After 75 years of independence, India is entering its golden era—leapfrogging the United Kingdom to become the world’s fifth-largest economy and on track to have a GDP of more than $15 trillion to become the third-largest economy by 2047. The country has been a shining light in an otherwise gloomy global outlook and is poised to be the fastest-growing large economy in the decades to come.
So far, India has followed a unique growth trajectory. Over the past two decades, the services sector grew rapidly without a manufacturing boom, unlike other countries where manufacturing growth precedes services. The services sector’s contribution to GDP has risen from 45 percent to 55 percent while manufacturing has remained largely stagnant at 15 percent in 2017 and 17 percent in 2022.
Going forward, growth in manufacturing is a must if India wants to reach the projected target of $20 trillion by 2047. With the right measures and rigorous execution, India’s manufacturing sector can reach $4.5 trillion, taking its GDP share to 22 percent (against a base projection of
$2.5 trillion with a 17 percent share in GDP), which is both a necessity and an opportunity for India to shine.
Three areas highlight the fundamental necessity of growth in manufacturing:
Population: a boon and a bane. India has roughly 800 million working-age people and will add about 200 million more over the next three decades. Manufacturing employs 50 million to 60 million people today. Even with a conservative projection of $3.5 trillion output by 2047, manufacturing has the potential to create 85 million more jobs. Achieving $4.5 trillion through higher manufacturing growth could create 90 million jobs—a big boost for income and a multiplier for economic growth.
Trade deficit: a gulf to bridge. At about 2 percent, India’s trade deficit indicates a high dependence on imports, which will put pressure on budgetary expenditures, currency, export competitiveness, and domestic investments.
Resilience: self-reliance for self-assertion. India needs to be self-reliant in its pursuit of becoming a global superpower in the geopolitically-sensitive world order. A thriving, self-reliant domestic manufacturing sector will give India a platform to reach its goals.
The government recognizes this necessity, and significant efforts have been made for a wide- ranging push on manufacturing. Broad government reforms have started showing momentum, from the Goods and Services Tax (GST) to the ease of doing business and the Production Linked Incentive (PLI) schemes. Furthermore, the global value chain reconfiguration post-pandemic has added positive pressure and presented an opportunity for India to become a manufacturing superpower.
Read more at: https://economictimes.indiatimes.com/small-biz/sme-sector/the-next-25-years-indias-golden-opportunity-to-become-a-manufacturing-powerhouse/articleshow/98263284.cms
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