As estimated, China’s booming manufacturing sector has been sucking 1 percent of the farming population every year. For India, the figure is about half a percent. And the agriculture sector still bears the burden of about 70% of the population. Agriculture can’t bring prosperity to those below poverty line in rural India. It is only manufacturing that can do it. So, only National Manufacturing Competitiveness Council (NMCC) wishes between 12 and 14 percent growth per annum for manufacturing sector for the next 10 years, so that manufacturing’s share of GDP increases to 30-35% by 2020.
Why is the manufacturing sector in India lagging behind? If one goes by the CII and other spokesmen of the industries, for every thing the blame lies with the government and its policies, its reluctance to bring about the changes asked for by the industries. But is it really true? Have the industry and business houses done what it could have?
According to data in media, half of the world’s cameras, a third of air conditioners and televisions, and a quarter of washing machines are manufactured in China. 92 % of China’s exports comprise manufactured goods. Is it not a fact that India keeps on taking pride in being the topmost exporter of iron ores and cotton? Most of these exports are having China as destination. China becomes top exporter of finished textiles and apparel and produces more than 200 million tones of steel and exports the products made of the steel as major raw material. Why did Tata Steel, the pioneer in steel making in India didn’t go for becoming the largest steel maker in a full century of time period? Even with all liberalization in place for a decade now, Tata Steel didn’t add to its capacity in significant manner to become a world scale steel manufacturer, though it took all advantages given by the government to public sector SAIL. Till late in 90s, India didn’t produce good quality steel sheets for automobile body panels. With a good presence of Tatas in power sector and huge manpower in engineering, Tata could have reduced the cost of its power generation to the minimum and could have manufactured the plant and machinery too for expansion or addition, if it wished so. But it kept on announcing project such as one in Gopalpur of Orissa, but never executed that. The same happened with other industrialists and business houses except Ambani.
India perhaps considered camera as luxury item and thought it will remain perpetually dependent on import. None in industry went for any serious business tie-up as Chinese went. With India’s hot and uncomfortable summer, India could have gone for air conditioners and refrigerators in big way. However, Voltas of Tatas never thought of a world-class scale and quality for its air conditioners, nor did Godrej had that mission for its refrigerator. Both the companies though belonging to two big business houses still don’t have any vision or strategy to become globally competitive and expand accordingly. In television, though many manufacturers sprung up, but except for Videocon none could grow to a global scale and technology. Today, Samsung and LG have taken over the control of the market. And that is the reason that even the component industry for the sector has not grown the way it would have with local manufacturer. Videocon with its acquisitions abroad particularly the latest one of Daewoo Electronics might be considered a serious player in this sector, though it is still not clear how far it will have its manufacturing in India. Indian manufacturers never considered washing machines, dishwashers, and micro ovens for inclusion in its product line, as it thought these appliances as unacceptable on large scale by Indian consumers. There are no reasons why some Indian manufacturer wouldn’t have grown as Haeir.
With all the systemic inefficiencies that mean higher cost of doing business in India, some industries have been gradually growing competitive and stay ahead with multitudes of suppliers from all over the globe. By consensus, these are auto components, electricals and electronics, pharmaceuticals, textiles, and specialty chemicals.
Auto component sector have over 500 big component manufacturers. Interestingly, 472 of these have the ISO certification with some even Deming Prize winners. Auto components may touch $40 billion or more, and the sector can export over $20 billion by 2015. Bharat Forge, Sundram Fasteners, Sona Koyo, Amtek Auto, Visteon India, Delphi India, component divisions of Mahindras and Tata Motors are some of the main players.
Market of electronic products is projected to be over $70 billion. Exports are hardly about $2 billion today. But many companies from developed countries are coming to India as a second location for manufacture because of its skilled manpower.
Textiles are another sector where the sky can be the limit.
Many other sectors can join the list with a little more innovative entrepreneurships and very little government support with certain sector based policy change. Leather, gems and jewellery, engineering services, tractors, machine tools, and heavy engineering and electrical components manufacturing are some among the prospective ones. And the growth in all these sectors will mean a lot of employment too.
The first basic requirement will be at least three to five ambitious entrepreneurs in the sector. Examples are the Excel Propack and Suzlon. Why can’t other entrepreneurs benchmark them?
Many good things are happening making the future of India’s manufacturing sector bright. I shall like to mention based on my personal view. Under an agreement, Ashok Leyland and Bosch will contribute about Rs 4 crore each for the engineering design programme offered by the department of engineering design, formed recently by IIT-M. Alliance of this sort will make Indian manufacturing sustainable under global thrust on innovations.