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Economic Survey 2020 stresses on Assembled-in-India

Goutam Das     January 31, 2020

Make In India hasn't really taken off, except in a few sectors such as mobile phones and automobiles. The programme, however, forms an important pillar when it comes to the government's strategy around jobs creation. The Economic Survey 2019-2020 reinforces this view and offers guidelines on fine tuning the country's manufacturing strategy. To create employment, India must focus more on assembly, particularly of 'Network Products' or where production occurs across Global Value Chains operated by multi-national corporations.  

The Survey states that by integrating "Assemble in India for the world" into Make in India, India can generate 4 crores well-paid jobs by 2025 and 8 crores by 2030.

"The experience of countries that have achieved rapid and sustained export growth suggests that India can reap rich dividends by adopting policies aimed at strengthening its involvement in the export market for network products. Given our vast manpower with relatively low skill, India's current strength lies primarily in assembly of network products. While the short to medium term objective is the large scale expansion of assembly activities by making use of imported parts and components, giving a boost to domestic production of parts and components should be the long-term objective. Assembly is highly labour intensive, which can provide jobs for the masses, while domestic production of parts and components can create high skill jobs," the Survey states.  

The Survey, nevertheless, does not address the issue of automation and the resulting impact on jobs. Indian factories, particularly green field factories, are starting to adopt Industry 4.0 architecture where exponential technologies such as smart sensors, automation devices, new robots, Internet of Things (IoT), cloud computing, location detection technologies, human-machine interfaces, augmented realty, 3D printing, artificial intelligence (AI) big data analytics and mobile devices, among others play a role. The nature of jobs in these factories are poised to change - adapting to these technologies imply higher skilled jobs, not low-skilled labour. Smart factories also employ significantly low numbers of workers versus conventional ones.   

Indian manufacturers are interested in smart factories and Industry 4.0 because the rest of the world is doing it and India must keep pace to be competitive. India has a productivity gap to bridge.

Interestingly, the Economic Survey does talk of Artificial Intelligence but for enhancing the quality of supervision.

"SEC and FTC extensively use Artificial Intelligence and Machine Learning to track and flag market malpractices while none of our regulators do so. As a result of the limited resources at the regulators' disposal, supervision of the market economy suffers badly thereby encouraging market malpractices. The economy cannot achieve the ambitious $5 trillion mark as long as it is plagued by market malpractices and suboptimal supervision. Therefore, significant enhancement in the quantity and quality of manpower in our regulators (CCI, RBI, SEBI, IBBI) together with significant investments in technology and analytics needs to be made. This would enhance the effectiveness of the hand of trust in supporting the invisible hand for greater wealth creation," the Survey states in a chapter 1, on Wealth Creation. 

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