A Fundamental Reset to Drive Manufacturing Growth

Context:

• The global manufacturing landscape is undergoing a shift towards high-tech, innovation-driven production, requiring advanced R&D, skilled manpower, and efficient logistics.
• India’s manufacturing sector faces structural challenges, particularly low productivity and value addition per worker, necessitating a fundamental policy and institutional reset.
• The article argues for aligning education, industrial ecosystems, and innovation policy to unlock manufacturing-led growth.

Key Highlights:

Changing Global Manufacturing Paradigm

• Manufacturing is increasingly driven by:
  • Advanced R&D
  • High-skill human capital
  • Technology-intensive value chains
• Countries competing successfully invest heavily in innovation ecosystems, not just low-cost labour.

India’s Manufacturing Performance Gaps

• Per capita value addition:
  • India – $0.32K
  • China – $4.6K, U.S. – $2.4K
• Labour productivity (value added per worker):
  • India – $8.9K
  • China – $21K, U.S. – $159K
• Indicates low efficiency and weak integration into high-value global supply chains.

Limitations of Existing Initiatives

• Schemes like:
  • National Manufacturing Competitiveness Programme (NMCP), 2005
  • Make in India, 2014
• Provided policy momentum but failed to significantly boost productivity and innovation outcomes.

Relevant Prelims Points:

• Value Addition per Worker:
  • Measures manufacturing efficiency per unit of human resource.
• GERD (Gross Expenditure on R&D):
  • India: ~0.65% of GDP
  • Global benchmark: >1% of GDP
• AI and Semiconductor Ecosystems:
  • Critical for strategic technologies, defence, electronics, and future industries.
• Manufacturing Challenges in India:
  • Low productivity
  • Skills mismatch
  • Weak R&D-industry linkage
• Benefits of Manufacturing Reset:
  • Job creation
  • Export growth
  • Reduced import dependence
  • Enhanced strategic autonomy

Relevant Mains Points:

• Need for Educational Reset:
  • Move away from rote-learning, exam-centric models.
  • Introduce project-based, lab-centric education.
  • Early emphasis on high-order thinking, design engineering, and problem-solving skills.
• Ecosystem-Based Manufacturing Approach:
  • Build domain-specific innovation clusters akin to Silicon Valley, focused on:
    • Hardware
    • AI
    • Electronics
    • Pharmaceuticals
    • Semiconductors
  • Develop state-specific manufacturing parks with:
    • Plug-and-play labs
    • Testing and certification facilities
    • Advanced measurement systems
• Strengthening Core Engineering Disciplines:
  • Renew focus on civil, mechanical, chemical, textiles, and materials engineering, beyond software and AI.
• Policy Convergence for Manufacturing Growth:
  • Align education policy, industrial infrastructure, and innovation ecosystems.
• Way Forward:
  • Increase public and private R&D investment beyond 1% of GDP.
  • Foster industry-academia collaboration.
  • Promote future-ready manufacturing ecosystems to ensure resilience, competitiveness, and inclusive growth.