Rapid: A new mission to power India’s manufacturing engines

The Union government is working with industry to create a new manufacturing mission that will focus on specific sectors, said two officials with direct knowledge of the discussions.

Following multiple presentations over the past two months, officials from various ministries met with industry executives last week to chart the direction of the mission, the people cited above said. The new mission, dubbed Rapid (Research, Analysis, Program Implementation and Data Intelligence), will work to increase local value addition in the manufacturing industry and incentivize research and development in the private sector.

Attention to key sectors

“Key sectors such as automotive, electronics and electronic components, medical devices, drones, aerospace and space will receive special attention under the Rapid programme,” said one of the two officials, requesting anonymity.

The new mission comes at a time when manufacturing’s share of the Indian economy stands at 17%, an improvement from 14.4% in FY21 but far from the country’s target of increasing it to 25% by 2025. India sees a massive shift from petty agriculture-related work to manufacturing and exports as critical to boosting wages and growing its economy.

Three-level objectives

The mission will have three levels of objectives: short-term two-year goals, medium-term five-year goals and a 10-year strategy with detailed objectives. Details are currently being discussed and more meetings are likely to be held soon, officials said.

A proposal for an R&D plan under Rapid “has already received approvals from key government departments and discussions are currently underway with several ministries that will be involved in collaboration on it,” the second official added.

The Rapid program is being led by the Steering Committee for Advanced Local Value Addition and Committee on Indian Exports, or SCALE, which is chaired by Pawan Goenka, former CEO of Mahindra & Mahindra Ltd. and current chairman of India’s nodal space body, the Indian National Space Promotion and Authorization Centre (In-Space). According to the officials cited above, the Rapid program, which is currently being discussed at various levels of the government, will aim to establish an innovation- and design-driven manufacturing ecosystem in the country.

To establish Rapid, a framework for sector development and selection, along with suggestions for implementing policy reforms and incentives for stakeholders, will be presented to several central ministries. SCALE will then identify new priority sectors and establish a National Action Plan to boost the chosen sectors.

No general increase

“It is important to note that Rapid will not seek to offer a blanket incentive for manufacturing. The idea behind Rapid is to get India’s private sector to invest in local R&D, as only then will there be progress in adding real value to India’s manufacturing goals. This will be key to getting us closer to our developed economy goals by 2047,” said a third official with direct knowledge of the plans.

Emails sent to the Ministries of Electronics and IT, Commerce and Civil Aviation remained unanswered by press time.

The government believes that a massive expansion of manufacturing is necessary to grow the Indian economy to $5 trillion by FY28 and reach $2 trillion in exports in the next six to seven years.

Industry veterans expressed optimism about the new mission.

Prashant Kumar Singhal, partner and technology, media and telecom (TMT) leader at consultancy EY Global, said the main aim of a programme like Rapid would be to “create local intellectual property (IP) in technology, telecom and other sectors, which would then be licensed globally”.

Top IPs outside India

“The biggest challenge right now is not R&D – many companies operate their own captive engineering centres in India, which are dedicated to research and innovation projects. However, most of the major IP companies, both hardware and software, reside outside India. Therefore, we need a programme that has a central headquarters of engineering operations in India across the development spectrum. This will also require a framework that takes into account taxation and other factors to facilitate local development,” Singhal added.

Ashok Chandak, president of the Indian Electronics and Semiconductor Association, an industry body, said a broader push is “essential” for India to see substantial growth in local manufacturing. “On behalf of the industry, we have made multiple submissions to the Centre on how to drive domestic value addition in manufacturing. Some of the key areas will include increasing localisation of the semiconductor ecosystem to add value by over 30% to industries like automotive. Smart metering in the electronics ecosystem is another key area that India can leverage, along with its recent push into the domestic space ecosystem. There are many areas,” Chandak said.

Born in India

“In the 1990s, there were several brands in the electronics sector that were created and emerged in India. Barring a few industries like washing machines and air conditioners, most Indian brands did not perform well. Investing in innovation and R&D will be essential to create brands that are not only great in India but can also be exported to key markets around the world,” Chandak said.

While the Economic Survey highlighted that manufacturing GVA shrugged off a disappointing FY23 and grew 9.9 per cent in FY24, it also raised concerns about India’s manufacturing competitiveness, something the country wants to achieve through Rapid Growth.

“…the slow pace of investment in M&E and intellectual property products will delay India’s attempt to increase the share of manufacturing in GDP, slow the improvement of the country’s manufacturing competitiveness, and create only a smaller number of higher-quality formal jobs than would otherwise be generated,” the Economic Survey noted.