India’s challenges in manufacturing sector

Posted by:  | Feb 26, 2014 | Post comments
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Manufacturing long term  Indias challenges in manufacturing sector Manufacturing GDP has to rise, if the Economy has to improve – long term . The manufacturing sector’s outlook will largely influence the job scenario.

There has not been any significant job additions in the manufacturing sector .   The job additions were more in the informal sector.    The challenge is to make the National Manufacturing Policy into a workable framework and then re look at the skills development initiatives.

If India plans to create 100 million jobs over the next decade,  it has to have a very practical orientation to understand where these jobs are going to come from.   Else it is a tall talk, in the dark and as usual.

Not to sound cynical, however, there seems to be an absolute lack of focus.  The problem is on aligning initiatives in the Government and Private Sectors.   With about Rs.1000 crores to be additionally invested into the NSDC,  the question still remains on whether the current job training is translating to actual jobs.   Just looking at the statistics that from August 2013 around 168,043 youth enrolled into NSDC and related programs.  Around 78,000 completed training.    24 sector skill councils , 442 training partners and 17 assessment agencies are part of this program.  At the NSDC partner’s meet at Chennai recently,  Mr. Ramadorai, the NSDC head, raised questions on the data that was available to the NSDC.  The challenge for India is only compounding.

Old Labor laws -  a main deterent to the growth of the sector

The Government needs to focus on some immediate priorities to translate its actions to happenings.

The most pressing need for India is to revisit the old archic labor laws and statutory laws with a  clear time frame.   And this is something, no Government wants to touch.

Consider this.   A manufacturing Unit has to comply with 70 laws and file over 100 returns a year.   There is an urgent need to reduce this burden if the entrerprise has to focus on growth.      And without touching basics,  the government cannot just churn out training and jobs.   The entrepreneur should be encouraged to venture into manufacturing.

The industrial Disputes Act 1947 needs a comprehensive make over.  It needs to be changed to address the needs of the employer.  With present laws,  many entrepreneurs shun away setting up manufacturing facilities – which are actual indicators of a growing economy.

There is a need to revisit the statutory deductions.   A paradox, the lesser you earn the lesser you take home.  For a person with a salary of Rs.6000/- per month has a net take home which is just 52 % of his gross salary.   With poor governance of the EPF and ESIC, what is the Government trying to achieve ?

This certainly leads to informal employment of 15 persons or less.   While in China, over 80 % of garment business comes from organizations employing 200 persons and above,  in India, the same comes from organizations employing 15 persons or below.


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