Draft Detailed Project Report

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Technology Centre Systems Program – Draft DPR for New TC at Rohtak dominated by MSMEs (more than 80% of firms in India, Europe, US and Japan). As in other countries, the private tooling industry in India has grown hand in hand with the manufacturing industry. The turnover of the Indian tooling industry is approximately INR 13,000 crores, with more than a thousand firms employing over 120,000 workers (TAGMA Report 2011) [Reference ??]. The constraints to the growth and competitiveness of the Indian tooling industry mirror the ones affecting manufacturing as a whole, as articulated above. The scarcity of skilled workers and problems related to their retention, as well as the lack of access to a high-quality design and prototyping facility has hurt growth. In downstream industries such as automotive, electronics, fragrance and flavours, glass, leather, toys etc., there is shortage of skilled labour and limited access to advanced technologies. These industries include large numbers of MSMEs, often working as part of supplier networks of larger enterprises and subject to increase international competition. Demographic overview and challenges While India stands to benefit from an immense demographic dividend (with the largest youth population in the world; around 66 percent of the total population is under the age of 35), it has an overall employment rate of 4.7 percent (under usual principal status approach) and an overall labour force participation rate of 50.9 percent 4 . For the country to gain from this demographic dividend, skilling and up-skilling its youth are key priorities for the Government of India (GoI). India has a labour force of about 470 million, of which less than 10 percent has received skills training, either through formal or informal means 5 . About 13 million young people enter the labour force annually. Despite the huge expansion of skills training provision during the 11 th Five-year plan, the country’s skills development system requires massive up scaling. In its 11 th and 12 th Five-year plans, India recognized that skill development is critical to achieve faster, sustainable and inclusive growth on one hand, and to provide decent employment opportunities to the growing young population, on the other hand. According to the National Skill Development Policy published in March 2009, India had set a target of skilling 500 million people by 2022 6 . This program will play a bigger role in the country’s plan by setting a target of skilling 150 lakh people within the next 6 years. Global experience shows that a workforce with higher education and skill levels leads to higher productivity and personal income. A 2011 study showed that students who attended three-year vocational training courses at ITIs earned 25 percent more than two-year course students, who 4 Report on the Third-Annual employment & unemployment survey (2012 – 2013) of the Ministry of Labor, Government of India. 5 11 th and 12 th Five Year Plan 6 http://labour.nic.in/upload/uploadfiles/files/Policies/NationalSkillDevelopmentPolicyMar09.pdf Page 17 of 251
Technology Centre Systems Program – Draft DPR for New TC at Rohtak earned 14 percent more than did one-year course students 7 . These results were confirmed in a 2007 study showing that the returns on vocational training in India have been found to be 8 percent, almost equivalent to the 8.4 percent related to an additional year of education. The same study showed that increased educational attainment by one year is associated with 5.8 percent higher firm-level productivity in India 8 . Country’s manufacturing objectives Development of Indian manufacturing sector calls for deepening and recalibrating of economic reforms that would strengthen the sector and make it grow faster and become an engine of inclusive growth. To realize the potential of the manufacturing sector, Government of India had announced National Manufacturing Policy in 2011 with the objective of enhancing the share of manufacturing in GDP to 25% within a decade and creating 100 million jobs. It also seeks to empower rural youth by imparting necessary skill sets to make them employable. Sustainable development is integral to the spirit of the policy and technological value addition in manufacturing has received special focus. The National Manufacturing Policy has six objectives: ► Improve manufacturing sector growth rate to 12-14% over the medium term to make it the engine of growth for the economy. The 2 to 4 % differential over the medium term growth rate of the overall economy will enable manufacturing to contribute at least 25% of the National GDP by 2022. ► Increase the rate of job creation in manufacturing to create 100 million additional jobs by 2022. ► Creation of appropriate skill sets among the rural migrant and urban poor to make growth inclusive. ► Increase domestic value addition and technological depth in manufacturing. ► Enhance global competitiveness of Indian manufacturing through appropriate policy support. ► Ensure sustainability of growth, particularly with regard to the environment including energy efficiency, optimal utilization of natural resources and restoration of damaged/ degraded eco-systems. Recommendations of 12 th plan working group & Parliamentary Standing Committee 7 Vocational Training in the Private Sector (Goyal 2011) 8 The Knowledge Economy and Education and Training in South Asia (World Bank 2007) Page 18 of 251
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