India’s Manufacturing- Victim of Corruption

Indian policy makers agree that only manufacturing can create employment in millions to absorb the population joining the workforce every year. At least the nation’s manufacturing policy sets the same objective.

The Government historically set up many enterprises under various ministries to produce a large number of critical industrial equipment, particularly in capital equipment, where the private sector was reluctant to enter. Except for very few, others are just white elephants and drain on the national exchequer. Frequently, some get allocation for revival too. But the government never tried to see that all those manufacturing units become globally competitive too. With the choppers scam in media, I wondered why a country like India with all necessary resources could not be self-sufficient in producing helicopters of different applications in more than six try years after the independence. Why has the company such as HAL in aviation sector not been able to produce even reliable helicopters? Can someone justify the India’s total dependence on import? Can someone justify that the country that can launch sophisticated satellites and missiles and build nuclear plants on its own can’t develop reliable helicopters for different applications? If India would have been manufacturing helicopters in the country, it could have created a lot of employment in the manufacturing company as well as with many of the parts-suppliers.

The story of Arjuna, the indigenous battle tanks and Tejas fighter are known. Arjuna has taken decades to get into the Indian army. Tejas is still waiting to be introduced in India’s Air Force. The people in authority in all the wings of defence forces make it difficult to accept locally manufactured machines. Millions are wasted in developing technologies and products, but not accepted by the defence executives and politicians. It all happens because import only can provide huge bribe that is shared at the concerned people at all levels. Instead of getting involved in the development of better equipment in the country, the officers create troubles at all levels.

The disease has been contagious and spreading to even all the civil sectors such as Electricity Boards, Railways and Telecom too. Even the private sector is not sacrosanct and many know about it. We heard few months ago BMEL scam of Tetra trucks for army. BMEL would have by now indigenized Tetra trucks. If that couldn’t Tata Motors or M&M would have done it. That is the reason that the country’s capital industry couldn’t reach the globally competitive scale. The nation will have to rethink the ways and means to correct the situation.

India has already lost its first chance to be a low cost manufacturing nation. Between 2001 and 2010, China’s manufacturers captured nearly 45 percent of the global growth in manufacturing exports from low-cost countries, whereas India accounted for a paltry 5 percent. India could become a viable manufacturing alternative to China in industries ranging from apparel, auto components, and high-technology sector such as aviation and might even dominate some new manufacturing sectors in new technologies.

According McKinsey analysis, ‘rising demand in India, together with the multinationals’ desire to diversify their production to include low-cost plants in countries other than China, could together help India’s manufacturing sector to grow six fold by 2025, to $1 trillion, while creating up to 90 million domestic jobs.’

For any country to be manufacturing power, auto sector of the country historically grew strong. In India, it has happened with almost all major auto manufacturers in the country. One Maruti Suzuki has developed and created the base of vendors of auto parts. For example, Sumi Motherson started to supply wiring harnesses to Maruti has spread to 25 countries with 124 plants. And 76 percent of the company’s business now comes from outside India. Samvardhana Motherson Group (SMG is the holding company with nine business divisions) is one of the world’s largest manufacturers of wiring harness, mirrors and plastic parts, among other products.

To take manufacturing to all corners of the country, it has been established that power sector and highway connectivity must be compatible. Researches have confirmed the positive effects of the Golden Quadrilateral upgrades on the organised manufacturing sector. The government must go to remove the drawbacks in its highway building and power generation and distribution.

However, the government will have to find a way to make all of the government manufacturing enterprises accountable and efficient without any politics getting into it.

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