Smart policy push a must to unleash India's manufacturing potential: Ajay Shankar

With labour intensive manufacturing shifting out of China, India can stand to gain provided the government pushes for smart policies and further encourages investment in manufacturing sector. “We have had some extraordinary successes but we are nowhere in the global scale for conventional labour intensive manufacturing. This is a weakness for us. Because of rising labour costs, 300 million jobs are moving away from China. There is a window of opportunity of 100 million jobs there. We can get 50 million of those if we get our act together,” said Ajay Shankar, chairman, Expert Committee on Regulatory Affairs, Department of Industrial Policy & Promotion (DIPP) at CII’s Manufacturing Summit 2015 on September 24, 2015.
   
He added, “We have to do a lot to inspire both Indian and the global investor to invest in India. And this can happen only through genuine partnerships, be it between manufacturing and services or business and labour. We have to create 100 million jobs in the country if we are to remove inequality and poverty.”
 
Highlighting the connection between the services and manufacturing sector, he said, “For a long time we had this wrong idea that we will bypass manufacturing and directly become a service industry economy. The world has changed and so has this old way of thinking manufacturing and services as different. The two have to become partners in creating jobs and value in India. Manufacturing is finally getting the centre-stage it deserves. Growth in the manufacturing sector is no longer an aspiration but a necessity for us. We have to succeed in creating jobs because if we don’t we risk social instability.”
 
According to Shankar, there was a genuine industrial recession, but one could also see early signs of optimism. “But we need to find creative ways to find more domestic demands for domestic value addition. This we have to do without becoming protectionists. We have a huge challenge before us because many of our policies have become dated. Hence we have to look at creating modern policies to help the manufacturing sector without giving way to protectionism and instead inspire competitiveness,” he opined.
 
Talking of creating a competitive environment for the manufacturing sector, he said, “It’s a misconception that IT growth happened in spite of the government. IT sector growth happened because of the government and the laws and policies they implement to support the industry. Manufacturing needs the same policy push to deliver results and drive competitiveness.”
 
On an optimistic note Ajay Shankar said, “We have a great future ahead. I am hopeful that we will get our acts together. We are exceptionally privileged that we have one of the most creative hub in design and IT with the right ecosystem for start-ups and incubation centres for making entrepreneurs for the future. That exists for the services sector. Now we need to see it in manufacturing as well, create an ecosystem for mentorship of future entrepreneurs.”
 
According to him, competitive federalism is the way forward. “States are aware and politically motivated for it. Bureaucracy can at times create layers. It is a lot of hard work but we will get there if we get things right. We have to see labour as partners, become innovators and creators and work in a green, environment friendly way,” Shankar commented.
 
India ranks 140 in the global ease of doing business marker, and experts believe that the country can quickly get into the first 80 by simply matching the best practices of different states in the country. “Growth is 10 percent dependent on law and 90 percent dependent on implementation. At an inter-ministerial level there is a lack of clarity, an ambiguity that causes obstacles and delays in implementations of routine matters. We, as an industry, need to work closely with each other to take care of these issues. We can create a list of minor issues that are proving obstacles and the industry and the government can work together on removing that,” said Dr Naushad Forbes, president designate, CII and director, Forbes Marshall Ltd.
 
According to Dr Forbes, the longest unpicked, low hanging fruit has been to bring the software and manufacturing industry together. “Software can help bring innovative solutions in the industry and a productive interplay can take place. Software can make a firm more efficient and then it can go on to make another,” he said.
 
Shedding light on the global supply chain matrix, Dr Forbes said, “If you look at manufacturing around the world, its distinctive role is its position at the heart of the global supply chain. In India we have many independent and successful first rate manufacturers. But we do not play a part in the global supply chain. We do to an extent in the auto parts and pharmaceutical business. What about other areas like electronic and apparel which are two huge opportunities for us right now. Working together with the government we should figure out how we can be competitive and effective players in these exciting segments.” 
 
Jamshyd Godrej, chairman CII Manufacturing Summit and past president CII & chairman & managing director, Godrej & Boyce Mfg Co Ltd, said, “Strength of services sector combined with the strength of manufacturing is the future. To reach our full potential though, we need close co-operation among a vast number of agencies especially between people involved in complex system of manufacturing. We have to understand all connections and complexities of its working.”
 
A CII-BCG Report titled ‘Future of Indian Manufacturing: Bridging the Gap’ was released on the occasion. The report underlines the efforts industry and government can make to harness the potential of the manufacturing sector. Highlighting the progress India has achieved, it points out the places were gaps need to be bridged.