Analyzing technology aspect of India's manufacturing: The global context and future of work

Although developed countries lead in technological advancements and adoption, nations in the Global South are not immune to their effects due to increasingly borderless interactions. The extent of transformation will depend on the economic and technological feasibility in the less developed economies suggesting the co-existence of existing technologies even though the technology frontier continues to shift upwards. Therefore, it is intriguing to understand the relative significance of the distinguished technology levels in terms of their employment base and also for different typologies (e.g. employment-intensive, export-oriented, import-dependent, etc.) of the industry. In the backdrop of the likely non-uniform technology impact across regions and countries and the likely existence of the different levels of technology, the paper has two key objectives. First, to present a balanced view of the possible challenges and opportunities from the technology transition across the regions. However, the linkage between technology (as in innovation) and employment is also influenced by the sector where the firm operates. Technology response of the sector tends to vary due to factors including the richness of technological opportunities, cumulativeness of the knowledge base, or the means to protect the economic benefits of innovation/ technology. The view motivates the second objective to classify the broad manufacturing into sectors by different technology levels, viz., high-, medium-high-, medium-low-, and low-technology, and study their relative significance in employment, value added, export, imports and output in the manufacturing segment of the Indian economy. The present paper contributes through providing a technology profile of the Indian manufacturing by classifying sectors into four categories, originally based on the R&D intensities as defined by the OECD. The technology categorization takes into account the R&D spending as a proportion of the value added and output of the industry in the ISIC Revision 3 nomenclature. By extending the classification to the more recent ISIC Revision 4 (which is also aligned to the National Industrial Classification 2008 in India), we classify each of the 69 manufacturing sectors reported in the India Input-Output database for a recently available year which are further grouped into 17 sectors for comprehensiveness while also maintaining their distinguished technology categorization, the paper uses the classification in the Indian context. The four technology categories are assessed for their relative significance in terms of supporting employment, exports, imports and output of the manufacturing sectors. Also analyzed in the paper is the sector-level labour productivity, employment intensity, export intensity and import intensity based on the technology classification. The paper concludes with a broad recommendation in view of the increasing and pervasive use of technology across different parts of the world. In the Indian context, based on the analysis of the Indian manufacturing sectors, strategic interventions are suggested for better performance of the technology sectors and to minimize the frictions between technology and jobs in the future times. Proposals for investment in workforce development activities for effective job creation are discussed.