In Retrospect

Urgent overhaul

India’s strategically important manufacturing sector — once grounded in the rich heritage of Shudras — now dwindles on account of systematic uprooting in the guise of ‘technical education’ and caste-class hierarchies

Urgent overhaul

Textbooks of economic development have described many models highlighting the importance of manufacturing in the development strategy of a country. However, it has been observed that in many developing countries, the importance of manufacturing has diminished over the last 20-25 years, resulting in de-industrialization. India is not an exception.

India's service sector contributes 54.13 per cent while the manufacturing sector contributes 18.32 per cent followed by agriculture at 14.39 per cent. Rest is being contributed by mining, forestry, construction, and other sectors. Given a large domestic market that needs "products" to consume, such a lower contribution of manufacturing is not a healthy sign.

Manufacturing in most of the fast-developing Asian countries such as Thailand, Indonesia, Malaysia, Taiwan, the Philippines, Korea and China has contributed 30 to 50 per cent of GDP, and thus has helped in eradicating poverty. In contrast, the Indian manufacturing sector's contribution to GDP has moved from 16 per cent to 18.32 per cent in the last 10 years. However, if we consider the gross value added (GVA) figures, the shares of manufacturing have actually declined from 16.4 per cent in 2017-18 to 15.6 per cent in 2019-20. 'Make in India' initiative, designed to take manufacturing to 25 per cent of GDP, has also failed. Now a new slogan 'Atmanirbhar Bharat' has been coined. Policymakers must realize that no country can attain self-reliance with borrowed technology. Pandemic has revealed that India's dependence on critical technology from 'approved pharmaceutical inputs' (API) to computer chips, is near total.

Patent data reveals the true story of India's poor technological base. The numbers of patent and design applications filed by China and India in 2018 indicate the wide gap in technological know-how that exists between these two neighbours. For example, in 2018, Chinese patent applications (15, 42,002) were over 30 times higher than that of India (50,055). Moreover, 67.7 per cent of the Indian applicants were non-residents and the corresponding percentage of non-resident applicants in China was only 9.6 per cent. The same trend is observed in the case of industrial design applications also. In 2018, the numbers of design applications in China (7, 08,799) were 56 times more than that of India (12,632). And in India, 29.3 per cent of applications were filed by non–residents compared to only 2.7 per cent of applications by non-residents in China.

The major commodities India exports now consist of either primary goods or subsidized agricultural products. To remain cost-competitive in the global market, industry captains have convinced the Union government to initiate a massive 'Labour Law Reform'. Accordingly, the Indian Parliament has enacted four labor codes replacing nearly all the previous labor rules and regulations that protected the safety and security of the organized labor forces in India. Once these codes are notified, the entire country will become a 'Special Economic Zone' by default where labor forces will be exposed to ruthless exploitation to make Indian goods cost-competitive in the global market. Nonetheless, 'cost advantage' cannot be a long-term strategy for any sector.

In this brief essay we shall try to address three basic questions related to manufacturing.

1) As contemporary technical education and proprietary control on intellectual property rights are very critical in modern manufacturing, a brief analysis on the genesis of India's technical education since the British colonial period would help us to understand the manufacturing sector better.

2) It is also important to know the dominant trend of job preference of millions of Indian engineers who enter the job market every year.

3) It appears that the computer software (services) industry has flourished in India at the cost of hardware manufacturing. The last section will try to explore the reasons behind this development.

The genesis of engineering education in India

The great engineers of medieval India were mainly Shudras, members of the lowest varna in the caste hierarchy. The Shudras produced a steady supply of architects, builders, stonemasons, bronze sculptors, goldsmiths, and other professionals. Sometimes called the Vishwakarma community, these artisans and craftsmen worked in hereditary guilds. They studied structural design, mathematics, material science, and the artistic conventions of the day. Commissioned by kings, merchants, and Brahmins—who disdained all manual labor themselves—the Shudras, aided by the labor of those considered "untouchable" and outside the Varna hierarchy, built all of India's engineering marvels. A skilled artisan was called Silpin, who sometimes inscribed his name on his creations. In his book, 'Social Structure: Caste and the delusion of "merit" in Indian higher education', Namit Arora explains in detail how the caste system has ruined the technical skill and knowledge of the lower caste karigars (craftsmen) in the name of 'merit'.

