Nirmala Sitharaman: Focus must on India's manufacturing sector to become self-reliant
FM advises India Inc. against giving up on manufacturing sector and says it will prosper as India is the most preferred investment destination for companies in Europe and in the US, who are looking to reduce their dependence on China
Finance Minister Nirmala Sitharaman on Friday (May 17) said for India to increase its share in the global value chain and become self-reliant, it is vital to ramp up the country’s manufacturing sector.
Addressing the captains of the Indian industry at a CII Annual Business Summit, the minister also underlined the need of achieving greater sophistication in product manufacturing and policy support.
FM disagrees with top economists
“I also want to underline much against the advice given by some economists that India should no longer be looking at manufacturing or ramping up manufacturing. I like to highlight the fact that manufacturing must increase. India must also increase with the help of policies its (manufacturing) share in the global value chain," she said.
Some of the economists including former RBI Governor Raghuram Rajan have expressed the opinion that India should rather focus on the services sector rather than manufacturing as it has missed that opportunity. China's model of manufacturing-led growth cannot be replicated any more.
‘Manufacturing sector key to atmanirbharta’
The finance minister, however, said that expanding manufacturing will help India become self-reliant. She also expressed hope that India still has an opportunity to ramp up its manufacturing capability as the world is looking at China plus one strategy post-COVID-19.
Quoting a Capgemini Research Institute report released in May, she said, India figures at the top of the list of investment destinations for senior executives in Europe and in the US, who are looking to reduce their dependence on China and shift part of their manufacturing capacity to emerging markets.
China’s loss can be India’s gain
Sixty-five per cent of nearly 760 executives surveyed has said that they plan to increase investments significantly in India.
“Presently, the telecom sector's PLI has helped India to become a better atmanirbhar as 60 per cent import substitution has been achieved in the telecom sector. This itself gives quite a big scope for our Indian industry,” she said, adding, that the PLI scheme is also transforming the mobile and electronics sectors.
“From 78 per cent import to dependence in 2014,” she said, “today 99 per cent of all mobiles sold in India are made in India”.
“Value addition in electronics and smartphone manufacturing too have grown significantly and crossed 20 per cent from the negligible level of 2014-15,” she said.
‘India commands 50% of world’s GCCs’
Citing an example, she said, India has become Apple's second largest manufacturing hub for iPhones outside of China with exports to USD 1.1 billion last year.
Speaking about the service sector, Sitharaman said India commands over 50 per cent of the world's Global Capability Centres (GCCs) and remains the most preferred destination creating significant domestic and global opportunities.
The number of GCCs in India has increased to more than 1,580 at the moment.
She emphasised that the "fundamental basis for the consistent and steady growth and high growth is the policy stability, absence of flip flops, corruption free decision making, and making sure that the facilitation both in legislative and also the legal frameworks are all simultaneously going on." Prime Minister Narendra Modi-led government looks at the private sector as a partner in developing India, she said.
"We see a very big role for the private sector and we would like to partner with them in the development with the government acting as a facilitator and an enabler," she said.
