Finance Minister Nirmala Sitharaman emphasised that India must bolster its manufacturing sector, which will elevate its standing in the global value chain and help it achieve self-reliance, during her address at the CII Annual Business Summit on Friday. She further highlighted the importance of advancing sophistication in product manufacturing alongside robust policy support.
"I also want to underline much against the advice given by some economists that India should no longer be looking at manufacturing or ramping up manufacturing. I like to highlight the fact that manufacturing must increase. India must also increase with the help of policies its (manufacturing) share in the global value chain," Sitharaman said.
Despite opinions from economists like former RBI Governor Raghuram Rajan advocating for a focus on the services sector over manufacturing, the Finance Minister contends that expanding manufacturing is crucial for India's self-reliance. She remains optimistic about India's potential to enhance its manufacturing capacity, especially considering the global interest in diversifying supply chains away from China after COVID-19.
Citing a May report from the Capgemini Research Institute, she highlighted that India ranks highest on the list of investment destinations for senior executives in Europe and the US. These executives aim to lessen their reliance on China by relocating some of their manufacturing capacity to emerging markets.
Sitharaman highlighted the transformative impact of the PLI scheme on the mobile and electronics sectors, noting a significant shift in import dependence. She emphasised that from 78 per cent import reliance in 2014, India has made substantial progress, with 99 per cent of all mobiles sold in the country now being domestically manufactured.
Furthermore, she pointed out a remarkable increase in value addition in electronics and smartphone manufacturing, surging past 20 per cent from negligible levels in 2014-15. As an example of India's growing manufacturing prowess, she cited the country's emergence as Apple's second-largest manufacturing hub for iPhones outside of China, with exports reaching $1.1 billion last year.
Highlighting the significance of India's service sector, Sitharaman noted that the country hosts over 50 per cent of the world's GCCs, positioning itself as the most favoured destination and generating substantial opportunities both domestically and globally. She mentioned that India's current count of GCCs has surpassed 1,580, reflecting the sector's robust growth and pivotal role in the country's economic landscape.
She underscored that the, "fundamental basis for the consistent and steady growth and high growth is the policy stability, absence of flip flops, corruption free decision making, and making sure that the facilitation both in legislative and also the legal frameworks are all simultaneously going on." Prime Minister Narendra Modi-led government looks at the private sector as a partner in developing India, she said.
Sitharaman also highlighted the government's perspective on the private sector, viewing it as a crucial partner in India's development journey under the leadership of Prime Minister Narendra Modi.
"We see a very big role for the private sector, and we would like to partner with them in the development with the government acting as a facilitator and an enabler," she said.