One of the most significant consequences of the establishment of British supremacy in India was the disruption of the centuries-old union between agriculture and the manufacturing industry. This resulted in the progressive decline and destruction of the Indian town handicrafts and village artisan industries. Thus, British rule brought the near destruction of traditional handicrafts along with their technical know-how, the drainage of wealth through direct plunder and revenue extraction, and the transplantation of Western-type industrial capitalism in India.

The destruction of the time-tested traditional iron smelting technique in the Bankura district is a case in point. It is reported that during the mid-nineteenth century, iron was smelted in the Birbhum district following an indigenous method. The iron smelting at Birbhum was done in large-sized furnaces. Each furnace produced a mass of iron weighing 25 maunds. It was estimated in 1852 that the total production of the district stood at 2,380 tons of crude iron per annum. The large-scale smelting conducted at Birbhum attracted the attention of Europeans. In 1852, a Calcutta firm, Messrs. Mackay & Co., started the smelting of iron in this district and erected for this purpose, a furnace and plant on European lines. No doubt this furnace attracted the majority of the men who had formerly smelted iron by their own method; and when some twenty years later this enterprise was abandoned, the smelting of iron in the district appeared to have absolutely ceased.

However, the local artisans received a major blow during the mid-nineteenth century from the newly educated Bhadralok 'service community' (Brahmin, Kayastha, and Boidya) of Bengal. The Bhadraloks took strong exception to the official policy of confining technical education mostly to the improvement of the style of work of carpenters, smiths, and other handicraftsmen. They pointed out that Bengal already had enough trained artisans. What the province needed were modern engineers. "The main goal of technical education had to be not the revival of the extinct and dying industries but the establishment of new large-scale industries, which would produce goods that were at that moment being imported'', writes Sarkar Subhobrata (2013).

The Bengali intellectuals vigorously pressed for the opening of high-level institutions where the most advanced technical education would be provided. Pramatha Nath Bose, a noted geologist, and science-enthusiast observed: "Yes, technical education is very badly needed in this country. However, what kind of technical education is it that we want? Technical education may be briefly defined to be training for industries. In order to settle what kind of technical education is specially wanted, we must find out what industries are capable of special development. Now industries may be grouped under two heads: (i) Art industries, such as carpentry, shoemaking, engraving, etc, that is to say, industries which have a very remote, if any, connection with science. (ii) Science industries, industries more or less dependent upon some branch or other of natural science, such as mining, glass-manufacturing, cotton-manufacturing etc. From what I have already said, it will be apparent that it is the science and not the art industries that need to be specially developed."

Because of this systematic propaganda against the inclusion of the artisan communities, who could have been the flagbearers of modern industries of Bengal, the traditional artisans were deprived of an opportunity to upgrade their skills. The outcome of the Bhadralok-centric technical education was not very encouraging. The observation of Watson, ER 1907, may provide some ideas. He writes: "At the Civil Engineering College, Shibpur, there is a department of mechanical engineering with a well-equipped foundry, smithy, and turning shops, and all the students as a matter of course pass through this department. The native students are of the Babu class and, in practice, it has resulted that the majority of the successful students of the College have obtained appointments in the Public Works Department of the Government and that few have taken up mechanical engineering as a career. He also added that at Shibpur, there were a few artisan pupils who belong to the mistri class. They came at an early age and picked up their education in the shops. They were given a small salary, Rs three to Rs five per month, to compensate their parents for their labor, and as they grew older, they obtained employment as mistris (craftsman) in some of the Calcutta engineering works."

By the late twentieth century, this had changed more in favor of upper-caste elites. In her book, Subramanian A (2019), a professor of anthropology and South Asian studies, has rightly located the start of this change in nineteenth-century British India, when new social and economic forces began shifting technical knowledge "from guild to state, shop-floor to the classroom, and lower to upper caste." She explains how, in less than a century, the engineering profession in India "went from being the purview of lower-caste artisans to becoming integral to state power, economic development, and upper-caste status." Subramanian explores the psychology and the demographics of India's new engineers, and the politics of caste, class, reservations, and exposes upper-caste tricks that perpetuate their inherited social and cultural capital—mainly by attributing their professional attainments to their aptitude and innate brilliance, or "merit." Indeed, such claims constitute a long-standing conspiracy of ignorance about the role of caste in shaping not just engineering education but all professional higher education in India. The British colonial model of technical education, managed and controlled by the Bhadralok service communities, still dominates engineering education in India.

