With almost a million people joining the workforce every month, a vibrant manufacturing sector is needed to gainfully employ the youth
The Narendra Modi government has an ambitious plan: They want to raise the contribution from the manufacturing sector to 25 per cent of the GDP from the current 15 per cent. And to enable the grand vision, Modi towards the fag end of September 2014 launched the ‘Make In India’ campaign, trying to woo industrialists across the country and from abroad.
The announcement was timed perfectly. The world’s eyes were on India as it successfully put ‘Mangalyaan’ satellite into the orbit of the planet Mars and India was praised for its ability to make a satellite cheaper than a Hollywood movie.
“Whenever I met [business] people for the last few years they would tell me - we want to shift out... It pained me that people of nation are forced to leave. We do not want any industrialist being forced to leave India,” Modi said. Stressing the need for more labour reforms and skill development, Modi launched six new labour schemes on October 16. At the event, the Prime Minister unveiled half a dozen schemes including a unified web portal where employers can submit a single compliance report for 16 labour laws, a new labour inspection scheme, Unique Account Number facility for EPFO members, a new skill development and apprenticeship scheme and a revamped Rashtriya Swasthya Bima Yojana.
The industry has reacted positively to Modi’s campaign. They are of the view that it would increase competitiveness in India. Arun Kakatkar, Vice President of Human Resources India and Asia Pacific, TE Connectivity, said, “The recent thrust on manufacturing is much-needed and if this translates into actions it will be help the country and the industry. Only about an eighth of India’s workforce is in the organized manufacturing sector. With almost a million people joining the workforce every month, and a large young workforce, a vibrant manufacturing sector is needed to gainfully employ the youth. ‘Make in India’ Campaign is a positive step in this direction.”
“Make in India will instill a sense of pride in the products being manufactured in India. There will be a huge transition from “me too nation” to a “country to watch”. There will be no missed opportunity, India will lead the way,” says Pankaj Bansal, CEO and Co-Founder, PeopleStrong HR Services Pvt. Ltd.
Saying that the ‘Make in India’ initiative has come at the right time to provide a shot in the arm for India Inc, Moorthy K Uppaluri, CEO, Randstad India says, “With focus on manufacturing, which is a core industry sector for job creation, the government has set the juggernaut rolling in the right direction. The focus on manufacturing will drive the development of other key sectors like infrastructure and energy as they will serve as growth enablers. This cascade effect across sectors will immensely benefit the youth entering the workforce.”
So will it lead to creation of more jobs? “If everything goes as per the plan, we expect about 9 crore jobs to be created in the next decade,” says Bansal. However, regulated sectors in manufacturing will have slow growth compared to others as the judiciary and the government are yet to be aligned. Sectors like auto, steel will continue to lead the growth story, Bansal added. There will be an increase in engineering jobs due to greenfield projects, along with automotive industry. As innovation and process efficiency will hold the key for development, emerging fields like robotics will also see an increase in the number of jobs created.
Moorthy said that he expects the impact of the initiatives and schemes to be felt over a period of time. “If the intent is translated efficiently into execution, we can expect the job market to grow aggressively over the next five years,” he added.
There is a need for the government to focus on skilling, especially vocational skills. “This scope of growth clearly highlights the need for matchmaking the skills needed for the jobs with the skills available with the talent. The hiring process would need to have smart methods of identifying the best match for jobs. If the desired level of growth is to be achieved, employers should take steps to bring in these components to their recruitment process,” PeopleStrong’s Bansal said.
There is a huge potential for the manufacturing sector in India. The government itself has started off on the right foot by introducing changes to centuries-old legislations such as the Industrial Disputes Act, Contract Labour Act and the Factories Act. According to a McKinsey analysis1, rising demand in India, together with the multinationals’ desire to diversify their production to include low-cost plants in countries other than China, could together help India’s manufacturing sector to grow six-fold by 2025, to $1 trillion, while creating up to 90 million domestic jobs.
But, the country is a long way off in getting the necessary infrastructure in place. “The cost of doing business has escalated because of poor infrastructure. Secondly, we need a regulatory framework, which is designed to facilitate business and this includes tax laws as well as labor laws. We need predictable and stable laws & regulations. Thirdly, we need a steady supply of talent at all levels. Our education system is not geared to supply talent with relevant skills and low employability is still is an issue among graduates. The fourth aspect is we need a different culture to improve our standing as a manufacturing hub. We need to encourage a manufacturing culture where customer comes first. That needs change and that change will take decades, not years. But the government is shaping a better culture which will help the economy achieve desired growth,” said Kakatkar of TE Connectivity. The approach from the government has been inclusive so far and the intent to debate the labour laws and reforms are commendable as it will be a crucial enabler to drive this campaign, Moorthy said. Citing a word of caution, he said. “The government must also take steps to enable clear regulations and self-declaratory compliance in addition to a uniform labour code. Also, there are serious skill gaps that need to be addressed to realize the complete benefits of this initiative.”
Agreeing with “If the government is able to ease the administrative or legal restrictions being posed by our legal, judicial or government framework. It will be easier to win the confidence of corporates to establish operations in India and hence will contribute in making “Make in India” campaign a huge success.”
Arun Kakatkar of TE Connectivity said, “We can expect to see growth. Thirty years ago, it was aspirational for a fresh engineer to join a manufacturing or engineering start-up. These days it is not. We have a huge demand of goods in India, but most of these are unfortunately imported. I believe if the government perseveres with the reforms and changes, we might have manufacturing back in fashion. I can see the tide turning. We will need to work hard on the image and brand of goods manufactured here. It will take years of sustained hard work before we can compete in the global landscape.”
Source: BBC News, Financial Express, NDTV