Manufacturing Sector- a necessity for India’s Growth


A review of data in 2004 World Machine Tool Output and Consumption Survey (Gardner publication) was interesting. China was 12th in export with $370 million in 2003, Thailand 25th, whereas India was 29th with only $12.9 million. But the figures of import were just amazing. China imported machine tools worth $4040 million in 2003 as numero uno importer; Thailand was at 9th position with $551m, whereas India was 23rd with import of only $139.6m. Chinese consumption of new manufacturing equipment shows why and how it is so much ahead in the manufacturing. Actually China purchased and installed over $6.5 billion worth of machine tools outpacing second-ranked Germany by 2.2 billion. At one time USA used to be number one in export as well as in consumption. Today, USA has gone to 6th position in export, but remains as number 2 in import. Germany has maintained its position almost for quite some years. In 2003, Germany remained number one in export, and number 3 in import. Japan is number 2 in export and imports only some very special machine tools The consumption of machine tools are indicator of the strength of engineering manufacturing sector that comprises sectors such as automotive, automotive components, machine tools, electrical equipment and machinery, textile machinery, power sector equipment, aviation,etc. As machine tools are mother machines for engineering industry, it is, as some says, a good indicator of country’s industrial power. India is far behind in consumption. It shows very low investment in engineering manufacturing sector.

It is necessary that India gives some special priority for improving the growth of manufacturing sector significantly.

No country today can think of becoming a super power without strong manufacturing base.

Unfortunately in every area of manufacturing, we have missed the bus to become the global leader. We blame the government policies, taxation and control as the main reason for the situation. However, the industrialists must also take some responsibility. It requires a change of mind set. Manufacturing is not plain trading business, where one can make quick buck. Manufacturing is capital intensive, and requires a different thrust on technology and management. It requires regular investment, continuous improvement and innovation in process and product to remain competitive.

Some of views on the issue are here:

  1. India has a large capacity scattered all around, that are lying unutilized or very much underutilized. Hindustan Machine Tools Ltd over the years built a machining capability which may be the largest in the world. Similar are the case of other PSUs- BHEL, BMEL, HAL, ordinance factories, railways. Some private companies also have good installed capacity, but capacity utilization is very low. With a change in mind set, some of these companies can also become world leader in manufacturing in their area. An integrated approach may be devised to utilize the facilities and become global leader in component manufacturing. India can be supplier of heavy, medium or small sized components to engineering industries in many counties of world that lack this facility.

  2. In automotive industry, India may try to become a global source for power units (engine and transmission), steering, and axles as well as components of the mechanical subassemblies. Area of focus should be low to medium volume production of components which the industries in developed countries shall like to outsource. Moreover, the production requirement can be met with flexible machining systems. With increasing number of variety, the volume of manufacturing is getting reduced, where OEMs are seeking vendors.
  3. Prototype component manufacturing for OEMs does also have great opportunity, as OEMs will like to outsource them to vendors. Investment in Rapid prototype manufacturing facilities will be a good business proposal.
  4. India can also easily become the world leader for castings and forged components, where the developed counties are withdrawing from the industry. The scope can further improve if the major parts are offered fully machined,
  5. India lacks in some fields of manufacturing. Sheet metal stamping is one. India does not have large capacity stamping facilities. Most of the manufacturers are going for low volume but more variety in models. MNCs import most of the bigger stampings. With very high efficiency and flexibility of newer presses, there is scope for some stamping plants in the country to eliminate the import and transportation of the bulky components.
  6. India has not developed a good die and tool manufacturing capability, particularly for larger ones. Entrepreneurs and government can take advantage of the scope, as India has all advantages and skill to become the world leader in tool making sector. Being skill-based production process, the sector will provide good employment opportunity too. With large number of engineering institutes, training of manpower can easily be done. India’s strength in software design will be additional advantage in die and tool manufacturing where CAD and CAM are extensively used. With revolutionary change in machine tool technology, today one machine tool is sufficient to complete the machining of the die in one setup. Rest is manual operation. Naturally, to provide a total solution to the customers more machine tools and equipment are required depending on services.
    India has the potential to become a global tool room.

  7. The latest development in technology has brought in revolutionary flexibility of manufacturing in all engineering industries ranging from those producing air-conditioner to automobiles. Today, it is possible to complete total machining of an engine cylinder block or an air-conditioner compressor housing on one single machine. Investment can be phased.

As a policy, the country must decide to grow with manufacturing in national interest, large scale employment opportunity remaining the foremost, rather than switch over for mere assembly or import of major consumable products. With many reforms and global approach of procurement, the benefits of improved technology must be harnessed by all to the best. The quality, cost, and just-in-time delivery will make one win. One will have to be the world class to survive and grow. Technology provides the answer.
Encourage manufacturing sector; get an employment growth along with GDP growth of 10% or more.

Some tips for SMEs in manufacturing sector:

A. For entrepreneurs and industrialists
1. Change the mindset
2. Size need not be a limitation
3. Adapt world class manufacturing practices on shop floor
4. Employ technically educated workmen.
5. Provide customized education in related technology
6. Provide challenges for improving capability of processes
7. Train in multitasking.
8. Outsource non-manufacturing and service activities judiciously
9. Start thin and remain thin
10. Use computer to your advantage and also internet to improve productivity
11. Follow latest HR practices and do not exploit the operating class.
12. Invest in future

Please do not exploit the labour force, provide them their dues.

B. For Government
1. Reduce the duty on at machine tools and high tech equipment to zero.
2. Make finances available at low interest rate.
3. Undo reservation for SSIs and let them compete.
4. Make labour dispute acts simpler for fast decision for court
5. Remove inspector controls

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