What will India need to do to become a global manufacturing hub that it aspires?

Finally, after almost two months of lockdown, the government has decided to initiate the “Unlock” process to give the national economy a jumpstart that it really requires. As a part of this initiative, the Government of India and the Reserve Bank of India have announced economic packages totalling over Rs. 20 Lakh crores. A large percentage of the total package has been dedicated to the manufacturing sector. This is a strategic move on the part of the Indian government, as it is aspiring to wrest this initiative from China and attract industries moving out of China to India.

How can India become a global manufacturing hub

Over the last several years, it has been a conscious policy of India to improve the Ease of Doing Business in the country to attract foreign investment in the manufacturing sector. But merely an announcement of the economic packages will not bring forth the desired results. What is required is a paradigm shift in the multiple aspects of the manufacturing industry to become the next big manufacturing powerhouse in the world. After all, the mass exodus of migrant labours in the wake of the Coronavirus induced lockdown is an indicator that a lot of systemic changes are required in the manufacturing sector to actually become a global leader in manufacturing. The system needs to be robust enough to observe such “shocks.”

Here are some important steps that the government authorities must take to seize the momentum decisively in India’s favour: –

Labour Reforms

There is no doubt that the blue-collar workers are the engine that drives the manufacturing sector in the country. While the government has introduced a slew of measures in the last few years to improve the working conditions and financial security of the workers in the organised sector, a lot is still required to be done. A large percentage of blue-collar workers work in the unorganised sector and are thus out of the purview of the benefits of the government schemes. Moreover, much-needed labour reforms are pending for many decades, entangled in a bureaucratic quagmire.

The government needs to fast track the introduction of these labour reforms and also extend the benefits to workers in the unorganized sector as well. Minimum wages, health and medical benefits, hygienic working conditions, and retirement benefits are some of the issues that must be addressed immediately for the manufacturing sector to be strengthened in the country.

Upskilling the labour

Integration of technology in the manufacturing sector has been the biggest reason behind China emerging as a global manufacturing powerhouse.If India wishes to replace China in the global supply chain, then there is no alternative but to upgrade and modernise the manufacturing facilities. Along with that, there is also the need to upskill the labour. Most of the blue-collar workers in the country are either illiterate or have barely completed primary school, so they tend to struggle with the latest manufacturing technology. So, the government, as well as the industrialists, need to undertake initiatives to offer training programs for the blue-collar workers. These can be imparted in the form of on-the-job training as well as separate classroom sessions. Actively educating and upskilling the labour force hold the key to India’s emergence as a global powerhouse.

The financial well-being of the labour

Now that the restrictions imposed during the lockdown have been eased and blue-collar workers are returning to work, it is imperative for the government, as well as private enterprises, to ensure the financial and physical well-being of the labourers. Along with the monetary aspect of their well-being, focus also needs to be given to their health and personal well-being: mandatory life insurance, medical insurance, and retirement benefits. Family health benefits, ready access to medical advice, remote health monitoring are some of the initiatives that will quell the concerns of the workers and motivate them to work harder. This will not only boost the industrial output of the country but also improve the quality of goods manufactured.

Overhauling the regulatory framework

Overhauling of the regulatory framework is essential if India needs to emerge as an alternative to China.Protecting IP rights, respecting patents, quick resolution of legal issues, single-window clearances, removing criminal provisions from the Companies Act, and simplification of the FDI norms are some of the much-required changes that will improve the ease of doing business in the country and also attract more foreign investment in the manufacturing sector.

The potential of the manufacturing sector in the country is absolutely incredible, and along with the availability of a large labour force, the sky is the limit. What is required on the part of the government as well as business leaders is to take the initiative and incorporate the necessary changes to attract companies moving out of China to India.

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