From the start of industrial modernity, national power has been anchored in precision manufacturing. Britain's Industrial Revolution rested on cotton mills as well as on advances in machine tools. John Wilkinson's boring mill enabled the exact tolerances required for James Watt's steam engines, while Henry Maudslay's screw-cutting lathe introduced standardised threads and the principle of interchangeability.
Germany consolidated this foundation by embedding polytechnic institutes and vocational guilds into its industrial ecosystem, producing a skilled workforce and firms like Krupp, Bosch and Siemens. The US advanced further through the American System of Manufacturing, scaling interchangeable parts across armaments, railways and later aerospace, supported by federal procurement and research laboratories.
Japan, after 1945, combined statistical process control with lean production, embedding Kaizen and Total Quality Management (TQM), which transformed global standards in reliability and miniaturisation. China, beginning in 1978, placed precision engineering and manufacturing depth at the centre of its economic strategy, investing in machine tools, electronics, robotics and semiconductors, thereby creating the world's largest industrial base.
Narendra Modi's call for 'Zero Defect, Zero Effect' and 'higher value at lower cost' is aligned with this recognition. But India has followed a divergent path: liberalisation occurred without industrial deepening, premature celebration of a services-led trajectory substituted for industrial policy, and erosion of competitiveness in core sectors was tolerated.
National Manufacturing Policy of 2011 set an explicit target of raising the sector's share of GDP from 16% to 25% by 2022. In 2025, the figure remains around 17%, with precision manufacturing still the weakest link. India's persistent lag in precision manufacturing can be explained by 7 structural reasons.
Vocational is notional: Only 4.1% of the workforce (15-59) has formal technical training (PLFS, 2023-24), compared to >70% in Germany and South Korea. World Bank noted India's tertiary system produces graduates poorly matched to manufacturing, with low exposure to applied engineering, shop-floor practices and metrology.
For precision sectors such as CNC machining, SMT assembly and aerospace components, this thin pipeline translates into poor process capability and weak uptake of automation (robot density in India remains <10% of China's). Unfortunately, Skill India Mission has not able to address this issue.
Small fry: Economic Survey 2018-19 highlighted India's manufacturing trap of 'dwarf firms' - older enterprises with fewer than 100 workers that neither expand nor upgrade. Large firms (>500 workers) are too few to anchor supply chains, while MSMEs lack the capital for precision capabilities such as 5-axis CNCs, CMMs and ISO 17025 labs. Without a dense middle layer of tier-2 and tier-3 suppliers, India remains an assembler rather than an originator in GVCs.
Labour constraints: Recent consolidation into 4 labour codes is incomplete, unevenly implemented and insufficient. What India requires is a single, comprehensive employment code. Bangladesh did it way back.
Power points: Precision industries demand reliability. But India delivers variability. Logistics costs, historically 13-14% of GDP, are only now falling toward 8-9% under PM Gati Shakti. It is still higher than South Korea (7%) or Germany (6%). Further, power quality is a hidden barrier.
World Bank Enterprise Surveys (2020) show frequent outages and voltage instability, forcing firms to maintain expensive captive systems. Precision processes, CNC, wafer fabrication and SMT soldering, require uninterrupted, distortion-free supply. High industrial tariffs, often >₹7/kWh, further erode competitiveness relative to China ($0.088/kWh) and Vietnam ($0.085/kWh).
Goods not good enough: Domestic machine tool output covers only 50% of domestic demand, with imports filling the gap. Critical assets like 5-axis CNCs, laser interferometers, tool presetters and high-precision spindles are still mostly imported.
Metrology is equally shallow. NABL accredits few calibration labs. Without dense access to CMM calibration, gauge R&R and ISO 17025-compliant labs, firms cannot achieve ppm-level defect tolerances demanded in aerospace, medical devices or semiconductors.
Jugaad jungle: A survey found low adoption of process management, SPC and structured TQM. Quality initiatives remain checklist-oriented rather than embedded. Six Sigma penetration is limited outside automotive and IT services.
In contrast, German Mittelstand (SME) firms embed Kaizen and SPC at every layer. Without institutionalising statistical quality control, corrective action reports (CARs) and supplier production part-approval process (PPAP), Indian firms cannot consistently meet <50 ppm defect rates standard in global precision supply chains.
Starving R&D: India spends only 0.7% of GDP on Rundefined70%). This constrains design-for-manufacture (DfM), process innovation and new product development. Weak academia-industry collaboration means labs produce papers (often uncitable), not process innovation.
India cannot grow without manufacturing. Nor can it acquire real geopolitical leverage if it remains structurally dependent on foreign supply chains. The objective is not indigenisation for its own sake but global competitiveness. Until India confronts its structural bottlenecks, in skills, firm size, labour flexibility, capital goods depth, infrastructure reliability, quality culture and R&D intensity, precision manufacturing will remain a distant dream. And, with it, India's claim to genuine economic sovereignty.
