, in Tamil Nadu, along with low labour cost, industries also get subsidy and incentives.
However, India has full potential to beat China. Because not only is the labor cost less in India compared to China, but the infrastructure here is also strong. The government is going to spend more than Rs 11 lakh crore on infrastructure in the next five years. There are schemes like Make in India, Skill India and Startup India.
If India has to become a big manufacturing hub, then the import duty on the components used for manufacturing will also have to be reduced. According to the World Trade Organization (WTO), the average import duty on components in India is 18%, while in China it is 7.5%. Similarly, it takes an average of 20 hours to get import clearance from customs in China. Whereas, in India it takes 44 to 85 hours.
However, experts believe that to become the world’s largest manufacturing hub, India will have to beat not only China but also Vietnam, because Vietnam is the first choice for the world’s big manufacturing companies as compared to India.
Source (PTI) (NDTV) (HINDUSTANTIMES)