Plan a future where manufacturing & services are highly automated
Jobs are generated from the primary sector, secondary sector and tertiary sector industries. Primary sector jobs consist mainly of agriculture and a bit of mining in India. Core agriculture sector has already seen significant reduction in jobs. That leaves manufacturing and service as the expected growth engines for job creation. Manufacturing forms the secondary industry and services largely consists of tertiary industry.
India’s services sector holds enormous significance for the Indian economy; dynamic and endowed with a distinct universe of its own. India has grown rapidly in the last decade with almost 72.4 per cent of the growth contribution in India’s GDP in 2014-15, coming solely from its service sector. It has emerged to contribute majorly to national and states’ incomes, job creation and contribution to the economy. This is unlike other developing economies where manufacturing plays a key role in job creation.
A critical debate has now emerged on whether India can become the world’s third largest economy and if that can be achieved by revamping India’s manufacturing. The underlying assumption is that manufacturing can generate significant jobs and that it is strategic for the economy. As the latter is a policy decision, one has to be careful about the first assumption that manufacturing can lead to job creation.
Given the march of technology, manufacturing is expected to get even more automated with technologies such as 3D printing not only replacing traditional manufacturing, but also handicraft craftsmen whose work could not be replicated by earlier technologies. We may soon see a tipping point where suddenly in a span of a few years, vast amount of manufacturing industries may switch to low cost 3D printers, leaving millions jobless in a short period of time.
Low-end services jobs, including the BPO industry, are already getting highly automated with software replacing humans. The lower end services industry is at the cusp of transformation with technologies such as driverless cars, ATMs, automatic payment systems replacing service jobs in driving, ticketing and banking. For the longer run, we need to immediately create frameworks of training our workforce to perform very high end service jobs, else we could soon see massive job losses, followed by a collapse in demand and eventual collapse in economy.
Revisiting the government’s current intent on structurally transforming the manufacturing sector through its flagship initiative Make in India, we must note that manufacturing as a sector offers one of the most complex interplays of labour and capital. Thus, many argue that Make in India is easier said than done. India has almost everything that China had to provide a boost to its manufacturing in terms of sound fundamentals and a massive pool of labour. To top it, it has a very large English-speaking population. So, what is stopping investments into manufacturing from pouring in?
Among other reasons, India’s poor ranking in ease of doing business has discouraged global investors. Acquiring land for a largescale manufacturing facilities teamed with stringent labour reforms are viewed as major roadblocks. Weak infrastructure deters India from replicating the low cost high-volume manufacturing that China excels in. Given the impediments, while it might take time for manufacturing to lift off, services sector’s establishment cannot be overlooked. India’s services sector currently accounts for about 65 per cent of India’s GDP and the point that it is the world’s second-fastest growing services-sector cannot be ignored. In fact, it presents an opportunity to be leveraged upon.
Research points to positive and significant sectoral-linkages between manufacturing and services. India’s policymakers too seem to have realised that the two need to go together especially in case of a large diversified economy like ours. In fact, Make in India cannot succeed without robust manufacturing activities accompanied by a healthy service sector. For instance, growth of communication services might provide the market with demand and supply insights for manufacturing to regulate production and industrial inputs in the form of buseswhich can be imperative to a service sub-sector like, transport services.
Both sectors warrant rapid skill upgradation because sustaining the dynamism of skill-intensive sectors requires a continuous supply of skills. The prime minister’s Skill India objective needs to be accorded with high priority in order to gain momentum in high-tech manufacturing. Currently, less than 40 per cent of around 1 million people added to India’s workforce every month meet the industry’s skill requirements. There is an urgent need to tackle employability rather than just unemployment.
A number of productive initiatives are already in place. A National Skill Development Mission has been launched to create the strategiesthat could help implement decisions of the PM’s Council and the National Skill Development Corporation (NSDC). NSDC is expected to provide skill training that is required by organised and unorganised sectors.
Make in India can be as much about services as it is about manufacturing. India’s service sector remained resilient even during the global financial crisis. Moreover, services are now part of WTO and FTA negotiations. Reforms that could make Indian services more competitive globally include ushering in the concept of Total Factor Productivity to enable high quality of services, in line with global parameters. We need to improve the TFP of services particularly in relationship to other countries’ TFP that could be a real acid test for India’s service sector.
China’s loss of an estimated 6 million from the job market due to an ageing population presents to India an incredible opportunity which should be capitalised to the fullest? All three arms of the Indian economy: agriculture, manufacturing and services being interlinked need to support each other for this. We need more unifying measures like the GST encompassing all three and creating a holistic environment of a single market for the government and for industry.
In conclusion, a new India is in the making in which services along with manufacturing are expected to play a pivotal role in translating the advantage of democracy, demography and demand into real growth and empowerment, through employment. In answer to the economic survey 2014-15’s statement – What to make in India? Manufacturing or services it is not so much a question of ‘or’ as it is a matter of ‘and.’ In addition, we must immediately start planning for a future where manufacturing and services can be highly automated, this suits well for China and the western economies as they are expected to have a reduced workforce due to their demographic structure while India could be saddled with a large workforce waiting to pick up the reins.
