India Economic Summit 2011

  • Manufacturing for Livelihood

    Sunday 13th November 2011 - 3:00pm - 4:15pm

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  • How will India’s commitment to boost manufacturing from 16% to 25% of GDP accelerate quality growth? 

    Dimensions addressed:

    • The new National Manufacturing Policy
    • Moving up the manufacturing value chain
    • Labour reform
    • Aligning the educational system and skills-building
    • Addressing obstacles to infrastructure

    Key Points

    • Optimism and urgency greet the launch of India’s New Manufacturing Policy
    • India’s growth will falter without large-scale job creation – the service industry alone cannot deliver
    • Greater investment in infrastructure and good governance are needed to make the policy reality
    • Labour reform and investment in skills development are vital
    • The Indian government welcomes participation by foreign companies in manufacturing

    Synopsis

    Business leaders and senior economists throw their weight behind India’s New Manufacturing Policy, but warn that India’s growth will falter without large-scale job creation. The policy aims to create 100 million jobs in manufacturing and ensure the sector generates 25% of GDP by 2022. Panellists agreed that government and industry alike have no option but to make this policy work. 

    Approximately 10 to 12 million people join the job market every year and the service industry alone cannot deliver. States in particular need to be convinced that manufacturing is fundamentally important in job creation. In China, every 1% growth in GDP has reduced poverty by 0.8%, whereas in India 1% growth has reduced poverty by only 0.3%. This is because India’s growth has been driven by services and not manufacturing. In addition, India’s manufacturing sector needs to shift from a capital-intensive to a labour-intensive model. The policy addresses 15 different manufacturing sectors, including more rural sectors such as food processing, textiles and garments. 

    Turning the policy into reality will need investment in infrastructure, good governance and skills development. India’s logistics infrastructure is overstretched and stalled by high bureaucracy. A truck taking goods from Gurgaon to Mumbai has to pass through 36 checkpoints and takes up to 10 days to arrive. While 57% of goods in India are transported by road – the most inefficient, expensive and emissions-intensive mode of transport – the figure in China is 22%. All participants agreed on the need for better governance to reduce the trust deficit. The proposed National Manufacturing Zones will be free to experiment with new forms of governance and collaboration. The policy also proposes to streamline the multiple windows of access to government required to secure permissions.

    Most panellists agreed on the need to reform India’s archaic and out-of-date labour laws, to create the flexibility of entry and exit that business requires. But management is responsible for handling their workforce sensitively. Coupled with this reform is the urgent need for industry to invest more intensively in skills development: the only asset that appreciates in value is the human being. While the National Skills Commission will help in this regard, the most successful manufacturers have created their own processes to train a highly skilled workforce. The manufacturing industry should learn from the services industry to create an inclusive, safe and fun environment where employees can acquire new skills and grow.

    Other Key Takeaways

    The proposed new NMIZs – Mega Industrial Zones – will differ from the old SEZs (Special Economic Zones) by being located near new transport and logistics hubs along the Delhi-Mumbai rail corridor. Industries thrive in clusters, as this reduces transaction and logistics costs.

    Disclosures

    This summary was written by Jonathan Walter. The views expressed are those of certain participants in the discussion and do not necessarily reflect the views of all participants or of the World Economic Forum.

    Copyright 2011 World Economic Forum

    This material may be copied, photocopied, duplicated and shared, provided that it is clearly attributed to the World Economic Forum. This material may not be used for commercial purposes.

    Keywords: India Economic Summit, manufacturing, infrastructure, governance, labour reform, skills development

Speakers

  • Arun Maira Arun Maira
    Member, Planning Commission, India

    BSc and MSc, Physics, St Stephen's College, Delhi University. 1965-89, with Tata Group; 1989-99, wit...

  • Baba N. Kalyani Baba N. Kalyani
    Chairman and Managing Director, Bharat Forge, India

    Bachelor's (Hons) in Mechanical Engineering; Master's degree, MIT, USA. Chairman and Managing Direct...

  • Sander van 't Noordende Sander van 't Noordende
    Group Chief Executive, Products, Accenture, USA

    Degree in Industrial Engineering, specializing in Finance and Marketing, Eindhoven University of Tec...

  • Rudolf W. Hug Rudolf W. Hug
    Chairman of the Board of Directors, Panalpina World Transport Holding, Switzerland

    Doctorate in Law, Zurich University; MBA, INSEAD; Senior Executive Program, Graduate School of Busin...

  • Rajat M. Nag Rajat M. Nag

  • B. Muthuraman B. Muthuraman
    Vice-Chairman, Tata Steel; President, Confederation of Indian Industry (CII), India

    Bachelor's in Metallurgical Engineering, IIT; MBA, XLRI; AMP, European Centre for Executive Developm...

Chaired by

  • Manvi Sinha Manvi Sinha
    Managing Editor, New Delhi Television (NDTV), India

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