ISID has been awarded a major research project focusing on the challenges faced in the development of the Medical Device Industry of India, by the Indian Council of Social Science Research (ICSSR) in March 2023. The medical device sector is highly critical for prevention. Yet over 70% of the medical device demand of the country are met through import. However, in recent past, India has taken several measures to promote medical device industry and promote competitiveness in the global market. This study aims to examine the structural characteristics of the Indian medical devices sector and the effectiveness of recent policy initiatives, especially the Modified-Special Incentive Scheme 2012 that provides capital subsidy, Medical Device Parks 2019, Production Linked Initiative scheme 2020 and National Medical Device Policy (draft) 2022, in improving the domestic manufacturing ecosystem. Lastly, it will examine the India’s comparative advantage in the sector.

Research Team: Dr Shailender Kumar Hooda

Collaboration: ICSSR

Status: [Ongoing], project launched in March 2023; time frame: March 2025.

The Make in India programme was launched in 2014 with the objective of increasing the share of the manufacturing sector in the GDP by facilitating investment, both domestic and foreign, into the industrial sector; fostering innovation; building best-in-class infrastructure; developing industrial clusters; and making India a hub of manufacturing, design, and innovation while giving due emphasis to decarbonisation for a sustainable socio-economic development. As part of this programme, the Government of India has taken various measures to encourage manufacturing and investment such as the Production-Linked Incentive (PLI) schemes, improving ease of doing business, reduction in corporate tax, FDI reforms, quality control measures, development of industrial clusters, local content requirements and public procurement orders. This study aims to analyse the impact of the Make in India programme in six manufacturing sectors, i.e., pharmaceuticals, textiles and garments, steel, solar PV modules, fertilizers, and toys. It will make specific recommendations in each of the six sectors with a view to enhance the impact of the Make in India programme on the manufacturing sector of India. The project team consists of.

Research Team: Dr Reji K Joseph, Dr Anjali Tandon, Dr Beena Saraswathy, Dr Ramaa Arun Kumar, DrSangeeta Ghosh and Dr Seenaiah Kale

Collaboration: ICSSR

Status: [Ongoing], project launched in September 2023; time frame: March 2024.

The automobile industry in India is one of the sectors that experienced impressive growth in the post-liberalization period. A protected sector controlled by quantitative restrictions and high import tariffs during the import substitution regime was gradually opened to foreign players through liberalization policies. Huge pent-up domestic demand due to the growth of the middle-class segment and demographic change contributed to the expansion of the production capacity of the automobile industry in India. Besides the original equipment manufacturers, the auto component sector grew through policies of phased manufacturing and later by way of producing for MNCs operating in the domestic market and abroad. This sector entails deep backward and forward linkages extended to domestic and foreign value chains, attracts FDI, and faces global competition both in terms of scale effects and innovation. This study aims to delineate the different factors that contribute to the competitiveness of this sector in the context of domestic and global market and the way automotive manufacturers are coping with the challenges of growing market and emerging technologies. It also reviews the prospects for the PLI scheme for the auto sector. The output of the project has been reported in ISID Working Paper #255.

Research Team: Dr Satyaki Roy

Status: [Ongoing]; started in 2022-23; time frame: 12 months.

The IIDR is the first in a new series of biennial flagship reports launched by ISID, to mark the India@75. It draws upon in-house analytical work, wide-ranging consultations with noted experts, and policy discussions to build a compelling narrative on criticality, opportunities, challenges, and policy reforms needed for industrial transformation of India at the current juncture of its development trajectory as it seeks to emerge as a developed nation by 2047. Besides being one of the biggest economies in the world, India should also be a global leader in inclusive and sustainable development. While drawing lessons from the experiences of the successful industrializers of the West and the East in terms of strategic interventions deployed, it is also cognizant of local specificities and initial conditions besides the changed external context that has turned less benign with recent trends of protectionism, stalled multilateral trade negotiations and the global slow down following the COVID pandemic. In support of the Make-in-India and Aatmanirbhar Bharat programmes, the Report identifies the opportunities of creating decent job opportunities for India’s youthful workforce through empowering MSMEs, providing an enabling framework to budding entrepreneurs and start-ups, improving the quality of FDI inflows, and unleashing the large national champions to emerge as competitive players on the global markets through leveraging technology, including the Industry 4.0. It also offers analysis and thoughts on green industrialization to enable India to contribute to global sustainability targets. It will be backed by extensive policy advocacy through high-level policy dialogues, popular columns, and social media.

