India Turns to Manufacturing to Boost Job Creation

Aug. 19, 2011
Goal is to boost share of manufacturing to 25% of the economy from current rate of 16%.

India aims to sharply crank up its manufacturing base to help provide jobs to 100 million young people who will join the workforce by 2025, Commerce Minister Anand Sharma said on Aug. 19.

The "National Manufacturing Policy," to be unveiled in a few weeks, plans to boost the share of manufacturing in the country's economy to 25% from a current 15% to 16%, Sharma said.

The proposals will include a policy aiming for creation of world-class manufacturing infrastructure by setting up special manufacturing zones.

India's Crisil Research, a private research house, said in a report earlier in the week the country needs to generate at least 55 million new jobs by 2015 to maintain current levels of employment in the country of 1.2 billion people.

Crisil noted this would be nearly twice the number of jobs added to the economy between 2005 and 2010, adding that job creation had not kept pace with growth in gross domestic product (GDP).

"GDP growth increased to 8.6% during 2005-10 from 6% during 2000-05, but the net addition to jobs remained almost flat at around 27 million during the two time periods," chief Crisil economist Dharmakirti Joshi said.

India's government has been seeking to promote industrial expansion and shift its economy away from service-sector-led growth to create jobs. Services including the flagship outsourcing sector account for 55% of India's GDP but provide only 25% of jobs while agriculture represents 15% of the economy but nearly 60% of employment.

Such factors as restrictive labor laws, poor supply chains, bureaucratic red-tape, dilapidated infrastructure and land-acquisition problems have held back growth in the manufacturing sector. The country also suffers from a major vocational skills shortage.

Copyright Agence France-Presse, 2011

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