India As The Factory of The World- Prospects

It is only manufacturing and that too if it expands in all corners of India up to the rural inhabitants that India can get in to the status of developed country. The large domestic market will be the main attraction and India’s strength in IT and management must help. Manufacturing absorbs all level skills supporting even some with almost no skill.

According to a report presented by the National Manufacturing Competitiveness Council (NMCC) the Indian manufacturing sector grew at an average of 7 per cent between 1995 and 2004. However, the share of manufacturing remains rather stagnates at 17 per cent of India’s total GDP against 31 per cent for Malaysia, 34 per cent for Thailand and 35 per cent for China. For GDP to grow at 10-12 per cent, the manufacturing sector has to grow at 12 per cent average. And that only can create 1.6 to 2.9 million jobs annually, for the six million joining the working population every year.

Investments, both domestic as well as FDI coming in manufacturing is a sure indication for the forthcoming growth. FDI in the manufacturing sector has risen from $806.73 million (Rs 3,752.50 crore) in 2001 to $1196.93 million (Rs 5,567.70 crore) in 2004-05. The figure for 2005-06 was $2.09 billion (Rs 9,700 crore). However, 2003-04 was a bad year with lower FDI inflow into manufacturing at $671.47 million (Rs 3,123.40 crore).

The size of the consumers is attracting some MNCs to get into manufacturing in India. As example, Nokia, the Finnish mobile maker has setup its manufacturing facility in a SEZ in Chennai with several of its vendors and original equipment manufacturer (OEM) partners How can the manufacturers overlook India with 105 million mobile phone connections at present and that adds five million new subscribers each month? Many mobile phone companies are following Nokia for manufacturing mobile phones in India. Nokia in India will manufacture high volume phones for India, Middle East, North Africa and Asia.
Hyundai Motors of South Korea is another example. It began its manufacturing facility in Chennai for producing cars for the domestic market, but today have transformed the plant as the global manufacturing hub for the company’s hatchback cars. In 2005, Hyundai exported 96,560 cars from India. Hyundai Motors is setting up its second plant for an investment of $860 million (Rs 4,000.40 to double its capacity to six lakhs per year.

General Motors India and BMW are setting up new manufacturing units. Suzuki Motors has tied up with Nissan Motors, wherein the latter will source cars manufactured at Maruti for export to Europe with investment going up to $600 million (Rs 2,790.80 crore) in this project. Tata Motors, M&M, and many others are also investing in expanding its capacity. Tata Motors’ Rs 1 lakh car will be a revolutionary product.

It is not only high tech, but also the mass consumer goods such as lingerie that is attracting MNCs. As reported, an export-oriented joint venture ‘Intimate Fashions’ in collaboration with German lingerie-maker Triumph International and the MAS Group currently manufactures over seven million bras annually in its Chennai plant. Triumph International is setting up a new factory that will start commercial production by April 2007 with a capacity of over 12 million pieces

However, the number of new entrants in manufacturing, both local as well as from abroad is dismal. Manufacturing must become craze for the country, and our businessmen and traders must not remain perpetually tempted to import everything from China or other cheaper countries. Instead, they must get all those products suiting to our consumers’ test and requirements manufactured in the country at the cost that can earn them profit and provide employment and prosperity to many.

It is happening, as India has shown indication to improve on infrastructure- roads, and telecommunication. But the task of connecting all the rural areas by roads and electrifying all the households will be necessary, as without that the manufacturing can’t reach the rural India in big way.

What must be the main tasks: many more trade schools are to be opened. Private sector including MNCs must be encouraged for that. Big business houses and NGOs must move to ensure that all the youngsters getting into working population must get some sort of skill- training, and they also take pride in entrepreneurship and innovate wherever they work.

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