Analyzing technology aspect of India's manufacturing: The global context and future of work

Tandon, Anjali (2024): Analyzing technology aspect of India's manufacturing: The global context and future of work. Published in: The Indian Economic Journal , Vol. Volume, No. Special Issue (December 2024): pp. 117-138.

Abstract

Although developed countries lead in technological advancements and adoption, nations in the Global South are not immune to their effects due to increasingly borderless interactions. The extent of transformation will depend on the economic and technological feasibility in the less developed economies suggesting the co-existence of existing technologies even though the technology frontier continues to shift upwards. Therefore, it is intriguing to understand the relative significance of the distinguished technology levels in terms of their employment base and also for different typologies (e.g. employment-intensive, export-oriented, import-dependent, etc.) of the industry. In the backdrop of the likely non-uniform technology impact across regions and countries and the likely existence of the different levels of technology, the paper has two key objectives. First, to present a balanced view of the possible challenges and opportunities from the technology transition across the regions. However, the linkage between technology (as in innovation) and employment is also influenced by the sector where the firm operates. Technology response of the sector tends to vary due to factors including the richness of technological opportunities, cumulativeness of the knowledge base, or the means to protect the economic benefits of innovation/ technology. The view motivates the second objective to classify the broad manufacturing into sectors by different technology levels, viz., high-, medium-high-, medium-low-, and low-technology, and study their relative significance in employment, value added, export, imports and output in the manufacturing segment of the Indian economy.

The present paper contributes through providing a technology profile of the Indian manufacturing by classifying sectors into four categories, originally based on the R&D intensities as defined by the OECD. The technology categorization takes into account the R&D spending as a proportion of the value added and output of the industry in the ISIC Revision 3 nomenclature. By extending the classification to the more recent ISIC Revision 4 (which is also aligned to the National Industrial Classification 2008 in India), we classify each of the 69 manufacturing sectors reported in the India Input-Output database for a recently available year which are further grouped into 17 sectors for comprehensiveness while also maintaining their distinguished technology categorization, the paper uses the classification in the Indian context. The four technology categories are assessed for their relative significance in terms of supporting employment, exports, imports and output of the manufacturing sectors. Also analyzed in the paper is the sector-level labour productivity, employment intensity, export intensity and import intensity based on the technology classification. The paper concludes with a broad recommendation in view of the increasing and pervasive use of technology across different parts of the world. In the Indian context, based on the analysis of the Indian manufacturing sectors, strategic interventions are suggested for better performance of the technology sectors and to minimize the frictions between technology and jobs in the future times. Proposals for investment in workforce development activities for effective job creation are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Manufacturing, technology-based classification, Low-tech, medium-tech, high-tech, India
• Subjects: L - Industrial Organization > L6 - Industry Studies: Manufacturing; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology

