Boosting High-Tech Manufacturing
A fundamental reset to drive manufacturing growth
Context:
Global manufacturing is rapidly transitioning toward innovation-driven, high-tech products, fueled by advanced R&D, skilled labor, and complex supply chains.
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- With rising U.S. tariffs reshaping trade dynamics, countries must strengthen their manufacturing fundamentals—regardless of trade barriers.
- India has made strides with initiatives like Make in India (2014) and the National Manufacturing Competitiveness Programme (NMCP, 2005), boosting sectors like electronics, pharma, and automobiles.
Key Indicators Reveal Gaps
- Manufacturing Sector: In 2023, India’s manufacturing sector reported a per capita value added of $0.32K (K=1000) and productivity of $8.9K—figures that fall well below the global averages of $2K and $32K, respectively, according to World Bank data.
- Value Added: India’s total manufacturing value added stood at $461 billion, in stark contrast to China’s $4,658 billion and the U.S.’s $2,497 billion.
- Productivity: When it comes to productivity driven by R&D and innovation, developed economies maintain a clear lead—with the U.S. at $159K and Germany at $103K.
- Among Asian nations, Taiwan ($79K), Malaysia ($36K), and China ($21K) have also made significant strides.
- To compete, India must increase productivity, R&D investment, and high-tech capabilities.
Revamping Technical Education for Innovation
India’s engineering institutions must evolve to meet industry demands. Key reforms needed:
- Entrance Exams: Shift focus from rote learning to problem-solving, creativity, and fundamental knowledge.
- Curriculum Overhaul: Reduce reliance on theoretical learning; increase practical training (50% weightage).
- Advanced Labs & Workshops: Upgrade facilities for product design, tooling, and prototype development.
- Industry-Aligned R&D: Set up assembly lines and innovation hubs within campuses.
Strengthening Core Engineering Beyond IT & AI
- Engineering: While semiconductors, AI, and IT are crucial, India must also prioritise core engineering disciplines: Civil, Mechanical, Electrical, Chemical, Electronics, Automobile, Metallurgy, Biotechnology.
- Infrastructure Development: Build high-speed manufacturing systems for diverse terrains (mountains, deserts, oceans).
- R&D Investment: Increase from 0.65% to 2% of GDP to match global leaders like the U.S.
Status of the Manufacturing Sector
The manufacturing sector in India is experiencing steady, though somewhat uneven, growth. As of early 2025, 19 out of 23 key manufacturing industry groups recorded positive growth compared to the previous year. The sector’s contribution to GDP is estimated at 13–14% in 2025, with the Confederation of Indian Industry (CII) citing a higher figure of 17%. Industrial output, as measured by the Index of Industrial Production (IIP), showed a 5% growth in January 2025, up from 4.2% in January 2024. The Manufacturing Purchasing Managers’ Index (PMI) has remained robust, reaching 58.2 in April 2025-a 10-month high and well above the 50-mark that indicates expansion.
Building an Innovation Ecosystem Like Silicon Valley
Successful manufacturing requires an innovation-driven ecosystem:
- State-Specific Manufacturing Parks: Plug-and-play facilities with design software, testing labs, and certification support.
- Startup Support: Encourage manufacturing startups near engineering hubs.
- Industrial Infrastructure: Allocate 1% of GDP for advanced factories and supply chains.
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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH
