Authored by: Jaykhosh Chidambaran

Be vocal about local are the new buzzwords in Indian economic circles, propagated by populist Prime Minister Narendra Modi, alluding to a resurgence of its manufacturing sector, congruent to a previous reform agenda of Make in India. The global backlash against China as the malefactor of the novel coronavirus pandemic has reached a crescendo. Political leaders from both sides of the Atlantic have consensus on de-risking economies from monopoly dependence on China, touted as the factory of the world. An indignant Japanese Prime Minister Shinzo Abe has earmarked 245 billion Yen to assist infrastructure spending for those Japanese firms, exhorting to shift production facilities out of China. Can India ride the crest of this global anti-China sentiment, and use this opportunity to revamp local manufacturing and attract greenfield investments from multi-national companies?

The challenges: Pitfalls in the education and skill development ecosystem

Notwithstanding the lack of integrated infrastructure or active labour market legislations, the singular determinant of Indian emergence as the global manufacturing hub will be a skilled workforce. But it is also the current lacunae, which impedes this goal. Of the 450 million labor force, more than 50 percent are illiterate or only possess primary education, 50 million with secondary education, 7.9 million underwent vocational training, and a mere 10.5 million fall under the technically qualified gambit. Industry statistics reveal that an alarmingly high 83 percent of graduates are unemployable owing to the dearth of essential technical and management skills required to survive in the 21st century, new-age industries.

Indias education system has traditionally been based on rote learning. Post-independence India established, across the country, polytechnics, industrial training institutes (ITI), government engineering colleges, and institutes of higher learning to redirect the nation to a path of industrialisation and modernization. Their curriculum is predominantly input focused and there is little or no emphasis on experiential learning except for a few institutes like Indian Institutes of Technology (IITs), Indian Institute of Management (IIMs), Tata Institute of Social Sciences (TISS) and Institute of Chemical Technology (ICT).

The Annual Employability Survey 2019, done by an employability assessment company Aspiring Minds revealed that more than 95 percent of engineers are unfit for Information Technology jobs, stirring a controversy. These findings were corroborated by a veteran industry leader, CP Gurnani, CEO of Tech Mahindra, an Indian IT major that top IT companies in India hire only 6 percent of all engineering graduates. A decade-old McKinsey report had tabled similar findings that only a quarter of the graduating Indian technocrats have employability quotient, an indication of the retrogression in Indian technical education not commensurate with rapid technological advances.

The solution: Productivity-based skill development

Any sustainable educational goal should inevitably involve industry experts with sector-specific knowledge, from formulating curriculum to providing a roadmap for mandatory skills and capabilities warranted in creating a knowledge society and an innovation economy. The German dual skilling model for developing sustainable and state-of-the-art Vocational Education Training (VET) is worthy of emulation in India. Under this hugely successful program, students receive theory and conceptual lessons in the classroom for a week, followed by an apprenticeship in manufacturing facilities of companies, the week after, and alternating until successful completion of the courses.

This can be bolstered by nation-wide collaborative initiatives between the government and Indian industries should be rolled out for upgrading and redeployment of existing skills, enabling closure of skill gaps. Such large to medium and small industries participation in this synergetic program should be incentivised by corporate tax rebates, access to low-cost capital, re-classification of loans as subordinated debt, etc.

The public-private participation between government and industry will mitigate budget, resource, and time constraints, often a deterrent to social programs in emerging economies. An entry-level accountant could acquire basic conceptual and functional skills within a year, doing an accounting software course like Tally rather than enrolling in a three-year undergraduate commerce course. Similarly, a welder who had completed a two-year ITI course exposed to theories on different types of welding techniques might be grossly unemployable in an automobile production line welding job, that requires to perform 9 precision welds in an hour. If the German model is applied here, a student receives on-the-job training with an automobile manufacturer, as an apprentice for 45 days and become readily fit for employment.

Skilled workforce and foreign investments

Internationalisation of production has expanded opportunities for knowledge spillovers from the industrial world to developing markets. Unique, cutting edge skill sets are inevitable to compete and emerge as winners in New-Age economies dominated by semiconductors, fintech, artificial intelligence, robotics, and machine learning. The flow of technology and capital from the developed world to the developing world will rise exponentially, if the emerging market of India can offer highly skilled labor force, reciprocally, for setting up Greenfield investments or Brownfield acquisitions by MNCs.

In India, creating a highly differentiated ecosystem, skilled in producing a wide basket of goods that is technology-intensive, requiring superior learning and therefore not easily replicated, is critical to income leveling, wealth creation, and economic growth in the future. When MNCs strategically unbundle non-core functions in the service sector in developed markets and decide on outsourcing to competitive third world destinations, tapping into the availability of cost-effective, top-quality talent pool is always the primary criteria. Service sector contribution as a percentage of GDP is steadily increasing in almost all emerging markets, emulating the pattern in developed, free markets of the West. Complexity and income have positive correlations.

Re-imagining Indian education and the role of R&D

Annually, more than 12 million new job seekers enter the Indian labour market but create employment for only 5 million-odd jobs, and the major lacunae are unemployability due to skill gaps. Structural and institutional reforms are long overdue in the Indian educational sector. India is still home to over 600,000 villages and providing free access to qualitative primary and secondary education in rural heartlands is critical in empowering rural population (especially women folk), generating capacity employment, resuscitating rural demand, poverty alleviation, and edifying rural infrastructure in MSME sectors.

Ever since the First Industrialisation Revolution, if there is one input that is fundamental to improving the quality and longevity of human life on earth, indubitably, it is Research. Innovations and discoveries which, engendered quantum advancements in transport, telecommunications, medicine, and technology, that had transformed the world into a Global Village and Global Audience were consummated on establishing sophisticated R&D facilities in developed economies. It has created a stellar global fraternity of scientists.

A far-sighted and symbiotic public-private participation in the R&D sector, harnessing the powers of Artificial Intelligence, Machine Learning, Robotics, and Deep Learning should receive legislative support as part of the Skilling India initiative. Such synergetic partnerships have the potential to catapult India into a global leader in genome engineering, pharmaceuticals, connected devices in pro-active healthcare management, low-cost online education, and integration of virtual universities, fintech, clean renewable energy solutions, manufacturing, and agriculture.

The vision of the Indian Government, encompassing slogans such as Make in India, Skill India, Start Up India, Digital India to transform its socio-economic landscape by capitalising on its demographic dividend and assume global leadership in 21st century is contingent on a highly skilled and competent workforce. Creating that leadership capital is the order of the present that defines the future of India.

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