India must up its share in global manufacturing: FM Nirmala Sitharaman

Says private sector a partner in developing India

India must ramp up its manufacturing sector to increase its share in global value chains and become self-reliant with the help of government policies, Finance Minister (FM) Nirmala Sitharaman said on Friday.

“Much against the advice given by some economists that India should no longer be looking at manufacturing or ramping up manufacturing, I would like to highlight the fact that manufacturing must increase... We need to have greater sophistication in our product manufacturing,” Sitharaman said at the Confederation of Indian Industry’s (CII) Annual Business Summit here.
 

Some economists, including former Reserve Bank of India Governor Raghuram Rajan, recently said India should focus on the services sector rather than manufacturing as it has missed that opportunity.
 

 

Sitharaman said the government was looking at the private sector as a partner in developing India and sees it playing a big role towards becoming a developed country by 2047.
 

“We see a very big role for the private sector and we would like to partner with them in development with the government acting as a facilitator and an enabler,” she said.

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The FM said the fundamental basis for India’s consistent and steady growth was the policy stability, absence of flip-flops, and corruption-free decision making. “We are making sure that the facilitation both in the legislative and the legal frameworks are all simultaneously going on, having heard from the industry that rapid changes are required in our compliance regime,” Sitharaman said.
 

The FM underlined that the window of India’s demographic dividend is there for the next 30 years, and it comes with the added advantage of the lowest dependency ratio.

She highlighted the International Monetary Fund’s estimation that India would contribute 18 per cent to the global growth for five years beginning from 2023.

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The production-linked incentive scheme has helped in transforming the mobile and electronics sectors, she said. “From 78 per cent import dependence in 2014, 99 per cent of all mobiles sold in India today are made in India.”

Citing iPhone maker Apple’s example, the FM said value addition in electronics and smartphone manufacturing had grown significantly, having crossed 20 percent from the negligible level of 2014-15. “India's becoming Apple’s second-largest manufacturing hub for iPhones outside of China,” Sitharaman said.

The FM also quoted a Capgemini Research Institute report released in May that said India figured at the top of the list of investment destinations for senior executives in Europe and the US who are looking to reduce their dependence on China and shift part of their manufacturing capacity to emerging markets.

“Sixty-five per cent of nearly 760 executives surveyed have said they plan to increase investments significantly in India,” the FM said.

On the services sector, Sitharaman said India commands over 50 per cent of the world’s Global Capability Centres and remains the most preferred destination creating significant domestic and global opportunities.