How can India build a globally competitive manufacturing sector?

On 8 November, I have the privilege of facilitating the India: Workshop of the World? session during the World Economic Forum on India 2012. It will bring together leaders in industry and government to explore the question, “With a target to create 100 million jobs by 2025, how can India build a globally competitive manufacturing sector?” To prepare, I have been reading about the talent crisis facing the global manufacturing industry, particularly in India. Interestingly, despite the high unemployment rate, an estimated 10 million manufacturing jobs worldwide cannot be filled due to a growing skills gap. And in India, even with a population of 1.2 billion, the struggle to find the right talent to help fuel industry growth remains.

The skill set needed to fill these gaps includes expertise in research and development, coupled with knowledge in engineering, software and technology. To address this, India needs to balance quantity of education with quality. With the greatest number of higher-education institutions in the world – nearly 26,500 – the Organization for Economic Co-operation and Development (OECD) projects India to produce 24 million graduates by the end of this decade, which, with the exception of China, is more than any other country.

Improving quality will be more difficult. A study by Aspiring Minds, a Gurgaon-based company, concluded that India produces more than 500,000 engineering graduates a year, but barely 3% of an assessed 55,000 graduates were viewed as ready to be employed without extra training. An earlier survey by the Confederation of Indian Industries (CII) found that only 39.5% of all graduates in the country were viewed as employable.

Quality education through public-private partnerships is the first place India can invest in to cultivate a strong talent base. Other bold initiatives are essential to better position India as a place to design, develop and manufacture innovative products. Significant infrastructure development, policies to incentivize more foreign business investments, efforts to make it easier to do business in India, and actions to promote exports and build domestic capacity would likely also enable India to be more competitive.

The challenges India faces are not unique. Research on global manufacturing competitiveness by Deloitte Touche Tohmatsu Limited’s Global Manufacturing Industry group suggests that access to talented workers who can support innovation, a direct by-product of high-quality education, is the most important factor driving competitiveness.

As project adviser to the Forum on the Manufacturing for Growth initiative, Deloitte looks forward to shaping recommendations and actions that business and policy-makers can take to stimulate high-multiplier manufacturing growth.

I look forward to keeping the discussion going with you, at the Forum and beyond, including in a follow-on YouTube video, in which I plan to share some of the ideas generated from the 8 November session.

Author: Gary Coleman is Managing Director, Global Industries, at Deloitte Touche Tohmatsu Limited (DTTL), a Strategic Partner of the World Economic Forum. 

Read more about the Future of Manufacturing.

Image: Employees are seen working on an assembly line in Talegaon, India REUTERS/Danish Siddiqui