Research Team: Prof Nagesh Kumar and the entire faculty.

Collaboration: ICSSR

Status: [Ongoing], project launched in 2022-23; time frame: to be completed by March 2024

Steel plays a key role in the economic progress of nations. Availability of good quality steel at affordable prices is crucial for the sustenance of various other sub-sectors such as infrastructure, construction, automobiles, machinery, and domestic appliances which makes it the backbone of industrial development. Currently, India is the second-largest crude steel producer in the world. However, the presence of India in this market is meagre when compared with the share of China, the leading supplier which controls more than half of the global production. Nevertheless, India is gradually growing its share of world exports, while decreasing its reliance on imports. However, there is a significant demand-supply imbalance for value-added steel products such as specialty steel, for which the country forgoes a significant amount of foreign exchange. In this context, PLI scheme has been announced for selected specialty steel products. The present study aims to comprehensively cover the opportunities and challenges faced by the sector such as low demand, performance of private and public sector firms in the sector, MSMEs in the sector, trade competitiveness of various sub-components, deregulation and pricing, and use of artificial intelligence in various segments of operation.

Research Team: Dr Beena Saraswathy

Status: [Ongoing]; started in 2022-23; time frame: one year

Demand for food is enormously growing due to (a) increasing population and (b) decreasing per capita arable land (globally including India), therefore it is imperative to boost agricultural productivity. It is evident from the history of India that a significant role was played by fertilizers in enhancing India’s food production during the 1960s, termed as Green Revolution. Since then the government has made efforts to optimize fertilizer production to improve agricultural productivity. Given the huge gap between demand for and supply of fertilizer in India, the Government of India is trying to reduce import dependency. Currently 80 percent self-sufficiency has been achieved in the production capacity of urea (nitrogenous fertilizer-N), but in the area of phosphatic and potassic fertilizers (P and K) India is heavily dependent on imports. Therefore, this study will investigate the issues of fertilizer production and its import dependency and assess them from a policy angle to strengthen the industry.

Research Team: Dr K Seenaiah

Status: [Ongoing]; started in 2022-23; time frame: nine months.

The proposed study aims to evaluate the trend in import of inputs and components from viewpoint of import dependence in Electrical Equipment sector of India in the post-reform period with special focus on issues like import of critical inputs, low-cost imports, role of free trade agreements, inverted duty structure, and other factors in contributing to the import trend. The study also aims to assess the state of technology development in view of current technology gaps in this sector, and challenges faced in technology upgradation or local capability development. The extent of technology transfer under various ongoing foreign technical collaborations, barriers to access or acquisition of technology, and local innovation efforts by foreign and domestic firms shall be appraised from a similar perspective. The existing policy framework for promoting technological capability and self-reliance in manufacturing of components and machinery shall be reviewed. These aspects shall be evaluated both at sub-sectoral level and firm level over the recent years, covering select foreign affiliated and domestic firms. Special in-depth case studies of joint ventures, foreign subsidiaries, public sector units, and MSMEs shall be undertaken.

Research Team: Dr Swati Verma

Status: [Ongoing]; launched in 2022-23; time frame: 12 months.

