India should abandon the ambition of changing into the “subsequent China” in manufacturing, says former RBI Governor Raghuram Rajan, warning that international situations and structural constraints make large-scale, low-cost factory-led development more and more implausible.
In a wide-ranging interview with Frontline, Rajan cautioned in opposition to counting on conventional manufacturing because the core of India’s job creation technique. “There’s no room for an additional China,” he stated, noting that international manufacturing is more and more automated, protectionist, and saturated by international locations like Vietnam and China that mix low wages with robust infrastructure.
Even low-skill segments like meeting are seeing fast adoption of machines. “What firms want now could be individuals who can have a tendency the machines, restore the machines—not those that do the guide work machines have changed,” Rajan stated.
The issue is compounded by rising international manufacturing nationalism. “All people desires their very own little manufacturing business,” he noticed. “We can not count on that variety of jobs in manufacturing.”
Rajan’s remarks come as India navigates a vital part in its financial trajectory. With a falling dependency ratio and a large younger workforce, India ought to be capitalizing on its so-called demographic dividend. But, he argues, the nation is caught in “low earth orbit,” with constant however inadequate development of 6–6.5%—spectacular traditionally, however not sufficient to turn out to be wealthy earlier than ageing overtakes the inhabitants, significantly in states like Tamil Nadu and Kerala the place fertility charges are already beneath substitute degree.
As an alternative of chasing a now-unrealistic manufacturing-led mannequin, Rajan urged a multipronged strategy. India, he stated, is already excelling in high-value companies, accounting for 4.5% of world service exports. Whereas this sector gained’t soak up all job seekers, it represents a vital pillar of future development.
Equally vital, he added, is scaling up reasonably expert home companies—logistics, truck driving, plumbing, restore work. These roles may soak up hundreds of thousands if backed by centered skill-building. “Get a job wherever, create a job wherever you may,” Rajan urged.
He emphasised that India must harness each alternative—each export and home—to speed up development past the present plateau. “We’re the fastest-growing nation within the G20,” he stated, “but in addition the poorest on a per capita foundation. That has to vary.”
