Nov 10, 2020
A McKinsey report has evaluated that around eleven manufacturing value chains in India have robust potential to operate in international markets, thereby enhancing India’s influence and providing long-term employment and skill pathways to several Indians.
If the manufacturing companies endure significant improvements and balancing actions, it is estimated that these 11 manufacturing value chains can generate about $320 billion more in gross value added within the next seven years.
About 80 percent of that Gross Value Added (GVA) potential resides in six value chains which are agriculture and food processing; chemical products and petrochemicals; electronics and semiconductors; capital goods and machine tools; iron ore and steel; and automotive components and vehicles.
According to the report, these 11 value chains can nurture India’s growth as they are well-positioned to capitalize on India’s advantages in raw materials, manufacturing skills, and entrepreneurship. It further said that they can also tap into four market opportunities which are export growth, import localization, domestic demand, and contract manufacturing. The new industrial policy has also accredited to the potential these value chains hold.
However, the report stressed that the manufacturing sector needs to focus to become India’s economic growth engine. India’s manufacturing growth has been slower than expected in the past and is believed to be a country. From FY06 to FY12, India’s manufacturing-sector GDP grew by nearly 9.5 percent on-year. But, over the next six years, the growth fell to 7.4 percent. This year, manufacturing generated 17.4 percent of India’s GDP, which is a little more than the 15.3 percent it had contributed in 2000, showed the McKinsey report.
In comparison, Vietnam’s manufacturing sector more than doubled its share of GDP during the same time.
The report has stressed that THE manufacturing sector has the potential to generate jobs on a high-scale, the share of employment increased by just 1 percentage point in the last 13 years, compared with a 5 percentage point increase for the services sector.
In a previous report, the firm mentioned that India needs rapid GDP growth to create at least 9 crore non-farm jobs by 2030.