It is not as if the question has not been asked. In fact, some policies have already been identified and the government is actively engaged in implementing them. One relates to development of physical infrastructure - electricity, railways, waterways, roads, ports and so on - which is in a poor state, and poses a serious constraint on growth of manufacturing.
Another relates to improving the "ease of doing business" (the speed with which government permits, electricity, and access to credit can be arranged; the simplicity and transparency of taxation rules; how well contracts are enforced; etc.). Setting up and running of production facilities are often made difficult, and hence unattractive, by the complexity of government regulations, as also by clumsiness in enforcement.
Yet another relates to the need for reform of the currently existing labour regulations (covering rules of hiring, regulation of work hours, rules and costs of redundancy, mechanisms for dispute settlement, collective bargaining institutions, systems of social protection, and the like), which arguably create unhealthy industrial relations and act as a deterrent to growth of jobs in organised manufacturing.
There, however, are other critical policy issues that are yet to receive due attention. One concerns the role of the international economy. Manufacturing growth can no longer be promoted through import substitution under protection; there is no going back to the 1950s. Growth of manufacturing in the 21st century has to occur in an open-economy context - and that raises two issues of much importance.
The first refers to the problem of maintaining macroeconomic stability in a context of relatively free flow of finance capital across national frontiers. A particular difficulty arises from the free flow of foreign institutional investment (FII), which does not augment investment but brings volatility to the exchange rate, trade balance and stock markets. Such volatility is certainly not supportive of manufacturing growth, which requires a stable macroeconomic environment. The government's current policy of liberalising FII inflow seems inappropriate in this context and deserves serious reconsideration; direct controls on FII flows are required to maintain macroeconomic stability. It is FDI inflow that should be liberalised; this augments investment and also tends to be stable.
The second issue refers to the possibility of external demand fuelling growth of manufacturing in India. Here the prospect does not look particularly bright. The developed world is caught in a low-growth trap and slow growth of world trade is a consequence. The developed countries' return to growth entailing revival of world trade sometime soon does not appear very likely. Global value chains, whose emergence and expansion were a major driver of manufacturing growth in China, are undergoing a transformation and are unlikely to drive growth of labour-intensive manufacturing in India.
The contribution of labour-intensive tasks (such as assembly operations) to total value added of manufactures has been on the decline, while the contribution of skill-intensive tasks (such as design and engineering work) has been on the rise. Thus low-labour-cost locations with good physical infrastructure have consequently been losing their allure for multinationals.
Perhaps more importantly, regional value chains have begun to replace global value chains. The most important manufacturing value chain is now located in East Asia, with China at the centre and extending across Indonesia, Myanmar and Vietnam (and to an extent Malaysia and Thailand).
Finally, technological innovations such as 3D printing, artificial intelligence and industrial robotics, all occurring in developed countries, can potentially shift the comparative advantage in some areas of manufacturing back to developed countries.
For all these reasons, it is hard to visualise exports driving manufacturing growth in India as it did in East Asia in the recent past. India will have to rely principally on expansion of its domestic market for sustaining rapid manufacturing growth; it does have the advantage of being a large country and must exploit this advantage. Agricultural growth, services exports and development of a single market will thus remain critically important elements of a strategy of rapid manufacturing-led growth in India.
But India's manufactures will still have to be globally competitive as they will face competition from imports even in the domestic market. Achieving rapid manufacturing growth in this setting will call for action on two fronts. First, large-scale production must be made possible so that economies of scale can come into play. This underlines the need not just for good physical infrastructure but also for management skills, good industrial relations and efficient system of land acquisition. Problems in these areas served to restrain the scale of production in the past - and relatively small-scale production has been a key weakness of India's manufacturing. These problems need to be addressed. Second, the possibility of developing a regional manufacturing value chain in South Asia should be seriously explored.
Finally, there is the question of skills of the workforce. Fresh thinking is needed on what skills should be developed and how they might be developed. While the lack of skilled manpower is often cited as a constraint on manufacturing growth, the nature of this constraint remains unclear.
A basic argument for a growth strategy centred on manufacturing is precisely that it can absorb much low-skilled labour. And it can do so because many of the required skills can be easily acquired by workers on the job. It is worth remembering, too, that a decent general education is what enables people to acquire new skills with ease. Programmes for improving and universalising up-to-secondary education, which has suffered much neglect over a long period, may be the most appropriate skill development programmes for now.
Some high-skilled engineers, technicians and managers are undoubtedly required to build and run manufacturing enterprises. It has been argued that, in India, services have lured away such high-skilled labour so that manufacturing faces shortages and high costs. But if this is where the problem is, then expansion of tertiary education is what is required.
The point is that a deep understanding of the nature of the "skill constraint" on growth of manufacturing needs to be developed before special skill development programmes are launched.
The writer is honorary professor at the Institute for Human Development in New Delhi