The vaccines and medical device sector is highly critical for growth and lifesaving. The pandemic helped to highlight India’s strengths in vaccines development and manufacture. Presently, over three-fourths of the medical device needs of the country are met through imports. India has taken several measures in the recent past ranging from definitional changes for standardization to incentive schemes for strengthening and developing a robust manufacturing ecosystem in the domestic market, reducing manufacturing cost, and promoting competitiveness in the global market. However, an in-depth study is required to understand the inherent structural problems of the sector. This study aims to understand the size and structural characteristics (in term of value of output, employment, FDI, trade, etc.) of the vaccines and medical devices sector across different categories like consumables & disposables, diagnoses, electrical device, and implants instruments & appliances specially to understand how Indian medical device sector is penetrated around low-technology items to medium & high-tech medical devices. This also analyses the segment-wise comparative advantage and import dependency and compare India’s policy and regulatory processes in a global perspective. Lastly, the role/significance of recent policy measures/initiatives, especially the medical device parks, special incentive schemes and production linked initiative (PLI) schemes, will be analysed in improving the manufacturing ecosystem of medical device equipment and in reducing the import dependency.

Research Team: Dr Shailender Kumar Hooda

Status: [Ongoing], project started in 2021-22; time frame: 12 months.

Pharmaceutical intervention in the context of the pandemic always serves as a critical tool in controlling, eliminating, or even eradicating infectious diseases, thereby helping to resume societal and economic activities. There are many steps in the trajectory of vaccine development ranging from prioritization of research/innovation/development to licensing/clearance/IPR, costing, manufacture, and distribution. Compromising on any of these aspects along with vaccine nationalism can lead to unequal/delayed access of vaccines to global community. In this context, we propose to examine the state of play of vaccine research/development; who produces how much doses (global manufacturing share of vaccine along with the share of inputs used for vaccine production) and the global supply chains of vaccines; the role of global alliances (like the Covax, earlier Gavi) in smoothening and accelerating vaccine development and (equitable) distribution across the globe at affordable price; India’s contribution to global pharmacy in terms of R&D, manufacturing, and global supply chains and in eliminating the barriers (relating to IPR/TRIPS/licensing and technology transfer) to access for low-income people; and, government’s role in making the vaccines accessible within the country. As a first step, the study evaluated the implementation of PLI-I scheme in the industry designed to reduce import dependence for APIs which was presented at an ISID research seminar.

Research Team: Dr Reji K Joseph and Dr Ramaa Arun Kumar

Status: [Ongoing], project started in 2021-22; 12-18 months.

A well-developed machinery sector is the sine qua non for sustained industrialization and growth of any country as the machinery sector lies in the heart of the process of generation and diffusion of innovation in general and in the industry sector in particular. An infinitesimal of new inventions, new products, or new processes once conceived is of no economic relevance unless and until the machinery sector has successfully solved the technical and mechanical problems or developed new machines or equipment which the inventions require. In the history of innovation, it is seen that many inventions were kept idle for a long time after their initial conceptualization because of the absence of mechanical skills, facilities, design, and engineering capability which are necessary to materialize them into working reality. The significance of the machinery sector, therefore, necessitates the promotion of innovation or technological change in the sector itself. In the light of the above, this study intends to analyze technological change in the non-electrical machinery industry in India.

Research Team: Dr R Rijesh

Status: [Ongoing]; started in 2022-23; time frame: eight months.

The Gems & Jewellery industry is important due to its labour-intensive typology and export orientation. The industry also serves to satisfy the demand for cultural and ethnic items that are often hand-crafted and valued for their niche. More recently, challenges have emerged in the form of changing pattern of world demand, increasing use of technology for customization, emergence of global competition alongside the presence of a largely unorganized domestic industry, and shrinking demand in the post-pandemic period. The industry’s competitiveness has been on a decline when compared with other industries and countries. Prudent efforts to revive and maintain competitiveness can be helpful in building India’s brand image as a global player.

Research Team: Dr Anjali Tandon

Status: [Ongoing]; started 2022-23; time frame: six-eight months.

Several policy reforms in India, including FTAs, have focused on attracting FDI to promote GVC engagement. This study explored electronics industry’s GVC engagement within a new analytical and methodological approach. The nature of value chain participation was assessed through in-depth analyses of related and non-related party transactions of selected foreign and indigenous companies, using firm-level financial and customs trade data. The study found that the gains from greater inter- and intra-industry specialisation and scale economies expected from FDI-led production restructuring associated with FTAs accrued predominantly to the lead firms. In-depth case studies established that in the case of both foreign-invested and indigenous firms, India was largely serving as the market for final products. Further, whatever success has been achieved under the industry-specific policies for increasing domestic value addition and export promotion was not translating into the creation of an indigenous manufacturing ecosystem; rather it was leading to forex leakages. Breaking this cycle requires the indigenous ownership of productive and knowledge assets to be built up through vertical industrial policies. The project was sponsored by the ICSSR. Dr Smitha Francis was the project director.

