Highlight the Importance of the Manufacturing Sector in Economic Development. Discuss the Need for a New Industrial Policy.

The manufacturing sector constitutes nearly 16-17% of India’s GDP and is an important pillar for industrialization and inclusive growth.

Importance of the Manufacturing sector:

  • Employs nearly 45% of the population, only next to the agricultural sector.
  • Helps in dealing with regional imbalances.
  • Employs women and helps in women empowerment.
  • A crucial part of exports.
  • Employs skilled, semi-skilled and unskilled workforce as well. Hence it provides inclusive growth.

India is set to experience a demographic dividend and will require 50-60 lakh jobs annually. The manufacturing sector can play a significant role in this. However, this sector is suffering from a number of challenges:

  • Regressive and obsolete labour laws
    • It prevents the companies from growing and creates hurdles in capitalising on comparative advantages.
    • It promotes casualisation of labour, mechanisation of industrial processes etc.
    • Acts as a roadblock to ease of doing business.
  • Access to the credit facility
    • The small and medium enterprises do not have financial inclusion and access to formal sector credit.
  • Attracting FDI
    • Local sourcing norms, multiple registrations, and a multiplicity of regulators prevent FDI from entering the industrial landscape.

Therefore there is a need for a new industrial policy that takes a new look at the labour laws, registration and regulation and the protectionist policy usher a new era of industrialization.

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