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‘Progress by innovation’ essential to scale up and speed up development progress with inclusive and sustainable industrial development, said Mr. Gerd Müller, Director-General, UNIDO

Mr. Müller was delivering virtual invitational lecture on ‘Industrial Strategy for the Post- Pandemic Era,’ organized by the Institute for Studies in Industrial Development (ISID), New Delhi, India.

25 May 2022: Addressing the meeting, Mr. Müller said that progress at scale, and innovation in policies, financing and partnerships are critical to overcoming the intertwined challenges of eradication of hunger and poverty and solving the climate crisis. Given the dramatic consequences of the ‘poly-pandemic’ with its health and socio-economic dimensions, it is imperative for governments, industry, businesses, and society at large to think outside the box, and accelerate action on the implementation of already-existing solutions. He further highlighted three decisive factors that are shaping industrial development in the pandemic recovery era – digitalization, industrial greening, and rebalancing supply chains. Digitalization has accelerated during the pandemic, and for the manufacturing sector, will manifest further in the form of Industry 4.0. Industrial greening concerns the urgent need to address the human made triple planetary crises of climate change, loss of nature and biodiversity, and pollution, and make the zero carbon and circular economy a reality. At the same time, it is paramount to develop and diversify global value chains and make them more resilient with a fairer distribution of the value created.

Moderating the event, Prof Nagesh Kumar, Director of ISID, mentioned that decent job creation through inclusive and sustainable manufacturing transformation was the critical need of the hour for India at this current juncture as the economy recovers from a once in a century, the shock of the Covid-pandemic. India was currently moving in a very decisive manner to catch up with the potential of manufacturing with programmes through several new initiatives.

India’s efforts to transform and grow manufacturing were summarized by Ms. Sumita Dawra, Additional Secretary, Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India. These included reform measures such as reducing the cost of doing business, cutting down on regulatory compliances, creation of a national single window system, as a one-stop shop for approvals and clearances for investors, setting up of an empowered group of secretaries to resolve cross-cutting policy issues for investors, and development of India’s industrial landbank to name a few. “Indian economy is undergoing a transformation at an impressive scale and pace. We have a demographic dividend. India is expected to be one of the fastest growing economies, and at the moment, it enjoys the number one rank as the fastest growing G20 economy,” she added.

To make India’s industrial policy more robust, Dr. Naushad Forbes, Co-Chairman of Forbes Marshall, outlined three important changes – first, focusing on creation of firm-level technical capabilities beyond import-substituting production to achieve long-run competitiveness, innovation, and growth of manufacturing. Second, employment creation in labor-intensive manufacturing to achieve inclusive manufacturing, and finally, imposition of an effective carbon tax to galvanize investment in decarbonization of the economy and achieve sustainable manufacturing.

Responding to the comments made by Mr. Müller and Dr. Forbes, Dr. René Van Berkel, UNIDO Representative, Regional Office India reiterated the importance of productivity and industrial capability as precursors and enablers of the digital and green transformations. In this regard, Micro, Small and Medium Enterprises (MSMEs) deserve special focus, as their lower productivity drags down the overall industrial performance of the larger firms and of the Indian economy in general. He further added that UNIDO’s work on digital transformation has highlighted that companies with good productivity and industrial capability are better placed to benefit from the uptake of digital technologies.

Dr. Van Berkel further cautioned against focusing too much on labor-intensive manufacturing. Using the examples of the electronics and textile and garment sectors, he mentioned that labour intensity of sectors can both decline or increase over time. Hence, the narrative of “making India the second China,” does not guarantee success, and India may rather focus on ”making India the first India” with its economy built on its own strengths.

The proceedings of the event are available at https://www.youtube.com/watch?v=KmLqzvc3_2s&t=12s