India’s services sector holds enormous significance for the Indian economy; dynamic and endowed with a distinct universe of its own. India has grown rapidly in the last decade with almost 72.4 per cent of the growth contribution in India’s GDP in 2014-15, coming solely from its service sector. It has emerged to contribute majorly to national and states’ incomes, job creation and contribution to the economy. This is unlike other developing economies where manufacturing plays a key role in job creation.
A critical debate has now emerged on whether India can become the world’s third largest economy and if that can be achieved by revamping India’s manufacturing. The underlying assumption is that manufacturing can generate significant jobs and that it is strategic for the economy. As the latter is a policy decision, one has to be careful about the first assumption that manufacturing can lead to job creation.
Given the march of technology, manufacturing is expected to get even more automated with technologies such as 3D printing not only replacing traditional manufacturing, but also handicraft craftsmen whose work could not be replicated by earlier technologies. We may soon see a tipping point where suddenly in a span of a few years, vast amount of manufacturing industries may switch to low cost 3D printers, leaving millions jobless in a short period of time.
Low-end services jobs, including the BPO industry, are already getting highly automated with software replacing humans. The lower end services industry is at the cusp of transformation with technologies such as driverless cars, ATMs, automatic payment systems replacing service jobs in driving, ticketing and banking. For the longer run, we need to immediately create frameworks of training our workforce to perform very high end service jobs, else we could soon see massive job losses, followed by a collapse in demand and eventual collapse in economy.
Revisiting the government’s current intent on structurally transforming the manufacturing sector through its flagship initiative Make in India, we must note that manufacturing as a sector offers one of the most complex interplays of labour and capital. Thus, many argue that Make in India is easier said than done. India has almost everything that China had to provide a boost to its manufacturing in terms of sound fundamentals and a massive pool of labour. To top it, it has a very large English-speaking population. So, what is stopping investments into manufacturing from pouring in?
Among other reasons, India’s poor ranking in ease of doing business has discouraged global investors. Acquiring land for a largescale manufacturing facilities teamed with stringent labour reforms are viewed as major roadblocks. Weak infrastructure deters India from replicating the low cost high-volume manufacturing that China excels in. Given the impediments, while it might take time for manufacturing to lift off, services sector’s establishment cannot be overlooked. India’s services sector currently accounts for about 65 per cent of India’s GDP and the point that it is the world’s second-fastest growing services-sector cannot be ignored. In fact, it presents an opportunity to be leveraged upon.
Research points to positive and significant sectoral-linkages between manufacturing and services. India’s policymakers too seem to have realised that the two need to go together especially in case of a large diversified economy like ours. In fact, Make in India cannot succeed without robust manufacturing activities accompanied by a healthy service sector. For instance, growth of communication services might provide the market with demand and supply insights for manufacturing to regulate production and industrial inputs in the form of buseswhich can be imperative to a service sub-sector like, transport services.
Both sectors warrant rapid skill upgradation because sustaining the dynamism of skill-intensive sectors requires a continuous supply of skills. The prime minister’s Skill India objective needs to be accorded with high priority in order to gain momentum in high-tech manufacturing. Currently, less than 40 per cent of around 1 million people added to India’s workforce every month meet the industry’s skill requirements. There is an urgent need to tackle employability rather than just unemployment.
A number of productive initiatives are already in place. A National Skill Development Mission has been launched to create the strategiesthat could help implement decisions of the PM’s Council and the National Skill Development Corporation (NSDC). NSDC is expected to provide skill training that is required by organised and unorganised sectors.
Make in India can be as much about services as it is about manufacturing. India’s service sector remained resilient even during the global financial crisis. Moreover, services are now part of WTO and FTA negotiations. Reforms that could make Indian services more competitive globally include ushering in the concept of Total Factor Productivity to enable high quality of services, in line with global parameters. We need to improve the TFP of services particularly in relationship to other countries’ TFP that could be a real acid test for India’s service sector.
China’s loss of an estimated 6 million from the job market due to an ageing population presents to India an incredible opportunity which should be capitalised to the fullest? All three arms of the Indian economy: agriculture, manufacturing and services being interlinked need to support each other for this. We need more unifying measures like the GST encompassing all three and creating a holistic environment of a single market for the government and for industry.
In conclusion, a new India is in the making in which services along with manufacturing are expected to play a pivotal role in translating the advantage of democracy, demography and demand into real growth and empowerment, through employment. In answer to the economic survey 2014-15’s statement – What to make in India? Manufacturing or services it is not so much a question of ‘or’ as it is a matter of ‘and.’ In addition, we must immediately start planning for a future where manufacturing and services can be highly automated, this suits well for China and the western economies as they are expected to have a reduced workforce due to their demographic structure while India could be saddled with a large workforce waiting to pick up the reins.
