National Manufacturing Competitiveness Council (NMCC) that has come to an inference that only with manufacturing growing 12% or more, India’s GDP can grow above 10% that is a necessity for eliminating poverty from the country in effective manner.
Manufacturing growth has averaged over 12% in the first six months of 2006-07. It picked up from 11.7% in the first quarter to 12.4% in the second. Historically, it happened before too. In the period 1993-96 India grew even faster pace of growth, even 15% in some months. And so some doubts the sustainability of the growth of manufacturing sector. What is the biggest difference between current developments and what had happened in nineties that can make the country feel comfortable now?
Perhaps all responsible for the development- Indian corporates, their financiers, the capital market, and also the regulators and policymakers have learnt from the necessity of competitiveness from on going globalisation of every sector.
Physical infrastructure still lacks the world class and scale, but it has improved to certain extent. The travel time between Mumbai and Delhi has halved. It can reduce further with some sincere approach to the execution speed of already sanctioned projects, be it port, airport or roads. For, the real problem seems to be a singular inability to execute decisions taken-whether completing a project (for instance, the overdue New Delhi-Gurgaon expressway or Golden Quadrilateral or NS-EW corridors) or fixing theft and loss in electricity distribution. How can rural India effectively participate in manufacturing without rural electrification, which is being implemented under the Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) programme, if states like UP, Bihar, Orissa, West Bengal, Assam and Jharkhand have backlog to the extent of 90%?
The topmost priority for the government must be to work out changes in the organisational structures of the project execution so we can achieve objectives agreed upon and do so in time. If Delhi Metro Project can do it, so can the others too.
Many things are happening so far manufacturing sectors are concerned. According to the CII Manufacturing ASCON Survey, 65% of the 125 sectors tracked have reported production of high to excellent growth (10 to 20% and more than 20%) over the period April to September 2006. According to the survey, PVC, switchgears, power cables, circuit breakers, castings, fluid power and nitrogen have all shown a strong growth from the basic and intermediate goods sector. In the capital goods sector boilers, distribution transformers, power transformers, industrial furnace, textile machinery, tractors, transformer and transmission line towers among the capital goods industry have led the growth.
The manufacturing sector seems set to enhancing its share in the GDP to the targeted 30%. The export performance of the manufacturing sector has been better with some sectors shifting to the excellent growth category. The survey pointed out that 17 sectors recorded excellent growth in exports with seven sectors in the high growth category, 10 sectors recorded moderate growth. It is interesting that CII is also working to catalyze 100 manufacturing companies to innovate and move towards becoming global leaders.
MNCs of western countries are setting up manufacturing shops and expanding in India. Indian medium and big manufacturing companies are acquiring companies in developed countries to expand their market and obtain the latest technologies. Videocon’s acquisition of Daewoo Electronics is the example and perhaps a case to emulate. Progress of Tata Motor’s Rs 1-lakh car project that can create a capacity of about a million more cars, appears to be satisfactory as per the media report.
However, there are some disturbing reports too that must concern all. Some of our manufacturers are giving up the manufacturing easily and preferring the Chinese cheaper import. CII and the government must look into the reasons. India needs more and more new entrepreneurs in manufacturing too.
Manufacturing must spread up to the villages.