The research study aimed to look at the content of advertising to enquire into stereotypical and inappropriate portrayal of women across five brand categories, viz. FMCG (Fast-moving Consumer Goods), Lifestyle, Automobile, BFSI (Banking, Financial Services, and Insurance), and Travel & Hospitality since 1991, the era of economic liberalisation. The study included survey of the advertising industry to map the minds of creative teams and top management to know about the presence or absence of gender sensitive policies in creating ad content and for women working in the ad sector. The study analysed a number of laws and policies to look at the need for amendments in curricula of academic courses in mass communication being offered at undergraduate and post-graduate levels and to enquire into presence or absence of gendered and inclusive syllabus. The research programme was sponsored by the ICSSR and the final report was submitted to the Council in October 2019. Prof. Jaishri Jethwaney was the Project Director and Prof. Seema Goyal was Co-Project Director.

The study examined the role of government-funded health insurance schemes in providing financial risk protection against medical cost and improving access to healthcare in India and the state of Rajasthan using secondary and field survey data. The results were presented around accessibility, availability, acceptability, affordability, and financial protection indicators to show the effectiveness of the insurance-based system. The study found positive impact of insurance in improving the access to medical care use and reducing inpatient spending burden of households. Access to healthcare was found to be high in high provider network areas/districts. Given the intrinsic market failure in the insurance-based system, the study suggested establishing national, nodal, and regulatory agencies across states. These should be highly competent and efficient purchasing agencies, particularly with respect to (i) selecting qualified providers to contract services, (ii) negotiating with providers for price and the mode of payment, and (iii) contracting to provide quality care. For this purpose, a system need to be developed to collect proper market information and accurate data on cost/price. If the government decides the package rate on the basis of current high-priced privately dominated market, it will cost more to the government in the form of premium payment. The project was sponsored by the ICSSR and the final report was submitted to the council in March 2019. Dr. Shailender Kumar Hooda was the Principal Researcher.

A persistent delinking of growth and employment during the high growth phase of Indian economy followed by sluggish growth in the aftermath of global financial crisis together with alarming signs of absolute decline in manufacturing employment is the pretext for a quest towards a growth trajectory that facilitates gainful employment. This study focused on an industrial cluster producing readymade garments in Kolkata, West Bengal. It has hardly attracted attention hitherto by policymakers, mostly unnoticed in the huge gamut of cluster studies, possibly because this cluster has a low share in exports of garments despite having the largest share in domestic readymade garments market. Since it
provides employment to a huge workforce in different layers, products of this cluster are being sold across India, and more importantly, the producers hardly face any constraint in demand barring discrete episodes of short-term shocks. It primarily offers a case that once again reasserts the importance of domestic market particularly in the context of a large country like India. Even though it emerged as an artisanal cluster largely populated by small and tiny producers, mostly job workers, the study took contesting trends of fragmentation on the one hand, and vertical growth on the other. Further, the study argues that entrepreneurial skills, capabilities of labour and institutions that emerged from within the cluster gave rise to a production organisation that had shown immense capability in responding to changing demand over time, but it largely remained confined to the low-end of the garments market. The study was completed in November 2018 as part of the multi-institutional collaborative project with IGIDR titled “Manufacturing Matters: A Research Proposal for Employment Oriented Industrialisation,” funded by Ford Foundation. Dr. Satyaki Roy was the Principal Researcher.

