In a marked departure from the belief that growth comes through import substitution, consultancy firm McKinsey & Co has prescribed that an export-led growth could help register a 0.5 per cent rise in the gross domestic product (GDP) through an incremental four per cent hike in the industrial growth. | |
| The Confederation of Indian Industries (CII), the apex body of Indian industry, has appointed the consultancy firm to chart out a roadmap to be followed by the industry, especially in the manufacturing sector, to prop up the GDP growth. |
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| The study will be unveiled on October 8 at the manufacturing summit of the CII in Mumbai. |
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| Jamshed N Godrej, chairman and managing director of Godrej & Boyce Manufacturing Company, and the past president of CII, confirmed the McKinsey prescription. |
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| He said the CII would discuss the report with the Centre and would urge it to take up a time-bound programme. |
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| Providing a significant boost to the manufacturing-led exports should be recognised as one of the most important economic priorities, the report said, adding that the government should remove four key barriers for that. |
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| The barriers are: reduction of indirect taxes and import duties, improvement of infrastructure and acceleration of labour reforms, the report said. |
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| He said McKinsey arrived at the conclusion after studying the export opportunity in automobile components, textiles, electronic hardware and specialty chemicals. |
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| The report said India should aspire to grow much faster and become one of the three largest exporters of manufactured goods among the low-cost countries by 2015. |
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| This would imply aiming at expanding India's overall manufacturing size from $0.5 trillion to $1.4 trillion and to achieve an almost 10-fold growth in manufacturing exports from $40 billion to $300 billion. |
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| The combined impact of the domestic and export led growth would have remarkable results for the economy: a sustainable increase in GDP of one per cent a year; the creation of 25-30 million jobs in the manufacturing sector and 50-75 million jobs in the allied sectors, the McKinsey report said. |
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| According to the report, the next wave of manufacturing offshoring will be driven by skill-intensive industries, namely automobile components and pharmaceuticals. |
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| India would enjoy cost advantage due to the combined effect of large domestic demand, engineering skills and huge raw material. |
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