Changes in America’s economic structure, coupled with its global dominance in the services sector, explain why manufacturing now occupies only a modest share of the nation’s GDP
The latest installment of the Make-America-Great-Again (MAGA) assault on globalised economic growth takes the form of an import duty of 100% on a segment of pharmaceuticals.
Modified Special Incentive Package Scheme (M-SIPS) started in July 2012 as a three-year scheme addressing India’s growing import dependency. In 2015, it underwent its first major revision, extending the program to 2020, adding 15 verticals, and simplifying approval processes to encourage faster investment. By 2017, strategic amendments further expedited procedures and extended deadlines to the end of 2018. Applications closed in December 2018, but implementation continues. In 2020, the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) was launched as a successor, focusing on incentivizing component manufacturing with 25% capital expenditure support.
Electronics has become one of the most important sectors of the 21st century, powering industries from IT to consumer goods and energy transitions. For India and Vietnam, two of the fastest growing economies in Asia, electronics manufacturing is not just about exports but about higher income, jobs and global competitiveness.
At the centre of the issue is the US goods trade deficit with China – $295.4 billion in 2024. President Donald Trump, in his 2016 election campaign, said China was “raping” the US. It needs to be noted that while China, Mexico, and Canada had massive trade surpluses with the US, the latter imposed tariffs on almost all countries.
India’s developmental journey over the past decade has brought into sharp focus the need for better coordination between central and state schemes. While numerous programs are launched at national and state levels, their actual impact ultimately depends on district administration and local governance. It was in recognition of this reality that the Ministry of Rural Development constituted the District Development Coordination and Monitoring Committee (DISHA) in June 2016 to ensure better coordination and effective implementation of central government schemes at the district level. They replaced the earlier District Vigilance and Monitoring Committee. The core purpose of DISHA is to bridge the institutional and administrative gaps that often emerge as flagship schemes travel from conception to implementation.
The RBI’s latest monetary policy and regulatory pronouncements are a strange mixture of caution and recklessness. The policy appreciates that with inflation depressed, not only because of well-behaved food prices but also because of deficient demand that has sent fast-moving consumer goods companies into depression, real interest rates in the economy are high.
Earlier this month, the Supreme Court ordered the government to set up a committee to evolve measures to help home buyers who find that the properties they have invested in are stuck in stalled construction, even as their builders go into insolvency.