Germany consolidated this foundation by embedding polytechnic institutes and vocational guilds into its industrial ecosystem, producing a skilled workforce and firms like Krupp, Bosch and Siemens. The US advanced further through the American System of Manufacturing, scaling interchangeable parts across armaments, railways and later aerospace, supported by federal procurement and research laboratories.
Japan, after 1945, combined statistical process control with lean production, embedding Kaizen and Total Quality Management (TQM), which transformed global standards in reliability and miniaturisation. China, beginning in 1978, placed precision engineering and manufacturing depth at the centre of its economic strategy, investing in machine tools, electronics, robotics and semiconductors, thereby creating the world's largest industrial base.
Narendra Modi's call for 'Zero Defect, Zero Effect' and 'higher value at lower cost' is aligned with this recognition. But India has followed a divergent path: liberalisation occurred without industrial deepening, premature celebration of a services-led trajectory substituted for industrial policy, and erosion of competitiveness in core sectors was tolerated.
National Manufacturing Policy of 2011 set an explicit target of raising the sector's share of GDP from 16% to 25% by 2022. In 2025, the figure remains around 17%, with precision manufacturing still the weakest link. India's persistent lag in precision manufacturing can be explained by 7 structural reasons.
Vocational is notional: Only 4.1% of the workforce (15-59) has formal technical training (PLFS, 2023-24), compared to >70% in Germany and South Korea. World Bank noted India's tertiary system produces graduates poorly matched to manufacturing, with low exposure to applied engineering, shop-floor practices and metrology.
For precision sectors such as CNC machining, SMT assembly and aerospace components, this thin pipeline translates into poor process capability and weak uptake of automation (robot density in India remains <10% of China's). Unfortunately, Skill India Mission has not able to address this issue.
Small fry: Economic Survey 2018-19 highlighted India's manufacturing trap of 'dwarf firms' - older enterprises with fewer than 100 workers that neither expand nor upgrade. Large firms (>500 workers) are too few to anchor supply chains, while MSMEs lack the capital for precision capabilities such as 5-axis CNCs, CMMs and ISO 17025 labs. Without a dense middle layer of tier-2 and tier-3 suppliers, India remains an assembler rather than an originator in GVCs.
Labour constraints: Recent consolidation into 4 labour codes is incomplete, unevenly implemented and insufficient. What India requires is a single, comprehensive employment code. Bangladesh did it way back.
Power points: Precision industries demand reliability. But India delivers variability. Logistics costs, historically 13-14% of GDP, are only now falling toward 8-9% under PM Gati Shakti. It is still higher than South Korea (7%) or Germany (6%). Further, power quality is a hidden barrier.
World Bank Enterprise Surveys (2020) show frequent outages and voltage instability, forcing firms to maintain expensive captive systems. Precision processes, CNC, wafer fabrication and SMT soldering, require uninterrupted, distortion-free supply. High industrial tariffs, often >₹7/kWh, further erode competitiveness relative to China ($0.088/kWh) and Vietnam ($0.085/kWh).
Goods not good enough: Domestic machine tool output covers only 50% of domestic demand, with imports filling the gap. Critical assets like 5-axis CNCs, laser interferometers, tool presetters and high-precision spindles are still mostly imported.
Metrology is equally shallow. NABL accredits few calibration labs. Without dense access to CMM calibration, gauge R&R and ISO 17025-compliant labs, firms cannot achieve ppm-level defect tolerances demanded in aerospace, medical devices or semiconductors.
Jugaad jungle: A survey found low adoption of process management, SPC and structured TQM. Quality initiatives remain checklist-oriented rather than embedded. Six Sigma penetration is limited outside automotive and IT services.
In contrast, German Mittelstand (SME) firms embed Kaizen and SPC at every layer. Without institutionalising statistical quality control, corrective action reports (CARs) and supplier production part-approval process (PPAP), Indian firms cannot consistently meet <50 ppm defect rates standard in global precision supply chains.
Starving R&D: India spends only 0.7% of GDP on Rundefined70%). This constrains design-for-manufacture (DfM), process innovation and new product development. Weak academia-industry collaboration means labs produce papers (often uncitable), not process innovation.
India cannot grow without manufacturing. Nor can it acquire real geopolitical leverage if it remains structurally dependent on foreign supply chains. The objective is not indigenisation for its own sake but global competitiveness. Until India confronts its structural bottlenecks, in skills, firm size, labour flexibility, capital goods depth, infrastructure reliability, quality culture and R&D intensity, precision manufacturing will remain a distant dream. And, with it, India's claim to genuine economic sovereignty.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
