Towards a Competitive Manufacturing Sector

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Towards a Competitive Manufacturing Sector
ByRajiv KumarDirector and Chief Executive,
ICRIER
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Outline

• Aggregate Manufacturing Scenario
• Regional Disparities
• Employment Generation
• Unorganized Sector
• Export Performance
• Transition to Mass Manufacturing
• Policy Recommendations

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• Aggregate Manufacturing Scenario

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Significance of Key Sectors in the Economy
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Cross Country Comparison
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Composition of Manufacturing Sector Across
Countries
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Growth of Indian Industry
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Growth of Components of Manufacturing Sector
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Performance of the Manufacturing Sector
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Comparison of the Manufacturing with Other Core
Sectors
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Comparison of the Manufacturing with Other Core
Sectors
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Change in Composition of the Manufacturing Output
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• Regional Disparities in India

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Statewise Decomposition of Manufacturing Output
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Contribution of States to Output and Employment
in Manufacturing
Decomposition of Output
Decomposition of Employment
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• Performance of the Unorganized Sector

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Share of Unorganized and Organized Manufacturing
in Valued Added and Employment (2000-01)
Source NSSO 56th Round and Annual Survey of
Industries
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Gross Value Added Per Worker in Unorganized and
Organized Manufacturing (2000-01)
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• Employment Generation

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Employment Growth Rate in Manufacturing Sector
Note Period covered for Unorganized
Manufacturing is 1989-90 to 2000-01.
Period covered for Organized Manufacturing is
1990-91 to 2003-04 Source Annual Survey of
Industries and NSS reports, various years
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Employment in Organized Manufacturing Sector
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Change in Labor Intensity in Top 5 Labour
Intensive Goods
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Export Performance of Labor Intensive Industries
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• Export Performance

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Share of Manufacturing Exports to India's Total
Merchandise Exports
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Manufacturing Exports Cross Country Comparison
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Levels of Manufactured Exports Across Countries
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High Technology Exports
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Change in Composition of Indian Manufactured
Exports
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• Transition to Mass Manufacturing

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Value Added by the Manufacturing Sector in Some
Major Developing Countries (2004)
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Per Capita Value Added by the Manufacturing
Sector in Some Major Developing Countries (2004)
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Scale of Production of Major Commodities Across
Countries
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Scale of Production of Major Commodities Across
Countries
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Scale of Production of Major Commodities Across
Countries
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Scale of Production of Major Commodities Across
Countries
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Size of Labor Force in Manufacturing Sector
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Possible Routes to Achieving Mass Manufacturing
in India

• Route I Improve Export Market Share
• No sector where India enjoys a big share of
  exports
• Lack of FDI
• Role of MNCs
• Route II Expand the Indigenous Market Base
• Small size of the domestic market
• Low purchasing power
• Need to develop High Quality and Low Price
  products

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Spending on R D as a percentage of GDP (2003)
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Researchers Involved in RD (2003)
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Use of Foreign Technology (2004)
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Number of Resident Patent Filed (2004)
Source World Intellectual Property Organization
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• Policy Recommendations

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Policy Recommendations

• (i) Remove Entry Barriers
• 1. Heavy hand of petty functionaries
• 2. Clearances
• 3. Processes
• (ii) Remove Exit Barriers
• (iii) Weaken distinction between organized and
  unorganized sector
• (iv) Labour market reforms
• (v) Improve labour conditions and real wages
• (vi) Education Sector Reforms
• (vii) Infrastructure
• (viii) Foreign Direct Investment