January 19, 2021
Ongoing reforms in the manufacturing sector can result in long term growth of up to 8 per cent.
A combination of local market potential, labour costs, FDI inflows and future reforms will help improve global supply chains.
India is aiming to have manufacturing represent up to 25 per cent of national GDP by 2022.
The Make In India programme and other such Government initiatives are helping establish India as a preferred manufacturing destination.
The Government is improving productivity with the help of key reforms to establish manufacturing standard operating procedures, streamline labour laws, encourage privatisation and increase FDI into the country, in order to help India boost global GDP growth over the next 5 years. Experts at global investment bank, UBS Securities have stated that these reforms can result in long term growth of up to 8 per cent, which can lead to India having a contribution of 15 per cent towards global GDP by financial year 2025-26, as reported by the Economic Times. A combination of factors such as strong local market potential, competitive labour costs, steady inflow of FDI and the scope for further reforms will help India play a vital role in global supply chains as a manufacturing hub.
In recent years, manufacturing has emerged as a driving force for the Indian economy as the Government’s Make in India programme, supported by a range of other initiatives such as Digital India, Skill India, Startup India and more, has put the nation on the world map as the preferred destination for diverse manufacturing activities. The Government is also targeting to have manufacturing represent 25 per cent of the national GDP while creating 100 million new jobs by 2022. Additionally, as part of a broader agenda, manufacturing is key to the Government’s aim of setting up a US$5 trillion economy by 2025.
Owing to the proactive measures taken by the Government, India jumped 12 positions to reach the 68th rank concerning trading across borders on the World Bank’s Ease of Doing Business (EoDB) 2020 report. Overall, India has progressed up to 80 spots in the World Bank EoDB ranking over the past five years, while a strengthening manufacturing prowess has also helped the country rise in global value chains. Beyond the fast-expanding local consumption, India’s increasing global participation in manufacturing will make it a critical stakeholder of the world economy as its contribution to global GDP continues to rise.