Manufacturing A Revival

TATA GROUP CHAIRMAN N. Chandrasekaran's New Year message to employees underlined the importance of boosting the country's manufacturing base. "It's the new manufacturing golden age for India," Chandrasekaran said. "Our group plans to create 5,00,000 manufacturing jobs over the next half-decade."

- MINHAZ MERCHANT

That should please policymakers who seek a better balance in the contribution of services and manufacturing to the Indian economy. Services today account for over 58 per cent of GDP. Industry, which includes manufacturing and sectors like mining and power generation, accounts for 27 per cent with agriculture making up the rest.

A key initiative to increase India's manufacturing output, including exports of manufactured goods, is establishing dedicated industrial parks. Around 24 mega industrial zones are proposed to be set up by 2030. China used a similar strategy to build its manufacturing capacity over the past two decades. India is currently the fifth largest contributor to global manufacturing output. By 2030, the 24 planned industrial parks could see India becoming the world's third largest manufacturing hub.

The proposal seeks to establish manufacturing hubs across key industrial sectors: chemicals and petrochemicals (five hubs), textiles (seven hubs), leather and footwear (five hubs), medical devices (four hubs) and bulk pharmaceutical drugs (three hubs).

Mahesh Chhabria, Managing Director of Kirloskar Industries, recounted at a Mint CEO roundtable how China had transformed its manufacturing sector: “The way China created a cluster on footwear is mind-blowing. In a cluster of 10 sq km, I can source anything and everything, from the smallest guy to the biggest guy, to make my footwear. All design shops that make uppers in footwear are available to be outsourced there itself. Where does that concept exist in India?”