Development of human capital

Skilled and cost-effective manpower is an essential component of success in the manufacturing industry. Shortage of the same can prevent India from gaining a competitive edge in global markets. Measures to build a strong pool of workers equipped to meet the diverse needs of the upcoming sectors and new technologies in manufacturing must be taken. Development of human capital is a dynamic process and can have a gestation period of up to a generation.

Forecasting employment needs:

The first step must be to forecast the road that manufacturing will take. Which sectors would it expand into and which technologies would be important in the future. The question to ask would be how India can leverage its strengths and resources to achieve a competitive edge in these areas. Moreover, what weaknesses need to be dealt with and what kind of skills will be required. An estimate of the number of jobs to be created and the skill requirement for each job profile can help direct the course of a human development strategy.

Some indicators of the future of manufacturing needs are available. The manufacturing sector is estimated to have a US$ 180-billion investment opportunity over the next five years, according to the Investment Commission of India.1 Meanwhile, the Indian manufacturing sector is estimated to command a market capitalization of $520 billion by 2014-15, as against $272 billion as of Sept. 30, 2007, said a study on the sector by the Confederation of Indian Industry and the Boston Consulting Group.3 Outsourcing of manufacturing jobs to India would result in the creation of 30 million jobs by 2015.4 Sectors that will experience tremendous growth include machine tools, automobile components, pharmaceuticals and the textile sector, which alone is expected to create between nine and 10 million new jobs over the next four years.5

National Skill Development Mission:

The Planning Commission set up a National Skill Development Mission (NSDM) in 2007 headed by the Prime Minister Dr. Manmohan Singh. The NSDM proposes to consist of four sub-missions —industrial training, polytechnics, vocationalisation of secondary education, and another for the unorganized sector— each catering to different streams of workforce entrants to train more than 10 million people every year.3 The government has projected that 70 million jobs will be created during the 11th Plan (2007-12) and proposes to spend Rs31,000 crore during that period.6

To effectively channelize resources, the future of the manufacturing industry must be looked into. The right kind of training must be imparted to match employment needs of the industry and the availability of skilled workforce. This would require extensive market research, study of trends in the manufacturing sector and consultation with industry experts.

Development of Labor Intensive industries:

Manufacturing industry in India currently employs only 11% of the workforce.7 The world over, manufacturing forms a major employer in most economies. In India however, it has lagged behind. In fact the share of manufacturing in India has been more or less stagnant or has even decreased in the last few decades.

India being a labor rich economy must look to the manufacturing sector for its employment needs especially in light of the jobless growth in the growth driver ‘services sector’. Moreover, as the displaced workers from agriculture and related activities move to urban areas, the need for creating employment would only increase.

Creating Skill base:

Industrial training programs, introduction of vocational training and other courses at Polytechnics and development of a large number of educational and training institutions should be prioritized. Moreover, to further develop a competitive edge in manufacture of cheap consumer goods such as alarm clocks, decorative items, etc – currently the niche of Chinese manufacturing – would require the availability of a large amount of cheap labor with basic school education and some level of skills. A push towards expanding literacy at all levels along with basic vocational training would be of immense help. Public-private initiatives in this direction would help speed up the process.

References:

1. http://www.ibef.org/economy/manufacturing.aspx

2. http://www.automationworld.com/webonly-3807

3. http://www.allbusiness.com/labor-employment/labor-sector-performance/6257213-1.html

4. http://www.allbusiness.com/manufacturing/computer-electronic-product-manufacturing/1182849-1.html

5. http://www.indianexpress.com/news/pm-unveils-manpower-training-mission/210653/

6. http://www.livemint.com/2008/02/04000156/Budget-821709-Rs31000-cr.html

7. http://money.cnn.com/2007/10/18/news/international/India_manufacturing.fortune/index.htm