ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Mobile Phone Manufacturing in India

In financial year 2019, India produced around 29 crore units of mobile phones, which comes to an investment of around `2,780 crore, at 2017 prices. These investment figures turn out to be much lower than those reported in the popular press. Original equipment manufacturers and electronic manufacturing service firms dominate the Indian manufacturing scene. The analysis of the five-digit Annual Survey of Industries data for 2016–17 and 2017–18 makes it apparent that the impetus towards domestic assembly of mobile phones through various policy measures has made a positive impact on the growth of investments, particularly in plant and machinery assets. As a result, the direct employment generated per unit fixed asset has decreased in 2017–18. Value addition for a majority of the firms at the five-digit level was less than 10% in 2017–18.

Unmaking ‘Make in India’

India’s business climate has historically been considered poor, resulting in low-rankings in the World Bank’s Doing Business Indicators. The National Democratic Alliance government has attempted to reverse this situation by improving the de jure rules related to the business climate. Whether this approach will improve the ease of doing business in India is analysed by using firm-level data on the number of days it takes to get an operating licence or construction permit. De facto deals between the state and businesses, rather than de jure rules, characterise the state–business relationship in Indian states. States with weaker quality of governance provide higher proportions of good deals in terms of the speed of obtaining licences and permits, and easing the norms of business regulations need not necessarily lead to higher productivity.

Majoritarian Rationale and Common Goals

Looking at existing policy instruments and goals, and the economic and social outcomes they promise to deliver, it is argued that majoritarian politics and social and cultural outcomes are not part of fringe thinking. The politics of hate actually works to build a consensus for ruling class economics. It is not surprising, therefore, that the only "nationalist outlook" of our times is to stand firmly behind the policy programme for the global investor.

Faltering Manufacturing Growth and Employment

Declining growth and a stagnating employment share of manufacturing in a high-growth regime in India are disconcerting, given the pride of place assumed by manufacturing as the "engine of growth." The sustainability of high growth is linked intrinsically to a trajectory that creates gainful employment. This paper argues that the manufacturing sector, which recorded declining employment elasticity in the organised sector, will not be able to mend the gap between growth and employment. Rather the goal of rejuvenating manufacturing has to be contextualised in a larger strategy of full employment with interventions related to demand structures, technology, size structure of firms, as well as a calibrated engagement with the global market.
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