The launch of Apple's 'Made-in-India' iPhone signifies a major shift, highlighting the country's manufacturing prowess. Apple's success offers policymakers crucial insights to boost job creation in labor-intensive sectors. India faces a manufacturing dilemma despite rapid economic growth, with low manufacturing GDP contributions. Apple's move has already created numerous jobs and export opportunities, setting the stage for further growth. Policymakers should focus on exports, R&D, skill development, and effective implementation of incentives to replicate this success and drive inclusive growth.
With the recent launch of Apple’s iPhone 16, India's manufacturing landscape has witnessed a significant transformation. The advent of the new 'Made-in-India' iPhone marks a pivotal moment, propelling the country into the global manufacturing spotlight. Apple's success in India provides valuable insights for policymakers, offering a roadmap to foster a jobs revolution in labor-intensive manufacturing sectors across the nation.
The Manufacturing Dilemma in India
India, despite being the world's fastest-growing large economy, has grappled with a persistent challenge of inadequate job creation. Traditional labor surveys fail to capture the true essence of the issue as many individuals find themselves ensnared in low-productivity informal jobs that do not align with their aspirations. While the services sector has flourished, industrial success has remained elusive, with manufacturing contributing less than 15% to GDP, employing only 11% of the population, and accounting for a mere 2% of global goods exports.
Historically, no nation has ascended without robust manufacturing capabilities, and export-driven growth has been a common thread among successful economies. Countries like the Asian Tigers and China exemplify this trajectory, leveraging labor-intensive manufacturing to propel their economic ascent.
iPhone's Trailblazing Success in India
Apple's decision to establish its second manufacturing hub in India with the iPhone production signifies a paradigm shift. The iPhone, exclusively manufactured in China until 2021, has already generated 1.5 lakh direct jobs in India, along with an estimated 4.5 lakh indirect jobs. The production of iPhones in India amounts to $14 billion, with exports reaching $10 billion annually. This constitutes a mere 14% of Apple's global production, a figure projected to surge to 26% by 2026, as per JP Morgan forecasts.
To solidify its position as a premier exporting hub, India must attract iPhone's component manufacturers, who contribute significantly to the value chain. While predominantly Chinese, these ancillary firms hold the potential to create more jobs, impart advanced skills, and facilitate technology transfer, thereby integrating Indian MSMEs into global value chains.
Key Lessons for India's Policymakers
1. Global Market Realities: Dispel the misconception that India solely represents a vast market. Global leaders prioritize manufacturing bases based on competitiveness, not market size alone. India must enhance its image as a manufacturing destination to attract global brands.
2. Export-Led Growth: Emphasize the importance of exports in job creation and economic growth. To succeed globally, India must integrate into global value chains by reducing tariffs and fostering a conducive business environment.
3. Focus on Big Companies: While MSMEs play a significant role in job creation, fostering partnerships with large corporations is crucial. Government initiatives should target global brand leaders to catalyze job growth and industrial development.
4. Invest in R&D: To compete on a global scale, Indian companies must prioritize research and development to innovate and develop superior products that resonate with international markets.
5. Skill Development: Align educational institutions with industry needs to cultivate a skilled workforce. Emphasize apprenticeships, internships, and on-the-job training to bridge the skills gap effectively.
6. Effective Implementation of PLI: Structured incentives like the Production-Linked Incentive (PLI) scheme should address India's cost disadvantages and promote exports. Collaboration between government and industry is vital for successful implementation.
The success story of Apple's iPhone in India serves as a testament to the nation's manufacturing potential. It underscores the need for proactive policymaking to replicate this success across various labor-intensive industries. By implementing structural reforms, fostering innovation, and enhancing competitiveness, India can aspire to transition from a middle-income nation to a high-income economy, creating a sustainable jobs revolution and fostering inclusive growth.
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