Make In India To Drive India’s Job Creation

Published on 4 Jun 2016 . 6 min read

In a recently released UNDP Asia Pacific Human Development Report, it said that India urgently needs a blueprint for creating jobs to profit from its demographic advantage: 63% of its population is in the 15-64 age group. By 2050, India is expected to have another 280 million people eligible for employment. This clearly presents a big problem for the country that if we wont be able to generate employment for the youth, the fantastic GDP growth rate which economists hope that will continue may take a beating. Thus, there is a urgent need to create a blueprint to deal with this huge unemployment puzzle which will be staring us right in the face in the next few years.

A glimmer of hope is shown by Make In India, an ambitious project of the PM to generate more jobs in the manufacturing segment thus making the country a manufacturing hub for the world. With this program, the government hopes to create 100 million new jobs by 2022 giving manufacturing sector a stronger role in domestic job creation.

According to a 2012 McKinsey report, India’s manufacturing sector has the potential to hit US$ 1 trillion by 2025, allowing the sector to account for 25-30% of the country’s GDP. This level of GDP contribution, as analysed by KPMG in 2014, would rank India at par with Germany, Japan, the US and China in terms of manufacturing levels. The investment climate for the sector is also positive with global MNCs like Foxconn, GM, Airbus and Hyundai making billion dollar plus announcements to start manufacturing in India. Make in India week from February 13-18, this year, raked in more than US$ 200 billion in investment commitments.

Here are some of the sectors in the manufacturing segment, which have the potential of generating employment for thousands of skilled and semi skilled youth of the country:

  • Metals and Mining is a promising sub-sector as the global demand for metals and ores is expected to increase. The domestic economy is expected to grow at a minimum of 7% in the near to mid-term future leading to increased demand for construction and automobiles. This sub-sector has the potential to create 2.3 million jobs and contribute around US$ 150 billion to India’s GDP by 2020. Significantly, the Government also allows 100 per cent FDI in the sector. Between 2004-05 and 2011-12, the mining and oil and gas sector witnessed a CAGR in employment of 13.75.
  • Electronic Components and Automotive:  The automotive sector, which already employs around 19 million people and contributes 22% of the GDP, is expected to require 35 million hires by 2022. Electronic components manufacturers, meanwhile, are expected to benefit from an increase in demand for generation equipment. The generation equipment industry itself is estimated to grow to US$ 25-30 billion by 2022 in India. The CAGR for both these sub-sectors has been steady at 5.97 and 8.1, respectively.
  • Construction: Employment in this sub-sector is expected to benefit from the projected domestic growth rate and increasing urban migration. Over the next 20 years, India will see over US$ 20 billion in investments for urban infrastructure. Make in India automatic route facilitates 100% FDI for townships and cities. Employment in the sub-sector grew at an astounding CAGR 72.75 between 2004-05 and 2011-12. The development of residential, retail, commercial and hospitality infrastructure, provision of technologies and solutions for smart cities, meeting the urban housing shortage, urban water supply, sewage and sewage treatment solutions offer a tremendous potential for the employment of highly and low-skilled workforce. The approval of several SEZs boost the sub-sector’s opportunities to create the projected 100 million jobs by 2022 as outlined in the National Manufacturing Policy, 2011.
  • Defence Manufacturing: With an increased focus on homeland security and the recognition that nearly 60% of the requirements are met through imports, the Indian defence manufacturing space could provide an opportunity. An estimated Rs 250 Billion is expected to be invested in the sub-sector over the next 8 years, according to Make in India’s official website. It has already witnessed a CAGR in employment of 10.69. The country already has a strong presence of foreign investors in the sector, and the opportunity for India to become a defence manufacturing and supply-sourcing hub raise the potential for job creation.
  • Chemicals: India is the third largest producer in Asia and the sixth largest (in terms of output) worldwide. An emphasis on R&D in the sector from the Government, 100% FDI and the creation of Petroleum, Chemicals and Petrochemicals Investment Regions increases employment prospects in the sector. The easy availability of skilled science professionals and low costs of manufacturing makes India an attractive chemicals manufacturing hub.

While sectors listed above will grow over the next few years depending on the implementation of Make in India and ease of doing business, but they are expected to take off in a big way. However, there are many job creating opportunities already emerging in the manufacturing sector. As per a recent article published in The Economic Times, Indian Leather Development Programme training programmes are in fast track mode with more than 50,000 youth trained in the last 4 months. Now ILDP plans to train close to 2 lakhs people annually. These people are likely to find jobs in upcoming branches of Footwear and Design Development Institute slated to be open in Hyderabad, Patna, Banur and Ankleshwar. Under Make In India, Government has identified 25 sectors that would get support from the Centre in form of incentives and sector friendly policies in order to incentivise them to employ more people. All in all, India might be late to take a ride on manufacturing bus but if we get this right this time, there won’t be any stopping in putting India on the world manufacturing map and provide decent job opportunities to our youth.

This article was written for by By Prasanna Soparkar, Founder and MD, Core Integra 

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