The pharmaceutical industry’s structure is changing due to the impact of pathways chosen by the firms for global integration of the industry. The study sought to understand the nature of emerging constellations of interactions between large and small firms in the area of manufacturing of bulk drugs and formulations. The broad objectives of the study are:

1. To determine the relationship and nature of foreign and domestic firms with small firms through the channels of outsourcing, contracting, takeovers and integration into a global pharmaceutical production and innovation networks and the implications for learning innovation and competence building.
2. Contribution of outsourcing and contracting in the manufacture of pharmaceuticals to technology transfer and upgrading of capabilities;
3. Role played by the policies for regulation of FDI, price control, competition, cluster upgrading, public procurement, R&D support, intellectual property protection, standards of drug approval, quality control, clinical trials, etc.

Field investigations were carried out to study the implications for the processes of capability building for production, operations and manufacturing innovation of the emerging practices of large foreign and domestic firms. The two-year study was sponsored by the ICSSR. The draft report was completed in November 2017 and Final Report was submitted to the ICSSR in January 2018. Prof. Dinesh Abrol was the Project Coordinator.

Two studies, IT Industry of India and Post-TRIPS Pharmaceutical Industry in India, are taken up as part of the project on Innovation, Economic Development and IP in India and China sponsored by Max Planck Institute for Innovation and Competition, Germany and Applied Research Centre for Intellectual Assets and the Law in Asia (ARCIALA), Singapore Management University, Singapore. The first study IT Industry of India highlights the role of government policy in the development of electronics industry and the ITES sector. However, it is argued that these industries have not been driven by continuous innovation. The dynamics of these industries in India was very different from their global hubs where innovation systems together with intellectual property regimes played an important role in their growth.

In the second study, Post-TRIPS Pharmaceutical Industry in India, the TRIPS compliant patent law of India as well as the performance of Indian pharma industry during the post TRIPS-era are discussed. Most of the performance indicators show an upward trend during the last two decades; but their growth rates have been falling. This makes it difficult to draw firm conclusions on the performance of the industry. However, on two indicators — R&D and patenting, there is a clear upward movement, which indicates much better performance. Both the studies are under review process for publication. The study was undertaken by Dr. Reji K. Joseph, Associate Professor, ISID and Prof. Biswajit Dhar, IPR Chair Professor, Jawaharlal Nehru University, New Delhi.

Tobacco consumption is responsible for 9 to 10 percent of global mortality and considered as one of the major risk factors for non-communicable diseases (NCD). The World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) held in March 2003 outlined that tobacco taxation is the most cost-effective intervention to reduce consumption. The FCTC stipulated that all tobacco products be taxed at a tax incidence of 70 percent. A tax-driven price hike of tobacco products is expected to reduce tobacco consumption, more particularly among the current users while preventing the initiation among new users. Tobacco taxes in India, however, have not resulted in reducing tobacco consumption at the population level. Given this fact, the study examines the effectiveness of tobacco taxes in India, and, makes several observations, including on the real value of output and sale of tobacco (registered and unregistered) manufacturing industry, and affordability of various tobacco products both at the national and state levels, dominance of firms on tobacco control policy.

In order to use taxation as an effective instrument of tobacco control in India, the study recommends: (i) removal of all differential in excise duties and VAT rates on cigarettes to make the rates high and uniform across filtered cigarette and sizes, (ii) excise duty on tobacco products must be levied based on per gram of tobacco content on its products, (iii) equal percentage of tax burden across segments/lengths and brands of cigarettes so as to reduce demand substitution between them, (iv) not only the tax on beedies should be increased manifold, but the distinction between handmade and machine made beedies for the purpose of levying excise duty be also abolished, (v) increase in tax burden (through rise in excise and VAT rate) to 70 per cent of retail price of tobacco products as against the current rates of 20 per cent in the case of beedies and 55???59 per cent on cigarettes, (vi) broadening of tobacco tax net by bringing informal players into the tax net. Simplify tobacco tax structure and improve tax administration to impose and collect excise & VAT from informal manufacturers, and finally, (vii) to move towards the long overdue Goods and Services Tax (GST) regime. While doing so, the government could impose the maximum duty (Central GST and State GST) on tobacco products in the 3-tier structure as envisaged.

