India’s Industrial Policy has evolved over the years, and relevant changes have been introduced based on the exigencies of time. At the time of independence, development was to be led by the public sector, to create a sound industrial base for the future.
The Industrial Policy 1991 was in response to a challenge, and appropriate changes were introduced to facilitate the transition from a state-regulated economy to a liberalised and globalised economy.
Overtime, the thinking that started dominating policy circles was that the government, instead of directly intervening in sectors, must play the role of a facilitator to ensure competition and efficiency.
National Manufacturing Policy:
The National Manufacturing Policy was released by the Government in 2011. The main objectives of the Policy were increasing the manufacturing sector growth to 12-14 percent over the medium term, increasing the share of manufacturing in GDP to 25 percent by 2022, creating 100 million additional jobs in the manufacturing sector by 2022 and increasing domestic value addition and technological depth in manufacturing.
Industrial Policy in the Post Covid world:
Making in India for the world, which requires focusing on a few sectors to build comparative advantage, so that in due course, India is a major player in the global market in these sectors. This will enable us to reduce critical dependence on any country and developing self-reliance for items like bulk drugs/APIs, power equipment, consumer goods, and defence related products.
The slogan of Make in India for the world requires defining world-class quality standards. Quality of products and services is a key driver of competitiveness. Over the years, standards and technical regulation ecosystem in India has not kept pace with global trends. This has resulted in challenges for Indian exporters in accessing global markets as well as for domestic producers, who face cheap or inferior imports. Domestic standards and technical regulation ecosystem is also critical for linkages with global and regional value chains. Some measures that may be undertaken in this direction are:
Industry should be encouraged to drive formulation and development of voluntary
standards, by using industry driven standards setting bodies, if needed.
Regular participation of identified experts in international standards setting bodies such as International Organization for Standardization (ISO), International Electrotechnical Commission (IEC) and Codex.
Enhancing testing, inspection and certification infrastructure domestically, with private-sector participation.
Improving infrastructure and reducing logistics costs, which will work from the supply side and help in reducing production costs, thus making Indian manufactured products more competitive globally.
Ease of doing business (EoDB) is another key area which requires reform.
a. The real EoDB must lie within the operations of state governments and district authorities that lie closest to where business is done. State governments can be encouraged to rank districts on the lines of EoDB at the district-level, highlighting the importance of competitive federalism leading to better outcomes.
There should be an institutional mechanism for regulatory impact assessment, which will provide an objective evaluation of new regulations. This exercise will aim to achieve substantial net reduction in overall burden of regulatory compliances on industry. Stable and predictable policy regime creates a conducive environment for businesses to
thrive, and this also lies at the centre of EoDB.
Technological advancement of industry in India has not kept pace with that of many other manufacturing nations. There is a strong need to encourage Indian industry to upgrade to advanced technologies and ease transfer of technology from global and Indian innovators to Indian industry. Industry 4.0 offers opportunities, such as increased productivity, reduced waste and increased efficiency but there are also concerns about the cost of adoption and possible job losses. Measures to support digitisation and facilitate access to advanced technology will aid industry to leapfrog and catch up with global peers.
India's share in global value chains (GVCs) is low vis-a-vis other comparable economies. The above measures encompassing infrastructure development leading to supply chain resilience, PMP and PLI schemes in a number of products, promoting Make in India and the sustained drive towards quality and boosting domestic capacity will pave the way for India to make its mark in GVCs in the times to come.