Manufacturing policy hinges on competence level of states: Amitabh Kant
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Mumbai: India may opt for different models of manufacturing rather than a uniform manufacturing policy applicable nationwide, said Amitabh Kant, chief executive officer at NITI Aayog, the successor to the Planning Commission.
Kant, who was in the city to attend Mint’s Luxury Conference, said the country will have different models depending on the competence levels of states.
“We are a very big country, we are bigger than 24 countries of Europe. You will have different models of manufacturing. States like Gujarat and Maharashtra must get into intelligent manufacturing—Manufacturing 4.0, or smart manufacturing. They must advance the envelope with the convergence of digital technology in manufacturing,” Kant said.
However, in states such as Andhra Pradesh and Karnataka, the stress should be on labour-intensive sectors such as textiles, leather, gems and jewelry, he said.
“In the eastern part of India, the focus has to be on value-added agriculture and food processing. There is no reason why a state like Kerala should actually do manufacturing... Kerala is very good in the service sector—like tourism. So, every state, depending on its core competency, must excel; there must one area where it must be the No. 1 global player. And that is the ambition that every state must have,” he said.
Kant’s comments come at a time when Prime Minister Narendra Modi’s Make in India is promoting India as an important investment destination, a global hub for manufacturing, design and innovation.
Manufacturing must account for 25% of gross domestic product (GDP) against the current 17-18%, Kant said.
“There are huge perils of growing without a manufacturing base. Also, you need to shift people from agriculture to manufacturing,” he said.
But he was quick to add that agriculture must also get its due.
“You need a second green revolution in agriculture. With better inputs, seeds, irrigation. But you need to shift disguised employment from agriculture to manufacturing. Services must continue to grow, your agriculture must grow at 5% per annum. Your manufacturing must grow, and that’s the recipe for India’s 9% growth,” he said.
India is currently growing at 7.4%.
“...it’s also very important for exports to grow. Because exports and manufacturing are co-related. If exports don’t grow, manufacturing won’t grow. If manufacturing doesn’t grow, GDP doesn’t grow. All this is closely interlinked,” Kant said.
He refuted the charge that nothing is moving on the ground. “When people say this, they do not visit the ground realities. Every single company is investing, from Mahindras, to Tatas, to Birlas, to Boeing and Airbus, to JCB, everybody is expanding right now. And you will see much more of that with demand growing,” he said.
Referring to the revival of private capital expenditure, Kant said he expects that in the next 6-7 months, the private sector will go in for big-time investments.
Kant said the foreign direct investment (FDI) landscape is encouraging. “But we need to keep pushing the envelope. FDI must keep growing and expanding. We need to keep pushing our marketing campaign for Make in India with greater vigour and energy. I think that a lot of investment will come into defence manufacturing, the ESDM (electronic system design and manufacturing) sector, and auto components. These are the sectors that will grow and expand. Also, a lot of investment must come into textiles and food processing.”
He pointed out that 55% of FDI in the last 16 months was in manufacturing.
On the Indian luxury industry, Kant said it had the potential to be big. “My view is that it is a $20 billion market right now. I envisage that by 2020 it will become a $50 billion market and by 2025 this could be as high as $180 billion.”
Luxury is about aspirations and, therefore, the luxury market is bound to expand in India. “We are at a tipping point where the luxury market will start to grow,” Kant added.