Though during the last couple of decades few initiatives have been taken to include the lower caste students in engineering education, the initiative has not been successful. Upper caste service communities still dominate technical education in India at the expense of traditional crafts communities. In a recent study, it is observed that almost 63 per cent of the undergraduate dropouts at the top seven Indian Institutes of Technology (IITs) over the last five years (till July 2021) are from the reserved categories, according to Education Ministry data. Almost 40 per cent were from the Scheduled Caste and Scheduled Tribe communities. The Hindu reported earlier this month, that in some institutions, the SC/ST share was as high as 72 per cent. This long denial of the traditional craft communities from modern technical education might have adversely affected the Indian manufacturing sector.

Where have all the engineers gone?

India is one of the largest producers of engineering graduates in the world. According to industry estimates, at least 15 lakh engineers graduate every year and out of which only 2.5 lakh students land relevant jobs. Out of these 2.5 lakhs, roughly 2.2 lakh openings are in software, within which a vast majority (1.8 lakh jobs) are in IT services, earning around Rs 3-5 lakh per annum (LPA) in remuneration. In another study, it has been revealed that only three per cent of engineering graduates in India get high-quality tech jobs with a yearly salary package of Rs 8-10 lakh and above. The report claims that 80 per cent of these engineering graduates end up pursuing non-technical jobs due to the non-availability of suitable employment opportunities, reported Times of India in April 2020. The newspaper further reported that during pandemic years also, the IT and software sector were the major recruiters of engineering graduates. The Indian IT industry, which recruits engineers from all branches, be it computers / IT / electronics / electronics and telecommunication / biomedical / mechanical / Civil is said to have augmented its numbers by 2.1 lakh people this year, the highest in four years.

As expected, computer engineering attracts the largest number of engineering students. Around 880 thousand students enrolled in the computer science engineering discipline in the academic year 2019. The second highly sought-after engineering discipline was mechanical with about 782 thousand students for the same year. As reported by Statista, the other three disciplines which attracted students most were: electronics engineering (631 thousand), civil engineering (536 thousand), and electrical engineering (394 thousand). It is interesting to observe that chemical engineering does not rank among the first five disciplines though India is claimed to be the 'pharmaceutical hub of the world'!

In a nutshell, we can infer that India's best engineers are mostly engaged in writing codes for the offshore projects of their respective employers. Thanks to these hard-working engineers, India is the leading software sourcing destination across the world, accounting for approximately 55 per cent market share of the USD 200-250 billion global services sourcing business in 2019-20.

The IT services accounted for eight per cent of India's GDP in 2020. Exports are expected to increase by 1.9 per cent to reach USD 150 billion in FY21. According to STPI (Software Technology Park of India), the software exports by its registered units increased by seven per cent to reach Rs five lakh crore (USD 67.40 billion) in FY21 from Rs 4.66 lakh crore (USD 62.82 billion) in FY20.

During the last three decades, India's software sector has flourished exponentially. But the policymakers and academics are now raising a very pertinent question. Has India's software service sector grown at the cost of the core manufacturing industry of India?


While looking for some IP-related data for writing this piece I visited the web pages of a few major Indian software firms. After all, India controls around 55 per cent global market shares of this very important sector. On one of the websites of a major Indian IT company, I came across a list of ten global companies with the number of AI-related patents they filed in 2016. The data was sourced from the ClearViewIP in Feb. 2017. Qualcomm topped the list with around 1,300 listed patents followed by Microsoft with nearly 1,000 patents. Sony was the 10th member of that list with around 350 patents to its credit. Not a single Indian firm has figured in the list! It seems Indian 'dot. compradors' still find it very lucrative to pursue the 'body-shopping strategy' to export software services across the globe. Economist Jyoti Saraswati (2012) in his book, 'Dot.Compradors: Power and policy in the development of the Indian software industry', has defined the term as 'a native-born agent, relating to the information technology industry, employed by a foreign business to serve as a collaborator or intermediary in commercial transactions.'.

In the early 1990s, the 'economic reform' was imposed on India when the captains of the industry and the political establishment of the country were not ready for it. This resulted in the proliferation of crony capitalists and dot. compradors who have amassed huge wealth at the cost of manufacturing and agriculture. The present political system has become nonresponsive and fragile. Social unrest is on the rise. The economy in general and manufacturing, in particular, need urgent overhauling.

Views expressed are personal

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