Mentor’s Comment:  Global manufacturing and trade are quickly changing, focusing more on products that use advanced technology and innovation. This shift is being powered by strong research and development (R&D), modern technology, skilled workers, and complex supply chains. Also, the high tariffs recently introduced by the United States are expected to further change how the manufacturing industry works.

Today’s editorial talks about how global manufacturing and trade are changing because of the use of advanced technology and innovation. This topic is useful for GS Paper II (International Relations and Policy Making) and GS Paper III (Manufacturing Sector).

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Let’s learn!

Why in the News?

As global changes are set to reshape the manufacturing industry, it is important to focus on technical education, core engineering skills, and new ideas (innovation).

What challenges hinder India’s efforts to match global manufacturing standards?

• Low Manufacturing Productivity: India’s manufacturing sector is far less efficient compared to global benchmarks. Eg: In 2023, India’s productivity stood at $8.9K, while the global average was $32K, and the U.S. reached $159K.
• Limited R&D Investment: Innovation-driven manufacturing requires substantial R&D support, which remains inadequate in India. Eg: India spends just 0.65% of its GDP on R&D, while China spends 2.4% and South Korea 4.5%.
• Skills Mismatch and Weak Technical Education: The gap between academic training and industrial skill requirements slows the shift to high-tech manufacturing. Eg: Most engineering institutions focus on theory, grading, and rote learning, with less than 50% emphasis on practical training.
• Underdeveloped Industrial Infrastructure: India lacks world-class manufacturing ecosystems with integrated supply chains and R&D support. Eg: Unlike China’s fully equipped industrial parks, many Indian parks lack plug-and-play facilities, design labs, and testing centers.
• Low Per Capita Manufacturing Output: India’s contribution to manufacturing per individual is among the lowest in major economies. Eg: In 2023, India’s per capita value added was $0.32K, while the global average was $2K.

Why must India reform technical education for innovation-led manufacturing?

• Lack of Practical Skill Development: Engineering education in India emphasizes theoretical knowledge over hands-on experience. Eg: Less than 50% of curriculum time is dedicated to lab work or industry projects, reducing readiness for real-world manufacturing tasks.
• Weak Focus on Creativity and Problem-Solving: Entrance exams and academic culture focus on rote learning rather than fostering innovation. Eg: Students are trained to solve predefined problems, but lack the ability to tackle open-ended, real-world challenges in engineering and design.
• Outdated Laboratory and Workshop Infrastructure: Many technical institutions lack modern facilities to train students in advanced manufacturing techniques. Eg: Few colleges have tool rooms, CNC machines, or 3D printing labs, which are standard in global manufacturing training programs.
• Disconnect Between Industry Needs and Curriculum: The current syllabus often fails to align with rapidly evolving industrial technologies and skills. Eg: Courses in AI integration, robotics, and IoT in manufacturing are still missing or underdeveloped in most core engineering streams.
• Limited Industry-Academia Collaboration: Technical education lacks structured partnerships with manufacturing companies for internships, research, and product development. Eg: Unlike Germany’s dual education model, Indian students rarely work on live industry problems during their course of study.

How do state-specific manufacturing parks boost industrial ecosystems?

• Accelerate Industrial Setup with Plug-and-Play Infrastructure: Ready-to-use facilities reduce time and cost for new manufacturing units. Eg: Tamil Nadu’s SIPCOT parks offer land, power, and water connections upfront, attracting auto and electronics manufacturers quickly.
• Encourage Localized Skill Development and Employment: Parks drive local job creation and training programs aligned with industry needs. Eg: Gujarat’s Dholera SIR includes skill centers to train youth for electronics, EV, and robotics industries.
• Foster Innovation and Prototype Development: Dedicated facilities help companies develop, test, and refine products. Eg: Karnataka’s Aerospace SEZ near Bengaluru hosts R&D labs, testing units, and design centers supporting aerospace startups.
• Build Industry Clusters and Supply Chains: Concentration of allied industries creates efficient ecosystems with shared logistics and services. Eg: Andhra Pradesh’s Sri City SEZ houses over 180 companies across sectors like consumer goods and automotive, fostering collaboration.
• Attract Investment Through Tailored State Policies: State-specific incentives aligned with local strengths draw both domestic and foreign investors. Eg: Maharashtra’s Aurangabad Industrial City (AURIC) offers tax benefits and sector-specific infrastructure to attract high-tech industries.

Where does India lag in per capita manufacturing value and productivity?

• Low Per Capita Manufacturing Value: India’s per capita manufacturing value is significantly lower than global averages. Eg: In 2023, India’s per capita value added was $0.32K, compared to the global average of $2K and China’s $2.5K.
• Lower Manufacturing Productivity: India’s productivity is far behind that of developed economies, limiting its competitiveness. Eg: India’s productivity in manufacturing stood at $8.9K in 2023, while the U.S. reached $159K and Germany at $103K.
• Limited Technological Advancement and R&D: India lags in integrating advanced technologies and innovation into its manufacturing processes. Eg: The U.S. and Germany lead with high productivity linked to R&D investment, while India spends just 0.65% of GDP on R&D.

Way forward: 

• Revamp Technical Education and Skilling: Align curricula with industry 4.0 needs, strengthen practical training, and build strong industry-academia partnerships to boost innovation-led manufacturing.
• Strengthen Industrial Ecosystems: Expand world-class infrastructure, ensure faster regulatory clearances, and scale up R&D investment to create globally competitive manufacturing hubs.

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