Budget 2016: Accelerate infra facilities to make India a manufacturing hub

By Arvinder Walia

With a positive industry outlook, bullish expectations accompanied with high GDP, India has been touted as a ‘bright spot in the otherwise gloomy global scenario’ (as  said by President Pranab Mukherjee). Added to this, a 12-point jump in World Bank’s Ease of Doing Business ranking from 142 to 130 can prove to be a harbinger of the manufacturing success story that India is trying to create.

start-up-ibnlive_380Against the backdrop of initiatives like Make in India, Start Up India, and Digital India to build a start-up friendly ecosystem, the government is expected to roll-out concrete next steps in budget 2016 to leverage the opportunities that can help India achieve the 25 percent growth target set for the manufacturing sector of the country.

Despite the rosy picture, demand and supply-side constraints restrict Indian manufacturing firms from being competitive with their global compatriots. This is not a recent phenomenon. Registering a steady growth in 2015-16 fiscal, corporate India expects some respite in terms of fast-tracking the reform process.

Here are a few suggestions for Budget 2016:

A robust infrastructure base: Given a downtime in the manufacturing supplier base of the world (China) and low input (crude oil) prices, it is an excellent time to accelerate the pace of creating infrastructure facilities and become a manufacturing hub. This will also help to further streamline the value chain across the entire ecosystem, thus providing the necessary impetus to the sector.

Fiscal push to industry-academia connect: The right impetus to the industry-academia connect can probably be provided by industrial tie-ups with research institutes in  universities.

Significant thrust on MUDRA: The MUDRA (Micro Units Development and Refinance Agency) scheme announced in the 2015 budget to help Micro Small and Medium Enterprises (MSMEs) in their working capital requirements and easy flow of credit needs a significant push in the current budget to effectively help the firms.

Demand-side measures: With a growing middle class, the domestic population can provide a ready market for the sector. Hence the demand side measures such as public investment in health and education sector, should not be overlooked.

However, with the implementation of the Seventh Pay Commission putting immense pressure on the state exchequer, it will be interesting to see how the government manages to allocate the money to push the demand and supply dynamics of the sector.

(The writer is an analyst with Munjal Institute for Global Manufacturing at Indian School of Business. Views are personal)


Updated Date: Feb 27, 2016 13:51 PM

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