India's Dual Challenge: Manufacturing Growth Amid Net-Zero Ambitions

India faces a formidable challenge in its bid to expand manufacturing while simultaneously reducing its carbon emissions, according to Chief Economic Advisor Anantha Nageswaran. At the launch of NITI Aayog's report 'Scenario Towards Viksit Bharat and Net Zero', he highlighted the importance of this document for India's planning towards net-zero targets.

Nageswaran pointed out that India's manufacturing sector has stagnated at around 18% of GDP over the last ten years, with the services sector driving economic growth. He argued that manufacturing is crucial for India's ambition to emerge as a global economic powerhouse, as it plays a critical role in reducing capital costs, strengthening the currency, and enhancing state capacity.

The CEA warned that a renewed focus on manufacturing, though vital, would increase the economy's emission intensity, complicating India's journey to net zero compared to other nations. Amidst geopolitical tensions and rising protectionism, he stressed India's reliance on domestic resources, underscoring the need for sustained growth, savings, and investments.

Highlighting the challenges associated with renewable energy, Nageswaran noted the high energy intensity of producing materials like silver, polysilicon, aluminum for solar power, and copper for wind power. He advocated for investment in advanced technologies such as carbon capture and better storage solutions to cope with these issues.

Nageswaran called for scaling up research and development efforts to not only aid India's transition but also other emerging economies. He emphasized the NITI Aayog report as a 'living document' that requires updates as global conditions and technologies evolve. This report is set to serve as a reference point for researchers and policymakers tackling the climate change dilemma.