How Mechanical Engineering improves the chances of employment through ‘Make in India’

'Make in India' is an ambitious initiative launched by the Union government to attract manufacturing enterprises from abroad as well as domestic origin to set up manufacturing units in India to enhance the share of manufacturing in our GDP from current 15 percent to 25 percent by 2025.

Manufacturing being one of the highest employment generating sectors has been of current focus through capacity up-gradation, skill development and industrial development. To achieve this target, the Centre has adopted a mix of policies for ease of doing business in India through good governance, decreasing red-tapism and scaling up infrastructural development to multiply the role of mechanical engineering.

'Make in India' is being led by the Department of Industrial Policy and Promotion, Ministry of commerce and Industry, Govt. of India. The initiative is expected to create 100 million new jobs in the manufacturing sector in India by 2022. This initiative will promote innovators and creators by upgrading infrastructure and using state-of-art technology to bring a vibrant intellectual property regime in the country.

India is the 4th largest base for new businesses in the world and home to over 3100 tech start-ups, most of them belonging to the MSME sector. The economy is set to increase its base to 11500 tech start-ups by 2022 as the industry would get a huge boost from 'Make in India'. Now in this financial crisis period, some policy reforms and new policies have been announced for boosting 'Make in India':

Major FDI policy reforms have been made in a number of sectors, such as Defence, Construction development, Pensions, Broadcasting, Pharmaceuticals and Civil Aviation.
Foreign investors can invest in India either on their own or as a joint venture, as may be required in a few sectors.
Barring a few reserved sectors 100% FDI is allowed through the automatic route in several sectors, without the need of government approval, namely Automobile, Food Processing, Construction etc.
In Union budget 2016-17, the government has emphasized the need to increase manufacturing as a % of GDP.
The Central and State governments have sector specific policies, incentives and subsidies to promote manufacturing.
Increased allocation in the budget to improve infrastructure, which is critical in facilitating future growth.

Major FDI policy reforms have been made in a number of sectors, such as Defence, Construction development, Pensions, Broadcasting, Pharmaceuticals and Civil Aviation.

Foreign investors can invest in India either on their own or as a joint venture, as may be required in a few sectors.

Barring a few reserved sectors 100% FDI is allowed through the automatic route in several sectors, without the need of government approval, namely Automobile, Food Processing, Construction etc.

In Union budget 2016-17, the government has emphasized the need to increase manufacturing as a % of GDP.

The Central and State governments have sector specific policies, incentives and subsidies to promote manufacturing.

Increased allocation in the budget to improve infrastructure, which is critical in facilitating future growth.

Manufacturing is an important activity to promote economic growth and development. Nations that export manufactured products tend to generate higher marginal GDP growth which supports higher incomes and marginal tax revenue. The field is an important source for engineering job opportunities.

Among developed countries, it is an important source of well-paying jobs for the middle class to facilitate greater social mobility for successive generations in the economy. Industrial development is a driver of structural change which is key in the process of economic development.

Research suggests that economic development requires structural change from low to high productivity activities and that the industrial sector is a key engine of growth in the development process. In many cases of high, rapid, and sustained economic growth in modern economies have been associated with industrialisation, particularly growth in manufacturing production.

Many economists agree that rapid manufacturing-led growth is what India needs and must seek to promote. Though the country has had rapid services-led growth for a decade or so, economists have tended to view this as not very stable. Historically, manufacturing has led the growth process at early stages of development not just in today’s developed countries of Europe and North America but also in late-developers of Asia such as Japan, South Korea and Taiwan, and most recently in the People’s Republic of China. And no country in the world has achieved high-income status without developing manufacturing to a point where it accounts for a high share (around 30 per cent) of GDP.

The economic logic of this historically observed pattern of development is also well understood. On the supply side, manufacturing production is characterised by increasing returns to scale and rapid productivity growth. Manufacturing can also stimulate non-manufacturing activities significantly. On the demand side, the income elasticity of demand is higher for manufactures than for non-manufactures at relatively low levels of per capita income. And manufactures are eminently tradable, so that external demand can play an important role in supporting manufacturing growth.

There are around 300,000 mechanical engineers in India, who have been serving in different industries. Role of mechanical engineering can never be neglected. If we talk about the percent-wise breakup of mechanical engineers employed in different industries, then the below table clarifies:

Transportation equipment manufacturing 12%
Scientific research and development services 7%
Machinery manufacturing 13%
Computer and electronic product manufacturing 7%
Architectural, engineering, and related services 22%

Transportation equipment manufacturing 12%

Scientific research and development services 7%

Machinery manufacturing 13%

Computer and electronic product manufacturing 7%

Architectural, engineering, and related services 22%

The Prebisch-Singer hypothesis normally refers to the claim that the relative price of primary commodities in terms of manufactures shows a downward trend. Prebisch and Singer based this conclusion on a visual inspection of the net barter terms of trade – the relative price of exports to imports – of the United Kingdom from 1876 to 1947. Moreover, he argued that technical progress in manufacturing tended to be raw-material saving.

Thus, there are powerful empirical and theoretical arguments in favour of industrialisation especially manufacturing as the main engine of growth in economic development. The arguments can be summarised as follows: There is an empirical correlation between the degree of industrialisation and per capita income in developing countries. Productivity is higher in the industrial sector than in the agricultural sector. The transfer of resources from agriculture to manufacturing provides a structural change bonus. Compared to agriculture, the manufacturing sector offers special opportunities for capital accumulation in developing countries. Capital accumulation can be more easily realised in spatially concentrated manufacturing than in spatially dispersed agriculture. This is one of the reasons why the emergence of manufacturing has been so important in growth and development. Capital intensity is high in mining, manufacturing, utilities and transport. It is much lower in agriculture and services. Capital accumulation is one of the aggregate sources of growth. Thus, an increasing share of manufacturing will contribute to aggregate growth. The manufacturing sector offers special opportunities for economies of scale, which are less available in agriculture or services.

The writer is Assistant Professor in the Mechanical Department. He joined the School of Engineering and Technology, Adamas University in the year 2018. He completed M.Tech. in Design and Production Engineering from NIT Durgapur, West Bengal. He has 8 years of experience in academics and 1.5 years of Research.