While India may be one of the world's fastest growing economies, industrial production is not really keeping up with demand. The World Economic Forum's Global Manufacturing Index released on Sunday puts India in 30th position, five places below China.
India is however ahead of the other BRICS nations Brazil, Russia and South Africa.
Japan topped the rankings on the back of developing the best structure for production, according to in the Geneva-based WEF's first Readiness for the Future of Production Report, followed by South Korea, Germany, Switzerland, China, the Czech Republic, the US, Sweden, Austria and Ireland in the top 10.
Talking about India, which had a total manufacturing value of over $420 billion in 2016, the report said that the country's manufacturing sector has grown by over 7 per cent per year on average in the past three decades and accounts for 16-20 per cent of India's GDP, but production still lags demand.
''Home to the second-largest population in the world and one of the fastest growing economies, the demand for Indian manufactured products is rising. India has room for improvement across the drivers of production, except for demand environment where it ranks in the top 5,'' the WEF report says.
It listed human capital and sustainable resources as the two key challenges for India and said the country needs to continue to raise the capabilities of its relatively young and fast-growing labour force.
This entails upgrading education curricula, revamping vocational training programmes and improving digital skills, the WEF said, adding that India should continue to diversify its energy sources and reduce emissions as its manufacturing sector continues to expand.
The forum took note of the government's 'Make in India' initiative to try and turn India into a manufacturing hub, and moving towards a more connected economy with the announcement of $59 billion investment in infrastructure in 2017.
The report, which analyses development of modern industrial strategies and urges collaborative action, categorises 100 countries in four major groups: 'Leading' (strong current base, high level of readiness for future); 'High Potential' (limited current base, high potential for future); Legacy (strong current base, at risk for future); and Nascent (limited current base, low level of readiness for future).
India has been placed in the Legacy group alongside Hungary, Mexico, the Philippines, Russia, Thailand and Turkey, among others. China is on the list of Leading countries.
The report pointed out that the 25 countries placed in the Leading category were in the best position to gain as production systems stand on the brink of exponential change.
In terms of the scale of production, India has been ranked ninth, while for complexity it is at 48th place. For market size, India is in third spot, while areas where the country is ranked poorly (90th or even lower) include female participation in labour force, trade tariffs, regulatory efficiency and sustainable resources.
In a separate list of countries best positioned to capitalise on the fourth industrial revolution to transform production systems, the US has been ranked on the top, followed by Singapore, Switzerland, the UK and the Netherlands in the top five. India has been ranked 44th on this list, while China is at 25th place and Russia at 43rd. However, India is ranked better than Brazil (47th) and South Africa (49th).
The report, been developed in collaboration with A T Kearney, calls for new and innovative approaches to public-private collaboration are needed to accelerate transformation.