New Delhi: If India has to maintain a sustained GDP growth of 9-10 per cent per annum, it is crucial that the manufacturing sector grows steadily at 14–15 per cent per annum over the next three decades, noted a recent ASSOCHAM-EY joint study.
The joint report stated that while the Goods and Services Tax (GST) has to a large extent addressed prevailing regulatory issues, states across India must individually look into bureaucratic obstacles along with other obstructive regulations and policies on priority, based on their own manufacturing goals.
“Manufacturing sector in each Indian state and union territory (UT) has the potential to grow either directly — by setting up new industries — or by creating ancillary facilities, infrastructure and necessary forward-backward linkages to existing ones,” noted the ASSOCHAM-EY study titled “Sustaining India’s growth by accelerating manufacturing.”
It also noted that for states, the best way to grow is to focus on industries where a particular state has competitive edge over others in terms of raw material availability, demand, user industries, logistics and availability of skilled manpower, besides geographical location.
“Robust domestic demand, improved FDI (foreign direct investment), increase in exports, higher infrastructure spending and capital formation, supportive fiscal and monetary policies suggest India’s manufacturing sector is headed for a robust growth,” said the report.
Highlighting that optimism in India’s economy is largely stemming from launch of GST, apart from macro-economic and financial market stability, the study said that the government seems committed on providing conducive environment for growth of manufacturing.
Noting that India’s overall exports grew by 3.94 per cent to US$22,543.80 million in July 2017, the eleventh straight month of increase, and exports of engineering goods to China alone grew 123 per cent to US$629 million during April—June this fiscal, the study stated, “Equally heartening is the fact that manufacturing and trade are picking up in the country.”
It also said that government’s recent Banking Regulations Amendment Ordinance is a positive step to address problems of non-performing assets (NPAs) that have been clogging the Indian banking system.
The study further said that the government’s Make in India initiative will help elevate country’s manufacturing sector as it aims to increase share of manufacturing in the GDP (gross domestic product) to 25 per cent from current 16 per cent and to create 100 million new jobs by 2022.