Rapid: A new mission to power up India's manufacturing engines

The Union government is working with the industry to create a new manufacturing mission that will focus on specific sectors, two officials with direct knowledge of the discussions said.

After multiple presentations over the last two months, officials from several ministries met industry executives last week to chart the mission's direction, the people cited above said. The new mission called Rapid—Research, Analysis, Programme Implementation and Data Intelligence—will work to increase local value addition in manufacturing, and incentivize research and development in the private sector.

Attention to key sectors

“Key sectors like automobile, electronics and electronic components, medical devices, drones, defence aerospace and space will receive special attention under the Rapid programme," said one of the two officials, requesting anonymity.

The new mission comes at a time when the share of manufacturing in the Indian economy remains at 17%, an improvement from 14.4% in FY21, but far from the country's target to increase it to 25% by 2025. India sees a massive shift from small agriculture-related work to manufacturing and exports as critical to increase wages and grow its economy.

Three-tiered goals

The mission will have three tiered goals—including two-year short-term objectives, five-year mid-term objectives, and a decadal strategy with elaborate targets. Specifics are currently under discussion, and more meetings are likely soon, the officials said.

A proposal for an R&D scheme under Rapid has “already received approvals from key government departments, and discussions are currently ongoing with various ministries that will be collaboratively involved in it," the second official added.

The Rapid programme is housed under India’s existing Steering Committee for Advanced Local value-add and Exports committee, or SCALE, which is chaired by Pawan Goenka, former chief executive of Mahindra & Mahindra Ltd, and current chairman of India’s nodal space body, Indian National Space Promotion and Authorization Centre (In-Space). According to the officials cited above, the Rapid programme, currently being discussed at various levels in the government, will aim to establish an innovation and design-led manufacturing ecosystem in the country.

To establish Rapid, a sector development and selection framework will be presented to various central ministries, along with suggestions to implement policy reforms and incentives for stakeholders. Following this, new focus sectors will be identified by SCALE, and a National Action Plan will be established to advance the chosen sectors.

No blanket boost

“It’s important to note that Rapid will not look to offer a blanket manufacturing incentive boost. The idea behind Rapid is to bring India’s private sector to invest in local R&D, for only then will there be progress on actual value addition in India’s manufacturing goals. This will be key for us to reach closer to our developed economy goals for 2047," a third official with direct knowledge of the plans said.

Emails sent to the ministries of electronics and IT, commerce and civil aviation remained unanswered till press time.

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The government believes that a massive scaling of manufacturing is necessary to grow the Indian economy to $5 trillion by FY28, and hit $2 trillion in exports in the next six to seven years.

Industry veterans expressed optimism about the new mission.

Prashant Kumar Singhal, partner and leader for tech, media and telecom (TMT) at consultancy firm EY Global said that the core objective of a programme such as Rapid would be to “create local intellectual property (IP) in tech, telecom and other sectors, that would then be licenced for the world."

Core IPs outside India

“The biggest challenge right now isn’t R&D—many companies are operating their own captive centres of engineering in India, which are engaged in research and innovation projects. However, most of the core IPs in both hardware and software reside outside of India. We thus need a programme that headquarters an engineering operation in India across the entire gamut of development. This will also need a framework that looks at taxation and multiple other factors in order to facilitate local development," Singhal further added.

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Ashok Chandak, president of industry body India Electronics and Semiconductor Association, said that a broader boost is “essential" for India to see substantial growth in local manufacturing. “On behalf of the industry, we have made multiple presentations to the Centre on how to boost domestic value addition in manufacturing. Some of the key areas will include increasing semiconductor ecosystem localization in order to add value of over 30% to industries such as automobiles. Smart metering in the electronics ecosystem is yet another key area that India can capitalize on, along with its recent push for the domestic space ecosystem. There are many areas," Chandak said.

Born in India

“Back in the 1990s, there were a number of brands in the electronics domain that were built and born out of India. Barring a few industries such as washing machines and air-conditioners, most Indian brands have not fared well. Investing in innovation and R&D will be essential to create brands that are not only of excellence in India, but also can be exported to key markets around the world," Chandak said.

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While the Economic Survey highlighted that the manufacturing GVA (gross value added) shrugged off a disappointing FY23 and grew by 9.9%in FY24, it also raised concerns on India’s manufacturing competitiveness – something that the country wants to achieve through Rapid.

“...the slow pace of investment in M&E and IP products will delay India’s quest to raise the manufacturing share of GDP, delay the improvement in India’s manufacturing competitiveness, and create only a smaller number of higher-quality formal jobs than otherwise," the Economic Survey noted.