B Muthuraman, President, Confederation of Indian Industries (CII) and Vice-Chairman of Tata Steel, provides an overview of the government’s National Manufacturing Policy (NMP) and its possible impact on businesses in India.
The new National Manufacturing Policy (NMP), which aims to generate 100 million jobs and increase India’s GDP to 25% by 2022, is a positive development and will definitely put the manufacturing sector in a long-term high growth trajectory. The Confederation of Indian Industries (CII) believes that this is a positive development because India’s growth will falter without large-scale job creation and the service industry alone cannot deliver on the growth promise.
No major country in the world has become economically prosperous without going through long periods of manufacturing dominance. This is true of the US, Western Europe, Japan and now China; India cannot be an exception. A comparison with other emerging economies indicates just how much India has lagged in the manufacturing sector. Manufacturing in India contributes to a mere 15% of GDP, unlike other countries such as such as China (34%), Thailand (40%), South Korea, Poland, Turkey and Malaysia (approximately 26-30%), which are far ahead in this arena. Moreover, in last two decades, the Indian economy has moved from being largely agrarian to being more service-oriented, skipping the phase of industrialisation. This is of utmost importance if India is to provide gainful employment to the millions, who are entering the working age population every year.