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MBA E4b - 360-Prateek Thakur - GCSA (02-04-20)

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Prateek Thakur MBA E4B

36080003918

GCSA ASSIGNMENT
Q- Elaborate in detail the contribution of core industries in India’s economic growth
and competitiveness. Which industries is contributing more towards enhancing India's
competitiveness and how?

India has a population of 1.3 billion of which youth population (15-34 years) is estimated at
450 million as of 2016 and is expected to be 464 million by the end of 2021. The rising youth
population is likely to increase India’s overall food consumption. Some of the other factors
such as rising income levels and wealth, growing middle class, nuclear families and working
couples and increased urbanisation will result in India being a fast-emerging hub for
processed foods. India’s exports of processed food products have increased steadily from
US$ 1,352 million during 2006 to US$ 3,981 million in 2016.The food industry, which was
valued at US$ 39.71 billion as of 2013-14, was expected to grow at a CAGR of 11% to reach
US$ 65.4 billion by 2018. Indian food service industry is expected to reach US$ 78 billion by
2018. India’s organic food market is expected to increase three times by 2020, as compared
to 2017. In the year 2012-13, there were 1.6 million people engaged in the registered food
processing sector. This number is expected to increase to 9 million by the year 2024.
However, for improving the efficiency of the entire value chain, there is a need for substantial
investment in infrastructure development. Some of the investment needs and opportunities for
investors are as follows: Production
• Production of high-yielding seeds
• Production of high-quality planting material, including use of tissue culture methods of
micro-propagation
• Nurseries including hardening nurseries
• Organic farming
• Production of microbial cultures and vermin-compost, and
• Floriculture Processing
• Fruit and vegetable processing, including dehydration, canning, aseptic packaging,
processing of underutilized fruits, and processing for other products like grape raisin, osmo
air-dried fruits, fruit toffee, bleached dry ginger and spices’ powders
• Processing of maize for starch and feed through improved mini/small mills and dry milling
plants
• Processing of millets for various purposes, including malt from finger millets and RTE
(ready-to-eat) products
• Processing of sugarcane for various jaggery products like spiced jaggery, powdered
jaggery, and jaggery cubes
• Processing of herbal and medicinal plants
• Processing of dairy products
• Processing for poultry products, including poultry dressing, and
• Processing of livestock products and livestock wastes Infrastructure
• Cold chain infrastructure, including cold stores • Storage and warehousing
• Specialised transport services
• Packaging infrastructure, including pack houses, and
• Agri-clinics and service centres Trade and Others
• Procurement through contract arrangements, including contract farming
• Retailing
• Supply chain management.
• Capacity building, including human resource development in agribusiness. Micro-irrigation
is considered to be one of the most efficient solutions to overcome the water management
Prateek Thakur MBA E4B
36080003918

