||One size does not fit all : An analysis of the importance of industry-specific vertical policies for growing high technology industries in India
16-082016-07 , GRIPS Policy Research Center
India is one of the fastest growing countries of the world at present. Currently she is attempting to raise the share of her manufacturing sector to at least a quarter of her GDP by 2022 through variety of proactive industrial policies. This has led to a debate of sorts on the role of industrial policies when the economy is moving towards a free market economy where the discretionary role of government is reduced to a minimum. India's small manufacturing sector, although now sixth largest in the world, is slowly moving towards high and medium technology industries, both in terms of manufacturing value added and in terms of share of manufactured exports. India is now slowly becoming an important player in selected high and medium high technology sectors such as aerospace, pharmaceuticals, and automobiles while her attempts at developing a telecommunications equipment manufacturing industry has failed. The paper identifies the vertical policies that have been crucial for the development or lack of it of each of these four high tech industries. While these vertical policies are shown to be one of the necessary conditions for the growth of these high technology sectors, the sufficient conditions depend on the existence of firm strategies that can take advantage of these proactive vertical policies. The paper thus underscores the importance of specific vertical policies be it is the case of the offset policy in the case of the aerospace industry, the patent policy in the case of the pharmaceutical industry and so on.