The one challenge which is common right across all countries in the world, without exception, is the need to create more jobs. Even a country like Saudi Arabia, which has more than enough resources to take care of its citizens, wants to create jobs.

A job is clearly not just a means of livelihood but also a way of keeping the country's youth constructively engaged.

Further, the one common approach to creating more jobs globally, without exception, is to encourage manufacturing. India is, therefore, not unique in her approach to try and encourage manufacturing to create more jobs.

As every country wants to encourage manufacturing, the room to export is getting increasingly constrained. Countries are competing with each other, using varying toolsto attract investments.

Some like Brazil, Russia, Saudi Arabia, Algeria and Angola are using the wealth from their natural resources and particularly oil & gas; some like Germany and Scandinavia are using their highly-skilled manpower, some like Singapore and Dubai are using efficient governance and some like China and India are using the demand of their large population.

But it is clear that every country needs some competitive advantage to attract investment in manufacturing.

The two levers that India has with her to attract manufacturing investment are the demand of the domestic market and the quantum of intellectual capital. India has thus far achieved only limited success in using either of these two levers to attract investment in manufacturing.

The first point that we need to accept is that manufacturing in India will succeed only on the basis of the domestic market, and exports can at best be supplementary.

Attempting to base a manufacturing strategy predominantly based on exports will take a long time to achieve because manufacturing in India has competitive disadvantages like high cost of power, high cost of capital, infrastructure bottlenecks and lack of core technology. We, therefore, have to first ensure that our domestic market is attractive in terms of scale, is profitable for manufacturers and is a place which is easy to do business in.

Exports will then follow. It is indeed ironic if on the one hand we position India as a large and attractive market but on the other make policies that essentially rely on promoting exports without addressing the challenges of the domestic market.

It is critical for India to be one homogenous market that provides scale. Uniform taxation, uniform standards, uniform regulation, uniform laws, free movement of goods and people are critical in making this happen. We currently have challenges in each of these areas which present India as a very fragmented market.

Secondly, our own strength in innovation to meet our domestic customer needs will have to precede manufacturing. When we talk about manufacturing in India, it is predominantly based on technology from the developed world. The developed world technology has been essentially designed to meet the requirements of those market, which we then try and tinker with to suit our own local needs. While we in India have done brilliantly in innovating on disruptive business models, we have done little innovation on new products meant for our specific needs.

The process to innovate new products has to begin by a good understanding of market needs and even more importantly, to then convert that understanding into a sharp definition of a product.

Once the product definition has been set , it is a relatively easier job to actually make that product. Converting a market need into a sharp product definition is a rare skill, which is a combination of market understanding, knowledge of technology and entrepreneurship.

It is evident that judgement plays a crucial part in innovation. It is expected that failures will be part of the game. If we are to encourage innovation, then we also need to embrace failures and even celebrate them. Our culture in India does not respect failures and, in fact, ridicules them. This will have to change if we want to get manufacturing going.One way of encouraging innovation and eliminating the "losses" due to failure is to value intellectual property.

Source:- economictimes.indiatimes.com