Manufacturing and Five Trillion US$

India, as the fifth-largest manufacturer globally, aims to increase the manufacturing sector's contribution to 25% of GDP by 2020-2022. Despite registering a CAGR of around 7.7% from 2012-13 to 2017-18, certain challenges and constraints hinder the full potential of the manufacturing sector:

Government Initiatives:

1. Make in India: Aims to boost manufacturing's GDP contribution.
2. National Investment and Manufacturing Zones (NIMZs): Intended to create developed areas for world-class manufacturing activities.
3. Start-up India: Encourages entrepreneurship and innovation.
4. Infrastructure Projects: Industrial corridors and other infrastructure projects to enhance manufacturing.

Challenges and Constraints:

1. Land Acquisition and Labour Laws: Restrictive land acquisition laws and rigid labour laws deter investment.
2. Infrastructure: Inadequate power, roads, and other infrastructure need strengthening.
3. Skill Deficit: The workforce needs to be equipped with the skills required for modern manufacturing.
4. Regulatory Uncertainty: Past regulatory risks and policy uncertainties have impacted investor confidence.
5. Technology Adoption: SMEs and large-scale manufacturing face challenges in adopting Industry 4.0 technologies.
6. Export-Driven Growth: Lack of export-driven industrial growth is a constraint for sustained, high-value manufacturing.
7. Ease of Doing Business: Despite improvements, challenges persist in construction permits, enforcing contracts, paying taxes, starting a business, and trading across borders.

Low Manufacturing GDP Share:

1. Relative Share: Manufacturing's share in India's GDP is lower compared to low- and middle-income countries.
2. Growth Challenges: The growth has been highest in capital-intensive sectors due to challenges in capitalizing on labour and skill cost advantages.
3. Land and Labor Laws: Complex land and labour laws have impeded large-scale labour-intensive manufacturing.

Remedial Measures:

1. Addressing Land and Labor Laws: Reforms in land and labour laws are essential to promote labour-intensive manufacturing.
2. Skill Development: Focus on skill development to meet the evolving needs of the manufacturing sector.
3. Export Promotion: Encourage and facilitate export-driven industrial growth for sustained manufacturing expansion.
4. Technology Adoption Support: Provide support and incentives for SMEs to adopt Industry 4.0 technologies.
5. Infrastructure Enhancement: Continue investments in infrastructure to create an enabling environment for manufacturing growth.

Conclusion: To propel Indian manufacturing toward contributing significantly to a five trillion-dollar economy, comprehensive reforms, infrastructure development, and a favourable business environment are imperative. Addressing constraints and fostering a conducive ecosystem will unlock the full potential of the manufacturing sector.