Top infrastructure so that we can be a manufacturing base

Every rupee invested in manufacturing adds four rupees to our GDP. Besides, it results in the creation of employment even at the lower education levels of our population, and thus results in the wider distribution of prosperity in the economy.

It was estimated that offshore manufacturing to low-cost countries would increase from USD 1,400 billion in 2002 to USD 4,500 billion by 2015. India has the potential to garner USD 300 billion of this. Harnessing this opportunity can transform the quality of life of our population.

In the 1960s, based on manufacturing capabilities and cost structures, manufacturing activities shifted from the US and Europe to Japan for mass produced items like consumer electronics and cars. This was facilitated by world class infrastructure and labour productivity. Later, the production of such products shifted to Korea driven by the same factors. In the last 15 years, China has emerged as the centre for mass manufactured products, based on their labour reforms and discipline, and world class infrastructure.

While in the past, India has missed several opportunities to develop into a manufacturing centre, it has the potential to become one of the manufacturing bases for the world, especially for products that have high engineering design content. Indian companies are also becoming globally competitive in some sectors like auto components.

For the manufacturing sector to grow significantly, we need to develop good infrastructure in our country, and our government needs to make the necessary policy changes to further increase the role of the private sector. Joint government and private sector participation in the development of roads, ports, airports, power utilities and urban infrastructure will result in faster execution and higher quality levels.

Investments in manufacturing and infrastructure have a multiplier effect on our economy. Good infrastructure will also facilitate the dispersal of manufacturing units away from the major cities, and will enable quick and reliable movement of manufactured goods to markets in India and abroad.

Labour reforms are also required to stimulate investments in our economy. If investors have the option of easy exit when businesses do not succeed, they will be forthcoming in investing more in India. Thus, labour reforms will actually result in the creation of more jobs.

We need to recognise that as an integral part of the global economy, we all need to develop a global mindset. Enabling policies will go a long way in attracting capital to the manufacturing and infrastructure sectors.

Indians engineers have been recognised the world over as being amongst the best. While many of them contribute to the enrichment of foreign companies, the benefits of this talent does not trickle enough into our own economy. The manufacturing and infrastructure sectors compete for talent against the IT and ITES, FMCG and the banking sectors. Unfortunately, students do not consider manufacturing and infrastructure sectors as preferred career options. The short supply of talent to the manufacturing and infrastructure sectors could jeopardise our ability to achieve a 12-14 per cent growth rate in manufacturing, and to build world class infrastructure for our country.

While the rapid growth of the BPO and ITES sectors have created large employment opportunities for the lower band of our workforce, of serious concern is the loss of our engineering talent to multinational companies setting up offshore engineering centres in India, that results in a ‘‘virtual brain drain’’.

While most young people aspire to jumpstart their quality of life from high salary jobs, we need to systematically make them conscious of the long-term benefits in participating in building a rich and powerful India.

As Indians, we have a responsibility to bequeath our children with a country that is well-developed and economically strong, and where we are proud to live. India needs our talent: this is critical for our national and economic development.