Analysis of Performance and Challenges of India's Manufacturing Sector In The Global Market

Kanika S Tomar, Mahua Bhattacharjee and Anjali T Tandon

MPRA Paper from University Library of Munich, Germany

Abstract: Manufacturing in India accounts for roughly 16-17% of the national GDP, which for all practical purposes has remained the same as it was two decades back. Changing this number to 25% by 2025 through 'Make in India', an initiative taken by the government itself, is still Sandstorm. The contribution of the manufacturing sector in India is just about 1.8% of the global manufacturing output, whereas China contributes about 13.7%. This research critically evaluates the performance of the sector and pinpoints some of the major challenges faced in respect to low productivity, rigid labour laws, and inadequate infrastructure. Though mobile phone manufacturing in India saw remarkable growth the share of India in global production rising from 3% in 2014 to 11% in 2020 the big-ticket sectors such as automotive, pharmaceuticals, and small-scale industries still face inefficiencies in their structure. The comparative study shows that the labour productivity of India is far below those of its overseas competitors, such as China, which has leveraged its high labour efficiency and improvement in an enabling technology as a factor in strategically positioning itself. It also sets the objective of the investigation on the outside-in factors so far affecting the competitiveness of the sector: disruptions in global supply chains and exchange rate fluctuations. Industries 4.0 technologies, in their partial diffusion, have further efficiency enhancing and integration into global value chains. The analysis thus indicates that sustained reforms in labour laws, fiscal policies, and infrastructure and skill development would be impossible to realize with anything less than the stated target of 25% share in GDP. Along with all that, embracing smart manufacturing and sustainable practices would become binding imperatives to drive future growth and establish India as a globally competitive manufacturing hub.

Keywords: Manufacturing Sector; Global Competitiveness; Industry 4.0 Adoption; Make in India Initiative; Labor Productivity; India (search for similar items in EconPapers)
JEL-codes: J24 O31 (search for similar items in EconPapers)
Date: 2024, Revised 2023
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