Reshape Indian economy by ‘servicification’ of manufacturing

Reshape Indian economy by ‘servicification’ of manufacturing

India's demographic dividend is seen as a key factor for economic growth, with a young population and a focus on developing manufacturing capabilities. However, India faces challenges in providing skill sets to its workforce, leading to a high rate of unemployable graduates. The Production Linked Incentive (PLI) scheme aims to boost manufacturing but there are concerns about low domestic value addition in certain sectors.

Source: Link

FAQ - Reshape Indian economy by ‘servicification’ of manufacturing - Fortune India

Frequently Asked Questions (FAQ)

FAQ 1: What is 'servicification' of manufacturing?

Answer: 'Servicification' of manufacturing refers to the increasing integration and importance of services in the manufacturing sector. This involves the use of services as essential inputs in the production process and the provision of value-added services alongside traditional manufacturing outputs.

FAQ 2: How does servicification influence the Global Value Chain (GVC) activities of manufacturing firms in India?

Answer: According to a study mentioned in the Wiley Online Library, the effect of servicification on the GVC activities of manufacturing firms in India has been analyzed using panel data. The integration of services in the manufacturing sector has been shown to enhance the GVC participation of firms by improving their efficiency and competitive edge in global markets.

FAQ 3: What impact does servicification have on manufacturing exports from India?

Answer: Research noted on ScienceDirect indicates that the role of services as inputs has a significant and positive impact on export intensity. The incorporation of services into manufacturing helps boost exports by providing additional value and differentiating products in international markets.

FAQ 4: Are there any productivity benefits for manufacturing firms in India due to servicification?

Answer: A publication by the Asian Development Bank (ADB) highlights that service sector reforms and the consequent servicification of manufacturing can have a positive effect on the productivity of manufacturing firms in India. This may be due to improved efficiencies and innovation driven by service-related activities.

FAQ 5: What are the trade policy implications of servicification for Indian manufacturing firms?

Answer: A paper found in the World Trade Review discusses the servicification of firms and trade policy implications, suggesting that restrictions can have a negative impact on manufacturing. The servicification process necessitates that trade policies consider the seamless integration of services and manufacturing, as well as the liberalization of service-related trade barriers.

FAQ 6: Is servicification relevant only to developed countries, or does it apply to developing countries as well?

Answer: While a report by the WTO stated that servicification of manufacturing is less pronounced in developing countries due to lower domestic services content, it is nonetheless a significant trend in developing economies like India, where services are increasingly contributing to manufacturing processes and outputs.

FAQ 7: Has 'servicification' been observed in other countries apart from India?

Answer: Yes, the servicification phenomenon is not unique to India. There are studies, such as one on Japanese manufacturing firms referenced on RePEc, showing similar trends in other economies, which indicates a global shift in the manufacturing paradigm that includes richer integration with the services sector.

Please note: While these FAQs are based on the search results provided, accessing the full text of the linked documents would be necessary for more comprehensive answers or specific details on the research and data discussed.