Indian factories must go high-tech, climb value chain: Survey

India can realise the full potential of its industrial sector only if it focuses on moving up the value chain, enhances productivity and uses better technology, along with fresh employment generation, the Economic Survey said Wednesday.

"Indian industry has immense potential for further strengthening the agro-processing, textiles, garments and leather and footwear sectors with good prospects for sustained employment generation," said the survey, tabled by Finance Minister Arun Jaitley in the Lok Sabha Wednesday.

"But the medium-term challenge for Indian manufacturing is to move from lower to higher-tech sectors, from lower to higher value-added sectors and from lower to higher productivity sectors," it added.

The survey, presented a day ahead of the national budget for this fiscal, also said the medium-tech industries are primarily capital intensive and high-tech industries are mainly capital and technology intensive.

To push the share of manufacturing to 25 percent of the country's overall output, Indian companies also need to capture the global market in sectors showing some rising trends in demand.

"These sectors are largely high technology and capital intensive. Such high-tech industries may perform a less important role in sustaining employment but are critical for capital accumulation and skills development and for improving the knowledge base."

To gain a firm footing in these sectors, the policy thrust should be on pushing up the level of public and private investment on technology, research, development, innovation and skill development, it added.