Manufacturing: A sector crying out for a reality check

It's ironic that this sector is getting such attention even as automation reduces the jobs created

- RAHUL JACOB

In a world of wildly exaggerated claims for artificial intelligence (AI), the paradox is that the mythology which leads governments to favour manufacturing over services often seems like a global religion. US commerce secretary Howard Lutnick was quoted a few months ago fantasizing that "the army of millions and millions of human beings screwing in little, little screws to make iPhones" would soon move back to the US. Hardly a fortnight goes by without New Delhi and indeed governments overseas announcing some new incentive for manufacturing. In India's case, this is usually via the production-linked incentive (PLI) scheme.

China led the way a decade ago and provoked a similarly mercantilist pushback from the West. Kicking off its 'Made in China' scheme for the manufacturing domination of a swathe of high-tech sectors, Beijing declared "the history of the rise and fall of nations has repeatedly proved that without a strong manufacturing industry, there will be no country and no nation." Beijing's melodramatic declaration underlined what is best described as manufacturing machismo, evident also in the Donald Trump administration's obsession with trade deficits faced by the US in manufactured goods. For all of China's success in electric batteries and vehicles, the European Union Chamber of Commerce in China last week pointed out that in electric vehicles, for instance, only three of 112 manufacturers are making a profit. Perhaps only communist accounting principles would allow such distortions.