India can double share of value added goods to 25% of GDP: PwC

Says shifting focus from low to high tech industries will be critical

India can more than double the share of value-added manufacturing to 25% of the GDP in about two decades by improving competitiveness, audit and consulting firm PwC said today.

"In India, value-added manufacturing stands at 12% of GDP today. The report shows that value-added manufacturing can grow to 20% by 2024 and to greater than 25% in 2034 if India can step up its manufacturing competitiveness," PwC said in a report.

Shifting focus from low to high tech industries will be critical, it said. India needs to eliminate present regulatory hurdles in manufacturing, build skills base and take measures including reverse manufacturing and foreign licensing.

It also said that the share of R&D investment in India's GDP will have to grow from 0.8% at present, to 2.4% in 2034.

Manufacturing sector will play a key role in development, as the nation grows more urban and industrialised by providing jobs to a broad spectrum of workers and spurring income growth across different segments of the population, it said.

"For India to achieve its targets on value-added manufacturing vector, it needs to first remove regulatory hurdles that have made doing business in India difficult," said the report.

Policies related with land, labour and environment needs to be simplified as well as single window clearances are required for obtaining business permits, it added.

Strengthening manufacturing skills training will also prove crucial, PwC said.

India needs to import foreign technology to strengthen manufacturing capabilities, however, government can help businesses by increasing investment in R&D as it will reduce dependency on technology imports, said the report.

"The report shows that the share of R&D in India's GDP will have to grow from its current 0.8% to 2.4% in 2034 to achieve the desired gains in value-added manufacturing."

It suggested India should start exporting finished goods in the short run without neglecting low and medium technology firms in the country.

"For example, while the top two exports from India to China were cotton yarn and iron ore, China's top two exports to India were electronic goods and electrical machinery, indicating these growth economies' different positions in the manufacturing sector," it added.