IAS/UPSC Coaching Institute  

12 May 2025 : A fundamental reset to drive manufacturing growth

Editorial 1: ​A fundamental reset to drive manufacturing growth

Context

Amidst transformative global changes in the manufacturing sector, it is crucial to reinforce our focus on technical education, core engineering, and innovation.

 

Introduction

Global manufacturing and trade are rapidly shifting toward innovation-driven, medium-high- and high-tech products. This transition is fueled by advanced research and development (R&D), technological sophistication, high skill levels, and a complex supply chain network. Additionally, recent high tariffs imposed by the United States are likely to reshape the manufacturing landscape. Regardless of tariff policies, it is essential to strengthen the fundamentals through targeted policies that directly address prevailing challenges.

 

Ongoing National Efforts in Manufacturing

  • India faces a significant challenge in strengthening its manufacturing sector.
  • Since the economic reforms of 1991, consistent efforts have been made to elevate manufacturing's role in the economy.
  • Key flagship programmes include:
    • National Manufacturing Competitiveness Programme (NMCP) – launched in 2005
    • Make in India – introduced in 2014 to boost domestic production
  • These initiatives have given momentum to sectors such as electronics, pharmaceuticals, and automobiles.

 

Global Comparison of Manufacturing Indicators

  • A closer look at basic manufacturing metrics highlights key gaps:
    • Per capita value added in manufacturing (2023):
      • India: $0.32K
      • World average: $2K
    • Manufacturing productivity:
      • India: $8.9K
      • World average: $32K
  • According to World Bank data, India’s figures are significantly below global benchmarks.

 

Total Value Added in Manufacturing

  • Comparative figures of total manufacturing value added:
    • India: $461 billion
    • China: $4,658 billion
    • United States: $2,497 billion
  • These disparities underscore the scale of challenge India faces in catching up with major economies.

 

Productivity and Innovation Deficit

  • In terms of productivity linked to R&D and innovation, developed economies lead:
    • United States: $159K
    • Germany: $103K
    • Taiwan: $79K
    • Malaysia: $36K
    • China: $21K
  • These figures reflect a significant innovation gap between India and global leaders.

 

Path Forward for Competitiveness

  • To compete globally, India must:
    • Increase per capita value addition in manufacturing
    • Enhance productivity through investment in R&D, innovation, and workforce skills
  • A focused approach toward technological advancement and policy support is critical.

 

New approach to technical education

Area of Focus

Current Situation

Required Changes

Global Trends in Manufacturing

Manufacturing worldwide leverages R&D, skill development, and progressive university education.

India should align its educational system with global trendsin R&D, innovation, and skill development.

Role of Engineering Institutions

Engineering institutions in India play an important role in shaping the workforce.

Institutions must update curricula to meet emerging industrial needs and advance innovation.

Admission Process

The current entrance exams often focus on difficulty rather than fundamental knowledge or creativity.

Entrance exams should prioritize assessing creativity, problem-solving abilities, and fundamental knowledgeover toughness.

Curriculum During Graduation

Students focus heavily on academic inputs, notes, and grading.

Shift focus toward creative problem-solving, research, and higher-order thinking to foster innovation and industry readiness.

Student Skills at Graduation

Graduates excel at solving defined problems but lack the ability to address complex engineering challenges.

Graduates must develop the ability to visualize larger problems and engage in innovative thinking to meet industry needs.

Practical Learning

The current system lacks enough emphasis on practical work and hands-on learning.

50% of the curriculum should focus on practical work, including advanced labs, tool rooms, and assembly lines for R&D to develop skills for manufacturing.

Building core engineering

  • Semiconductors, IT, and AI are of strategic importance and are integral to modern engineering systems.
  • However, while AI and IT are crucial, core engineering remains fundamental.
  • Strong engineering skills are needed in essential core streams such as:
    • Civil
    • Mechanical
    • Automobile
    • Production
    • Electrical
    • Electronics
    • Chemical
    • Metallurgy
    • Textiles
    • Biotechnology
  • There is a need for robust engineering units in the country to:
    • Build equipment and machinery.
    • Focus on technical and management capabilities.
  • These capabilities should enable the development of:
    • A variety of products, infrastructure, and transportation systems.
    • These systems should be designed for high-speed development across different terrains (plains, mountains, deserts, and oceans).
  • Achieving this requires a significant investment in engineering and R&D infrastructure, along with a sophisticated supply chain to support rapid development.

 

Ecosystem for innovation

Aspect

Details

Success of Silicon Valley (U.S.)

Attributed to a strong innovation ecosystem with skilled manpower and robust R&D infrastructure.

East Asian Countries' Success

Benefited from policies fostering innovation systems and industrial infrastructure.

Success of Startups

Driven by the existing innovation ecosystem, particularly in the service sector.

Industrial Ecosystem for Manufacturing

Requires capital investment and a multi-pronged, systemic approach to create a manufacturing ecosystem.

State-Specific Manufacturing Parks

Should be established with modern facilities to facilitate quick setup of new units.

Prototypes Development

In-house capabilities should be developed within manufacturing parks for creating prototypes.

Required Facilities

Facilities for design software, measurement instruments, performance testing, and product certification should be available in parks.

Focus of Engineering Institutes

Should enhance R&D and align curricula with skill development and innovation.

Encouraging Manufacturing Startups

Should focus on engineering infrastructure and labs to support new manufacturing startups.

 

Conclusion

To transform manufacturing, the strategy must begin with the development of advanced research labs and the creation of robust industrial infrastructure. This requires increasing R&D expenditure from the current 0.65% of GDP to 2%, along with an additional 1% of GDP investment in industrial infrastructure. Ultimately, it calls for a strong policy framework capable of crafting innovative solutions in a rapidly evolving global environment.