The Production Linked Incentive Scheme announced recently by the Indian government under the Atmanirbhar Bharat Abhiyan is an important initiative needed for achieving the ambitious goal of becoming a $5-trillion economy. It covers various sectors that already have a considerable advantage but without realising the full potential.
India is largely an agrarian economy. More than 50% of its population is dependent on the agricultural sector for its livelihood and survival, though the returns are very low. The service sector, on the other hand, employs very few of the Indian labour force and its return nearly 60% of the Indian GDP. This is highly unfavourable for the Indian economy. To change this current trend, it is necessary to enhance the manufacturing sector. This can greatly boost India’s economic growth and solve the current unemployment crisis. The Make in India is a major step towards this direction.
India’s manufacturing sector is facing issues and is currently forced to lay off most of its labour force due to lack of profit and growth. In the past few decades, this sector has underperformed when compared to other nations, with a meagre share of 16-17% of the GDP. This is much lesser than that of China and Korea, whose manufacturing accounts for 29% of the GDP and 27% in Thailand. In the coming years, India’s population is going to increase and to make use of this demographic potential, this sector is vital as it can be labour-intensive and can promote an improved standard of living for the future generation. Currently, this sector accounts for only 12% of the total employment of the workforce. Clearly, this sector is not yielding the true potential of India’s demographic dividend due to poor government policies and reforms.
Automobile sales in India saw a steep decline in July this year. The automobile sector is currently facing prolonged demand slowdown for the past 12 months. This had cost at least 15, 000 job losses within 2-3 months, during the period when India is facing an unemployment crisis and overall economic slowdown.
The Ministry of Defence (MoD) has put out Draft Defence Production and Export Promotion Policy (DPEPP) 2020 for public feedback. The draft policy seeks to enhance the defence production capabilities of the country for achieving self-reliance and increased exports. This comes at a time when India is facing security concerns at numerous fronts, with China and Pakistan’s growing hostility towards India and neighbouring countries having closer ties with China.