The study was jointly undertaken by ISID and PHFI and WHO provided the financial support. A draft report was submitted to WHO in March 2014. Dr. Shailander Kumar Hooda of ISID and Dr. Sarit Kumar Rout, Mr. Pritam Dutta and Dr. Swati Srivastava of PHFI are the principal researchers.

The study deals with a comprehensive evaluation of the National Pharmaceutical Pricing Policy (NPPP), 2012 and the Drugs Price Control Order (DPCO), 2013 besides the past DPCO 1979-2013 and examines implications of the policy both in terms of access to medicines and industrial development. The key findings of the study are: i) One can expect the outcomes of prices of medicines to remain market-led (status quo) since the Drug Price Control Order (DPCO) of 2013 utilizes the formula of market determined pricing to undertake price regulation rather than price competition. Market will continue to be led by large firms while small and medium scale firms will continue to be at a disadvantage; ii) The pharmaceutical industry is characterised by high levels of market concentration. Out of 1468 sub-therapeutic categories of medicines, 73 per cent sub-therapeutic (1072) categories exhibited high concentration as measured by the Herfindahl-Hirschman Index; iii) The coverage of drugs under the DPCO 2013 is limited to only about 17 per cent of the drugs being prescribed and promoted at present in the country; iv) Analysis of the impact of the DPCO 2013 on the prices for marketing and sales leaders and those who have a share of 1 per cent in the market indicates that the price impact of the implementation of DPCO 2013 is marginal for the consumers buying drugs from the retail market; v) The absolute decrease in sales because of price control is estimated at less than 2 per cent (Rs. 1,300 crore) of the total market turnover. Therefore, not much relief can be expected to flow to the consumers; vi) The DPCO 2013, through its shortcomings, also provides pharmaceutical companies with several escape routes from price control. It not only permits the presence of a substantial inessential/irrational/unsafe medicines to be marketed, but also encourages its growth by allowing a 10 per cent increase in prices each year; vii) DPCO 2013 does not address the challenges of achieving cost-competitiveness and indigenous development of the bulk drug industry; and, viii) therefore, the choice of the drug price control mechanism must be made keeping in view the prevailing market situation and the need to safeguard indigenous industrial development and the scope to develop competitive public procurement by states.

The findings of the study were extensively used by the National Pharmaceutical Pricing Authority (NPPA), Department of Pharmaceuticals, Ministry of Health and Family Welfare, Government of India and civil society organisations while defending their case in a PIL filled in the Hon`ble Supreme Court of India on drug prices. The study was jointly undertaken by ISID and PHFI and presented in a Two-day National Conference organised by the Institute during March 06-07, 2014. Prof. Dinesh Abrol of ISID and Dr Shaktivel Selvaraj, Ms Malini Aisola and Ms Aashna Mehta of PHFI are the principal researchers.

The project, sponsored by NITI Aayog, is a policy-oriented study aimed at assessing the challenges and opportunities of labour augmenting growth in labour-intensive sectors in India.

It addresses the broader issue of the persistent gap between economic growth and employment, which continues even during periods of high growth in India. The underlying concern of this project is to address the critical issue of slow employment growth in a country with abundant labour reserves and to propose recommendations for creating meaningful employment opportunities. The study focuses on four labour intensive sectors identified in the project’s Terms of Reference: food processing, textile and garments, leather and footwear, and gems and jewellery. These sectors have relatively high labour-to-capital ratios and significant potential for generating new jobs. The research will utilise various secondary databases to examine the nature and growth of employment in these sectors, their export potential, extent of import dependence, and India’s comparative advantages in the global market. In addition to analysing secondary data sources such as ASI, NSSO, PROWESS IQ, UN COMTRADE, and TIVA, the project will also gather insights through interactions with various stakeholders, including big and small manufacturers, exporters, industry associations, export councils, and policymakers via field visits and interviews.

The ISID study team involved in this research comprises Nagesh Kumar (Project In charge), Satyaki Roy (Co-Project In charge), Anjali Tandon, Ramaa Arun Kumar, Sangeeta Ghosh, and Isha Chawla.