The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Sai Ravi Teja Pingali, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
To revive manufacturing in India isn’t easy as over the years we have lost ground in this area. Any policy will need a holistic approach. Manufacturing in India is slowly dying, and while the impact of it is not visible, the signs are clear. Several manufacturing companies have become just traders of branded goods made in China as it’s a simpler business.
But manufacturing comes with other difficulties: there is a burden of labour, and capital is sunk in land and equipment. The opportunity cost of this capital is that if employed in trading or marketing it will give a quicker, surer and higher returns. This is the mindset and the outlook that has to be tackled if manufacturing has to become popular again.
Trading or imports of goods for mass consumption especially in the food, consumer goods, electrical products and light engineering goods needs to be controlled. Control cannot be physical barriers but smart barriers. A smart barrier for food, particularly processed imported food flooding our markets, is to have strong regulations on quality clearances. Chinese chocolates and candies flood Indian markets since importers presently do not have to take FDA permission.
Smart cities need to be combined with manufacturing clusters in a manner that creates liveable places for a workforce. Manufacturing does not exist in vacuum. It needs an ecosystem of labour markets, liveable spaces, and access to markets. The trouble with the government policy on Special Economic Zones was that it allowed builders and developers to create these islands which did not have all the components of an ecosystem.