'Skill India' will, in turn, triumph only when several other parameters, including those related to education and research, were developed "on par with world standards", he added.
Asked if India was jumping into a service sector-led economy, Chidambaram said that was "inevitable".
"That is inevitable. If China can make firecrackers which are cheaper and safer than your crackers, Chinese crackers will come to India...That is inevitable," he said.
Answering questions from IIT-Madras students after delivering a lecture on economic reforms in India, the Congress leader said, "Unless you develop a competitive edge in production, you cannot outcompete the other producers."
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"So, if you want to become an industrial economy, you cannot say this is what I produce and therefore, you consume it. Nobody will consume it today," he added.
Chidambaram said the country has to produce goods which are "equal to the world's goods".
"Because we produce services which are equal to or better than the world's services...Our economy is fast becoming a service economy," he said, adding that this can be reversed "only when you invest in education, especially technical education, research, development, skills in Indian workers and then making in India and for the world".
In August, the former Union finance minister had described 'Make in India' as an "event management initiative" while speaking to students in Bengaluru.
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