Manufacturing India’s future: Problems of rising protectionism around the world and automation are overstated
Abstract:
Some influential commentators have argued that the time of manufacturing as the engine of growth is now passé. In their view, India must and can race to prosperity on the strength of its services sector alone.
I have steadfastly argued, instead, that we must walk on two legs, manufacturing and services. While we must exploit our strengths in services, we also need to significantly accelerate growth in manufacturing, especially labour-intensive manufacturing.
Agriculture, which currently employs nearly 45% of the workforce, is obviously not to be neglected. The point, instead, is that those currently deriving their incomes from agriculture would greatly benefit from accelerated growth in manufacturing. Nearly half of India’s farms are less than half hectare, a size too small to yield adequate living standard for a family of five. Owners of these farms will benefit directly if one or more of their family members found good jobs in manufacturing and services. Those continuing to cultivate will benefit from increased land per farmer as some farmers migrate to manufacturing and services.
Those who argue that India can transform through services growth and without significant acceleration in manufacturing have simply not offered a credible roadmap for the creation of well-paid jobs for hundreds of millions of workers with limited or no skills. These workers either work in agriculture and informal-sector enterprises or are self-employed.