A report by Goldman Sachs reveals that India’s capital-intensive sub-sectors, particularly in electronics, chemicals, and machinery, have experienced significant growth in employment and exports over the last decade. This surge can be attributed to government initiatives aimed at enhancing production capabilities in these areas.
Key Findings of the Report
- Export Growth: The report highlights a substantial increase in exports from India’s capital-intensive industries, particularly to developed markets, reflecting a shift toward a more diverse and high-value export basket.
- Employment Trends: It notes that capital-intensive sectors have outpaced traditional labour-intensive industries regarding job creation. The report categorizes capital-intensive sectors as those with a capital income share of 0.65 or more, which includes chemicals and machinery. In contrast, labour-intensive sectors such as textiles and food production have seen slower employment growth.
- Job Distribution: Despite the growth in capital-intensive sectors, labour-intensive industries continue to dominate the overall job landscape in India.
Transformational Changes in Manufacturing
The report attributes the transformation of India’s manufacturing sector to government reforms that aim to boost competitiveness and sustainable economic growth. A cornerstone of these reforms is the introduction of Production-Linked Incentive (PLI) schemes, which started in 2020.
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- Overview of PLI Schemes: Designed to encourage domestic manufacturing, the PLI schemes promote technological advancement and attract foreign and domestic investments. With an overall incentive package of ₹1.97 lakh crore, the schemes cover 14 key sectors, including electronics, pharmaceuticals, and specialty steel.
- Investment and Manufacturing Output: As of June 2024, the PLI schemes have attracted investments of ₹1.32 lakh crore and significantly boosted manufacturing output to ₹10.9 lakh crore. These initiatives have also created approximately 8.5 lakh jobs, contributing positively to the socio-economic landscape.
- Export Contributions: The schemes have driven exports up by ₹4 lakh crore, showcasing India’s growing presence in the global market.
Conclusion
The findings from the Goldman Sachs report emphasize the dynamic growth of India’s capital-intensive manufacturing sector, driven by targeted government policies and significant investments. As India strives to achieve its goal of becoming a developed nation by 2047, these developments lay a strong foundation for future economic growth and job creation, positioning the country as a formidable player in the global manufacturing arena.
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