The Importance Of Urbanization In India

Policy Measures

1. Openness to international trade

Open policies for access to foreign intermediate goods and services will improve India’s position in regional or global supply chain and encourage firms to invest in production facilities, job creation, and technology in Indian market. Openness to trade entails the following measures:

1.1 Trade facilitation: Addressing border and information bottlenecks

a. As goods cross borders in GVCs, primarily as inputs and then as final products, fast and efficient customs and port procedures will play an essential role to smoothen operations in supply chains. To compete globally, Indian firms require lean inventories to respond swiftly to demand; and reduce unpredictable border delays with fast-track

Promoting Urbanization and Smart Cities Cluster

With rapid urbanization in India, and development of cities as economies of agglomeration, it is critical for Indian urban centers and cities to serve as knowledge and innovation hubs to attract investment and raise productivity. With rapid urbanization impacting strategic thinking around GVCs, investment in smart cities as demand and supply centers will play a key role in the GVC ecosystem. Appropriately, cities should be perceived and developed as innovation centers with localized and customized value chains, by leveraging and promoting agile SMEs. Broad focus on urban clusters can be classified as:

• Developing core physical infrastructure that connects people to energy, water and other services, and to markets;

• Policy and Regulations: Budgetary and business environment policies focusing on less-restrictive regulations for flow of goods, services, capital and labour and Foreign Economic Policies to promote cluster economic activity, and FDI;

• Building institutions for social capital;

• Strengthening political and legal system of city

This is posing daunting challenges for the policymakers. Many policies and initiatives have been taken to boost growth of output in the sector. However, these policies have fallen short of targeting declining domestic value-addition in manufacturing industries.

To increase value-added growth in manufacturing, it is necessary to strengthen backward and forward linkages of manufacturing industries between themselves as well as across sectors, including services sectors. While services sectors can substantially add to productivity growth of manufacturing, manufacturing can also add to growth of services by providing additional domestic demand for them. Thus, building strong domestic value chains within the economy is needed to be able to gainfully link into global value chains. Incentivizing domestic firms to procure domestically in order to develop their domestic input industry can boost global competitiveness of many manufacturing