India can be hardware manufacturing hub”

#GS3 #ECONOMY #INFRASTRUCTURE.

Context

  •  Urging India and the U.S. to join the Paris Call for Trust and Security in Cyberspace that now has 75 countries on board to deal with new cybersecurity threats facing the world, Microsoft president emphasised the need to train more professionals to cope with these threats.
  • There is an opportunity for India to become a hardware manufacturing location as the world‘s technology majors have been moving their supply chains out of China over the past 18 months.

Hardware supply chains

  •  Terming the changing relationship between China and the U.S. and some other countries as one of the most significant geopolitical developments of this decade, the Microsoft official said the change was certainly impacting the technology sector.
  •  We are seeing not a decoupling, but some drifting apart. We are definitely seeing an impact in terms of hardware supply chains, with many companies moving parts too, (or) in some instances, perhaps, almost all, or all of their hardware manufacturing out of China to other countries.
  •  That has been underway for the last 18 months, even though it is not discussed as much by companies publicly as it might.
  •  This is something that creates potential new opportunities from a longer-term perspective for say, India, as well as others to make themselves more of a location for hardware manufacturing.
  •  Capacity had been shifting to Mexico, Vietnam, South Korea, and some southeast Asian countries.

Alarming effect of the event 

  • Terming the recent spate of cyberattacks a wake-up call for tech companies as well as governments, Microsoft president said the world was more secure when networks ran in the cloud as opposed to servers.
  • Many cybersecurity problems also emerged from the lack of IT administrators‘ compliance with best practices.
  • We need to keep making this simpler, but the other problem is there is simply a shortage ofcybersecurity professionals in the workplace.
  • We are going to need a global initiative to really accelerate all kinds of training to put more cybersecurity professionals in place.
Misses in manufacturing - Frontline

Manufacturing in India

  • India lags far behind China in manufacturing prowess. China ranks first in contribution to world manufacturing output, while India ranks sixth.
  • Against India‘s target of pulling up the share of manufacturing in Gross Domestic Product (GDP) to 25% by 2022, its share stood at 15% in 2018, only half of China‘s figure.
  •  Industry value added grew at an average annual rate of 10.68% since China opened up its economy in 1978.
  •  In contrast, against the target of 12%, the manufacturing sector has grown at 7% after India opened up its economy.
  •  Next to the European Union, China was the largest exporter of manufactured goods in 2018, with an 18% world share. India is not a part of the top 10 exporters who accounted for 83% of world manufacturing exports in 2018.

Issues With Indian Manufacturing Industries

Stringent Labor Laws: The labour laws in India are extremely complicated. e.g, Industrial Disputes Act-1947 provides that if you are a manufacturing firm with 100 workers or more, you cannot dismiss any of them under any circumstances unless you get prior approval from the government which is rarely given.

The law is mandated even if the industry is going bankrupt. Thus, the investors are not willing to enter into this sector.

Inadequate Skilled Workforce: The manufacturing sector, for it to grow, requires an educated workforce with the necessary skills and training. India‘s skill ecosystem needs to be fixed.

Basic Infrastructure: Roads, connectivity and transportation are slow and costly when compared

to developed nations which is a huge deterrence to Industries. Uninterrupted power supply is another challenge.

Small Size: Small enterprises, because of their smaller size, suffer from low productivity,

preventing them from achieving economies of scale.

Low Spending On R&D: Currently, India spends about 0.7% of GDP on research and development, a considerably small amount when compared with other developed nations. This prevents the sector to evolve, innovate and grow

Role of states

Policy Coordination: Since India follows a federal government system, a lasting solution to these constraints cannot be possible without the active participation of State governments and effective policy coordination between the Centre and the States.

State Specific Plans: Currently, manufacturing is mainly concentrated in few states like Maharashtra and Gujarat which cover a substantial portion of India‘s geographical area.

● States like Andhra Pradesh, Bihar, Chhattisgarh, Madhya Pradesh, Odisha, Rajasthan, Telangana, and West Bengal also have large land areas that can contribute to the success stories of Indian Manufacturing.

● The reasons for less manufacturing activity in these States have to be carefully examined, and based on this, state specific industrialisation strategies need to be devised and implemented in a mission mode with active handholding by the Central government.

Implementation: Strong and carefully designed policy implementation on the part of individual States would improve India‘s overall investment climate, thereby boosting investments, jobs, and economic growth.

 

SOURCE: THE HINDU 

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