References

Acemoglu, D. 2022. Technical Change, Inequality, and the Labor Market. Journal of Economic Literature, Mar., 2002, Vol. 40, No. 1, pp. 7-72. AfDB, ADB, EBRD, IDB (African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank). 2018. The Future of Work: Regional Perspectives. Washington, DC. Apparel Resources. 2019. Banga, K. and Dirk Willem te Velde. 2018. Digitalisation and the future of manufacturing in Africa. Supporting Economic Transformation (SET). Bogoviz,A.V., Vladimir S. Osipov, Marina K. Chistyakova, Maxim Y. Borisov. 2018. Comparative Analysis of Formation of Industry 4.0 in Developed and Developing Countries, Chapter in Central Statistical Organisation. 2008. National Industrial Classification, 2008. Chadha, R, Saluja, M R, and Sivamani, G. 2020. Input Output Transactions Table: India 2015-16. Brookings India Discussion Paper, January 012020. Chellasway, P. and Sumathi, N. (2006). Indian Textile industry. Accessed Online at https://www.fibre2fashion.com/industry-article/543/indian-textile-industry Cohen, W.M. 2010. Fifty Years of Empirical Studies of Innovative Activity and Performance. In Handbook of the Economics of Innovation, ed. B.A. Hall and N. Rosenberg, 129-213. Amsterdam: Elsevier. Council on Energy, Environment and Water (CEEW), Natural Resources Defense Council (NRDC) and Skill Council for Green Jobs (SCGJ). 2022. India’s Expanding Clean Energy Workforce. Report. Dachs, A. 2018. The impact of new technologies on the labour market and the social economy. Science and Technology Options Assessment, European Parliamentary Research Service Dasgupta, S. 2018. Indian shipping industry – An ocean of opportunities. Development, 27: 1769-1786 Dosi, G., and R. Nelson. 2010. Technical Change and Industrial Dynamics as Evolutionary Processes. In Handbook of the Economics of Innovation, ed. B.A. Hall and N. Rosenberg, 52-126. Amsterdam: Elsevier. Ejaz Ghani, E.,William R. Kerr and Stephen D. O’Connell. 2013. The Exceptional Persistence of India’s Unorganized Sector. Policy Research Working Paper 6454. World Bank. Elena G. Popkova, Yulia V. Ragulina, Aleksei V. Bogoviz (Eds.) Industry 4.0: Industrial Revolution of the 21st Century. pp 155-164. European Strategy and Policy Analysis System. 2018. Global Trends to 2030: The Future of Work and Workplaces. ESAPS Idea Paper Series. Faruk, Nabil Bin. 2023. The Impacts of the Automation on the Man-based Labor within the Apparel Industry of Bangladesh. ILO. 2016. ASEAN in Transformation: Textiles, Clothing and Footwear. ILO. In David O’Connor & M. Kjöllerström (Eds), Industrial development for the21st century (pp. 7–28). Hyderabad: Orion Printers. India Brand Equity Foundation. 2022. Automobile exports of INDIA. Accessed online at https://www.ibef.org/blogs/automobile-exports-of-india India Brand Equity Foundation. 2023. Auto components industry report. Jadeja, V. 2022. Opportunities and challenges for the Indian rubber industry. Kemeny, T and T. Osman (2018). Research Policy, Volume 47, Issue 9, Pages 1729-1740 KPMG (2020). White Paper – Footwear Industry in India, TCSP: Technology Cluster Manager, Technology Centre System Program (TCSP), Office of DC MSME, Ministry of MSME. Kumar, N and J P Pradhan.2003. Export Performance of Indian Enterprises in Knowledge-based Industries: Recent Trends, Patterns and Implications. RIS-DP # 42/2003. Lall, S. 1999. ‘India's Manufactured Exports: Comparative Structure and Prospects’, World Lall, S. 2001. Competitiveness, technology and skills. Cheltenham: Edward Elgar. Lee, Neil and Rodríguez-Pose, Andrés (2016) Is there trickle-down from tech? Poverty, employment and the high-technology multiplier in US cities. Annals of the Association of American Geographers, 106 (5). pp. 1114-1134. Mani, s. (2000). Exports of High Technology Products from Developing Countries: Is it Real or a Statistical Artifact. UNU/INTECH Discussion Papers, ISSN 1564-8370. Mani, Sunil. 2019. “Robot Apocalypse How Will Automation Affect India’s Manufacturing Industry?”. Economic and Political Weekly. Vol LIV. No. 8. Pp. 40-48. Marsili, O. 2001. The Anatomy and Evolution of Industries: Technological Change and Industrial Dynamics. Cheltenham, UK and Northampton, MA, USA: Edward Elgar. McKinsey & Company. 2023. India: The next chemicals manufacturing hub, March. Mellett, E. and Finnell, J. (2021). Skills you need to succeed in green energy and sustainability jobs. Leaders in Energy.org. https:// leadersinenergy.org/ skills-you-need-to-succeed-in-green-energy-andsustainability-jobs/. Mukherjee, A. and B S Harsh. 2021. Maritime pollution and the shipbreaking industry – challenges and mitigation-options. Natural Resources Defense Council (NRDC) and Council on Energy, Environment and Water (CEEW). 2015. Clean Energy Powers Local Job Growth in India, Interim report, February. NITI Aayog. 2022. India Innovation Index, 2021. OECD. 1994. OECD. 1996. OECD. 2011. ISIC REV. 3 Technology Intensity Definition, OECD Directorate for Science, Technology and Industry, Economic Analysis and Statistics Division. Prestwood, J. 2022. What Technologies Can Chemical Manufacturers Use? RBI (2022). India KLEMS Database. Reddy, K. and Subash S. 2020. Will COVID-19 Change the Landscape of Financing Innovation in India?. Economic and Political Weekly, Vol lV no 22, November 28. Research and Information systems. 2019. Robotisation of Textile Sector in China: Impact and Imperatives, Policy Brief No 88, August. Rodrik, D. (2008). Industrial development: Some stylized facts and policy directions. Samen, S. 2010. A primer on export diversification: Key concepts, theoretical underpinnings and empirical evidence. Growth and Crisis Unit World Bank Institute. Sanghvi, K. 2007. Challenges in Weaving Automation. Accessed Online at https://www.fibre2fashion.com/industry-article/1805/challenges-in-weaving-automation Singhal, Prachi, Mousumi Kabiraj, Kalyani Krishna, Anubha Sharma, and Shaily Jha. 2023. Unlocking Sustainable Livelihood Opportunities for Rural Women: A Case Study of Mainstreaming Women in Clean Energy-Powered Livelihoods. New Delhi: Council on Energy, Environment and Water. West, J. 2020. India squanders its comparative advantage. East Asia Fourm, July 10. Tandon, A. 2022. “Inter-industry wage differentials in India manufacturing”, Economic and Weekly, Special Article, Volume LVII No 38, September 17, pp 39-45. 2022. Tandon, A. 2024 Forthcoming. Labour and Capital Use in Indian Manufacturing. Routledge. Ullah, Mohammad Sahid and Rawshon Akhter. 2021. Automation of the Readymade Garment Sector in Bangladesh: Who is paying the price? UNCTAD. 2013. Impact of the global slowdown on India’s exports and employment, United Nations. Vashisht, P. 2018. Destruction or Polarization: Estimating the Impact of Technology on Jobs in Indian Manufacturing. The Indian Journal of Labour Economics, The Indian Society of Labour Economics (ISLE), vol. 61(2), pages 227-250, June. World bank. 2023. World Development indicators. Accessed online