challenges faced by the agriculture sector. With the government focus on providing rural
electrification, the country is expected to witness a growth in the level of mechanisation in
agriculture production. Mechanised agriculture will reduce the operational cost and time by
improving post-production agricultural activities and promoting conservation of water.
Government initiatives in several areas like promotion of farmer producer companies, organic
farming, and better soil management (through soil health cards) and better farmer-market
linkages (through e-NAM) are expected to further propel the sector. Mega Food Park Scheme
will create centralised infrastructure to take care of processing activities which require cutting
edge technologies and testing facilities, besides the basic infrastructure for water supply,
power, environmental protection systems, communication etc. The Indian food processing
industry will serve as a vital link between the agriculture and the manufacturing sectors of the
economy which would further enhance the production, consumption and export in the food
market. The food processing industry is expected to grow at a CAGR of 13% during 2015-
2020.
With over 7% economic growths annually over the last three years, India is the fastest
growing major economy. This has been enabled by various measures taken by the
government in the last few months. Make in India has resulted in one of the strongest country
brands ever thereby boosting the country’s image and investor confidence. Record FDI equity
inflow during April 2014 to December 2016 at US$ 52.6 billion has strengthened our external
account position. The manufacturing gross value added has also seen a healthy growth of
10.6% and 7.7% in 2015-16 and 2016-17 respectively. Manufacturing has to be the future for
our economy as we look at ways to absorb a large section of our young and rural population
for employment. The sector has the potential to contribute more to the GDP of our country
from the current share of over 17%. Recent reforms in various areas and measures to address
ease of doing business concerns have improved the investment climate. The government
needs to continue the reform push and also consolidate on what has been done so far. Private
sector is supporting and responding to the government’s efforts to make India’s
manufacturing sector more competitive. The efforts are to adopt new technologies that would
shape the future of manufacturing.
The growth prospects for India look optimistic and India is gearing up to become a global
manufacturing powerhouse as the manufacturing sector forms the backbone of the Indian
economy. The manufacturing sector supplies quality products to consumers across the supply
chain, thereby fuelling the growth and productivity of other sectors in the process. As per the
RBI, the sector contributed gross value addition (GVA) of Rs 16,670 billion and Rs 18,219
billion in 2014-15 and 2015-16, respectively. Buoyed by the Make in India programme, India
is expected to become the third-largest economy of the world by 2030, thereby providing a
huge opportunity for the Indian manufacturing sector to grow. The manufacturing sector shall
definitely play a crucial role in driving incremental growth along with various
reforms/polices like that of GST implementation and IT enablement as an assurance for a
favourable economic environment. The sector has evolved through several stages which
started with industrialisation in 1950s, followed by the license raj from 1965-80. Later it
witnessed economic liberalisation during the 1990s. Now, the Indian manufacturing sector is
growing towards the vision of becoming competitive on a global scale. The industry is
expected to be further fed by rising demand coming from the domestic market. In addition,
MNCs are now able to diversify their production capabilities to include low cost
manufacturing, thereby driving sustainable growth for the sector. The manufacturing sector is
expected to reach US$ 1 trillion by 2025 and will contribute about 25% to India’s GDP.
Under the Make in India programme, indigenous manufacturing is expected to increase by
12-14% per annum over the medium term. As per the World Bank, manufacturing
contributed about 16% to the country’s GDP in 2016. This is on the higher side when
Prateek Thakur MBA E4B
36080003918

compared with the global average of about 15% in 2015. Manufacturing is expected to create
100 million additional jobs by 2025, considering that the country has become one of the most
attractive destinations for investments in this sector. Many of the leading companies
including those of mobile phones and automobile brands have established or are looking to
set up their manufacturing base in the country, which will have a positive impact on job
creation.

The manufacturing sector historically has been contributing about 16% to the GDP of the country.
Going ahead, this is expected to increase to about 25% by 2025 to sustain the existing pace of growth.
With the government now providing significant incentives, tax breaks and favourable policy under the
National Manufacturing Policy and subsequently the Make in India programme, the investment and
initiatives from the private firms, both foreign and domestic, are expected to increase. With
development of NIMZ, country specific zones, SEZs, industrial clusters and special economic
corridors for rapid transport of goods and introduction of GST, the country provides a robust
development infrastructure for the manufacturing sector. The impact of the ‘Make in India’ initiative
is already visible in terms of FDI inflows into the country. India retained the position of the number 1
destination for greenfield FDI for the second consecutive year in 2016. FDI inflows by capital
investment for the year 2016 stood at US$ 62.3 billion across 809 projects. During April-September,
2017-18, FDI reached US$ 25.35 billion, an increase of 17% year-on-year (DIPP).Special attention is
being given to the development of the 25 sectors selected under the Make in India programme. For
example, defence manufacturing has recently seen investments from both foreign as well as domestic
investors. Significant developments in other sectors such as pharmaceuticals, textiles, food
processing, chemicals etc. are expected to boost the manufacturing sector as a whole.This is expected
to create 100 million additional jobs by 2022. As per media articles, placement firms are bullish on
the employment that the Make in India programme would generate. As per estimates, India is
expected to employ 2.9 million flexi staff by 2018, thereby becoming the third largest country to
employ contract employees globally. This would add 8 to 13% to the current pool of jobs in the
country.

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