Quality of jobs, not just job creation, key challenge as India eyes manufacturing push: PM-EAC member Gaurav Vallabh

Rising Bharat Summit

• India skipped manufacturing, moving from agriculture to services
• Manufacturing push, deregulation needed for 10%+ state growth
• Tier-2 and tier-3 cities seen as next growth drivers

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Admitting that employment quality remains a concern, Gaurav Vallabh, a member of the Prime Minister’s Economic Advisory Council (PM-EAC) on Friday said India bypassed manufacturing in its growth journey by moving directly from agriculture to services, and must now build an “intellect-based manufacturing” ecosystem to raise MSMEs and drive 10 percent-plus state growth.

Speaking at Network 18 Rising Bharat Summit, Vallabh said, “I admit creating jobs is an issue. More important is quality of jobs is an issue.” He added that India’s structural transformation had skipped a critical stage. “From agriculture we directly jumped to services economy. We didn’t focus in manufacturing economy.”

Manufacturing push and deregulation imperative

Calling for a structural reset to support investment and scale, he said manufacturing must anchor the next phase of expansion. “Manufacturing is 16% of GDP currently,” he said, indicating the limited share of the sector in the overall Gross Domestic Product (GDP).

He argued that policy reform was essential to unlock private capital. “We require deregulation in land, labour and legal for HNIs to invest,” he said, adding, “We have miles to go as far as deregulation is concerned for Businesses to Invest, inform, operate.”

According to him, state-level growth would be central to India’s broader development ambition. “Most states need to grow over 10%, for which MSMEs, micro organizations need to grow. Next league should be of fierce manufacturing,” he said.

Capex, exports and digitisation

The PM-EAC member highlighted the role of public capital expenditure in crowding in private investment. “Capex expenditure is huge. Re 1 of capex has multiplier effect of Rs 2.5-3,” he said.

Capital expenditure, or capex, refers to government spending on building physical assets such as infrastructure, logistics networks and defence equipment. A multiplier effect of Rs 2.5–3 suggests that each rupee of public investment can generate multiple times that amount in economic output through supply chain and demand linkages.

He also pointed to a shift in defence production. “Defence equipment manufacturing, has now moved to exports,” he said, signalling a transition from import dependence towards export-oriented manufacturing in select segments.

At the same time, he emphasised the technological dimension of the next growth phase. “Fierce digitisation has happened,” he said, adding, “Intellect based manufacturing will be the new word for India.”

Tier-2, tier-3 cities as growth drivers

The PM-EAC member said the next phase of expansion would not be confined to metropolitan centres. “Next level of growth drivers will be in tier 2, 3 cities which will take us to Viksit Bharat,” he said.

Framing the current juncture as an opportunity, he added, “India’s time has come.”