Manufacturing has emerged as one of the high-growth sectors in India. And has been consistently contributing to the GDP and employing almost 20 percent of India’s workforce. Merchandise exports from select industries (including engineering, petroleum products, gems and jewellery, pharmaceuticals and chemicals) stood at USD 106.06 billion between April 2021 and August 2021.

In recent years manufacturing has got a special push via ambitious campaigns like the ‘Make in India’ program to take India on the world map as a manufacturing hub and give worldwide credit to the Indian economy.

Despite an impressive recovery in certain subsectors in the latter half of 2021, supported by growth in production of natural gas, steel, cement, fertilisers, coal, refinery products and electricity, the manufacturing sector faced major challenges owing to the COVID-19 pandemic.

The setbacks faced included supply chain disruptions/raw material shortage due to continued lockdowns, labour shortage due to mass migration of labourers from cities to their hometowns, liquidity crunch, weaker demand, and capacity underutilization. Also, prices of raw materials, power, and freight shot up in sectors like steel manufacturing, which adversely affected small and medium enterprises.

The cost of doing business and production remains a cause for concern. Unfortunately, it is also reported that as many as 11,716 businesspersons died by suicide in 2020, vulnerable to the losses faced due to the pandemic.

To combat the above issues faced by the Indian manufacturing sector, the Government of India (GoI) provided several incentives and measures such as extra stimulus introduced through the Make in India programs and product-linked incentive schemes for pharmaceuticals, textiles etc.

Additionally, GoI established several subsector-specific schemes, such as launching technology innovation platforms, signed a collaboration deal with the Indo-Canada Chamber of Commerce to promote ‘Make in India’ and ‘Self-reliant India’ initiatives in the telecommunications sector, introduced Operation Green to support agricultural manufacturing and vide Foreign Direct Investment Policy in 2020, allowed investments of up to 74 percent in the defence manufacturing sector under its automatic route, to increase inflows.

Concerning the outlook for the sector in 2022, most experts see a post-pandemic boom and positive growth. The Union Budget 2021-22 is expected to enhance India’s domestic growth in manufacturing, trade and other sectors. The development of a robust infrastructure, logistics and utility environment for the manufacturing sector could be the primary focus of the GOI.

The latest trends in the field include greater reliance on technology and automation, with digitalisation taking over the entire manufacturing ecosystem involving parts tracking, inventory management, logistics management, customer support – remote installation, monitoring, diagnostics and service being accepted and growing.

While it is imperative to supplement the sector using increased stimulus and capital, the need of the hour is focusing on targeted sector-specific policy initiatives, centering on ease of entry and exit and provision of tax incentives. A well-thought-out five-year plan to supplement with a new legal regime that would help in the creation of a long-term vision for scalable sector growth.

We need to offer a time-bound and easy legal framework for debt and capital restructuring, access to stock markets and ease in regulatory compliances. Reforms without caveats catalyze the growth of India’s manufacturing value chains by helping them lift their productivity, secure know-how and technology, and gain access to overseas capital.

It is important to support them via large-scale value chains so that they become global champions and could focus on quality even in mass production. It is the time to go all out and help the manufacturing sector beyond lip servicing.

—Nitin Potdar and Jashan Merchant are advocates at JSA Advocates and Solicitors. Views expressed are personal