Normally countries shift from agriculture to industry and then later to services, but India shifted directly from agriculture to services. What are the reasons for the huge growth of services vis-à-vis industry in the country? Can India become a developed country without a strong industrial base?

Reasons behind this

→ Land availability for industrial clusters is low - due to clearance delays, litigation. → Multitude of labor laws make compliance burden for manufacturers very high, whereas service sector is not so employment intensive. → Banking issues and twin balance sheet crisis limits capital in industry.

→ Dualist education sector - produces very high skilled workers or unskilled/low-skilled - suited for service sector than industry, vocational training absent. → Demand problem - high levels of inequality limits demand for mass consumer goods manufacturing. → Infrastructure paucity - bigger constraint for manufacturing than services. → External sector - Chinese creation of massive excess capacity - dumping of manufactures at ultra low prices - renders our industry less competitive

Significance of Strong Industrial Base for self reliant India

① Producers especially MSMEs will benefit from domestic industrial chain supplying inputs cheaply and creation of a ready market. Eg - Pharmaceuticals will benefit from a domestic API sector (currently imported) ② Reducing our current account deficit (2% of GDP) to sustainable levels.

③ Integrating into global value chains. ④ Increasing revenue for government to spend on social services like health and education. ⑤ Job creation and tapping into India's demographic dividend before window closes. ⑥ Using our industrial capacity as leverage in international relations with partners like USA, Europe Russia.