India’s Competitiveness in Manufacturing

Multi-level support at policy, process, and people level encouraging global businesses to make India their manufacturing hub. Stable political regime, modern land reforms, abundant talent and natural resources ensure long-term success of a manufacturing setup.

In the immediate post-Second World War era, nearly all emerging independent countries chose the path of import substitution to achieve industrialisation. But by early to mid-1960s Singapore, Taiwan and South Korea had broken away from this consensus and switched to export-oriented strategies. They soon achieved growth rates of 8-10% for the following two to three decades. India chose to stay course, deepening import substitution yet further. Our imports as a proportion of the gross domestic product (GDP) dropped to just 4% in 1969-70 from the peak of 10% in 1957-58.

By mid-1960s we had banned consumer goods imports, which took away the pressure on domestic producers to supply high quality products. The “domestic availability” condition additionally denied our producers access to world class raw materials and machinery whenever equivalent domestic products, no matter how poor in quality, were available.

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