Manufacturing India-II

Indian manufacturing sector is getting pretty attractive. Smaller enterprises are scaling up. Many MNCs are setting up shops for varied products. New technologies are entering. Indian manufacturers with all odds such as rising rupee are competing.

Augmenting manufacturing growth: India can no longer expect to outperform its competitors unless manufacturing grows substantially. Its high-tech industry, the business-process-outsourcing and IT industries may earn revenue to at least $60 billion by 2010, but will never provide the number of jobs needed for all of the tens of millions of Indians seeking opportunities. If India were to leverage its inherent strengths in skill-intensive manufacturing, exports could surge to about $300 billion, creating 25 million to 30 million jobs by 2015. Emphasizing apparel, auto components, electrical and electronic products, and specialty chemicals could help “Made in India” to become the next big manufacturing-exports story.

The first step will be to ignite domestic demand, which would help attract multinational manufacturers and provide the scale needed to be globally competitive. More important, the total taxes on manufactured goods should fall to 15 percent of retail prices (the current level in China) over the next three years. Our study of a variety of product categories in India and China shows that for every drop in prices of 25 percentage points, consumption increases three- to fivefold.

The SEZs can further accelerate manufacturing growth story. By 2016, the automotive industry is expected to create 25 million jobs in India, according to Government predictions, set out in its Automotive Mission Plan. Of this, 62 per cent will be skilled workers, and 10 per cent, unskilled; the balance 28 per cent would comprise management and general personnel. For every job created directly by the automotive industry, a further seven are created indirectly in the economy at large. The industry is set to have a major impact on India’s future economic growth.

In India, a $2,500 Pace Car: A revolution is taking place in India that could change what most of the world drives. Next fall, the Indian automaker Tata Motors is scheduled to introduce its long-awaited People’s Car, with a sticker price of about $2,500. Hot on its tail may be as many as half a dozen new ultra-affordable vehicles – some from the world’s leading carmakers, including Toyota and Renault-Nissan. With a median age of just under 25 and a rapidly expanding middle class, India will overtake China next year as the fastest-growing car market, according to estimates by CSM Worldwide, an auto industry forecasting service. As a result, car companies are coming up with new ways to develop and build automobiles worldwide.

By 2013, CSM predicts, India’s market will expand an average of 14.5 percent a year, compared with just over 8 percent for China. CSM estimates that in 2013, the Chinese will buy 10.8 million cars, compared with 3.8 million in India, but says there is already a glut of local and foreign manufacturers in China, making India a more attractive long-term market. The competition to make cars less expensive could finally help make India an automotive research and development hotspot.

Maruti’s sales in India exceed Suzuki’s domestic sales: Maruti Suzuki India Ltd, the nation’s biggest carmaker, surpassed its parent Suzuki Motor Corp in sales in their respective home markets for the first time as rising incomes in India boosted demand. Maruti sold 336,758 cars, vans and sport-utility vehicles in the domestic market between April and September. That exceeded the preliminary 315,000 vehicles Suzuki sold in Japan in the same period, according to spokesman Takuma Mizuyoshi.

Tata Motors launches armoured vehicles:
The Tata Motors Ltd has launched a range of armoured vehicles for defence and bulletproof vehicles for high net-worth individuals. The company’s range includes an armoured bus, a troop carrier and bulletproof Sumo and Safari.

Tubeless radials rule India’s roads: Most of India’s tyremakers including MRF, JK tyres and Ceat have started manufacturing tubeless radial tyres. “Tubeless radials can carry on with a nail in them for many kilometres, and you will probably notice the flat tyre at home, rather than on the road.”

L&T considers manufacture of components for commercial jets: Engineering and construction company Larsen & Toubro Ltd (L&T) is exploring the possibilities of making components of passenger aircraft at its factory at Coimbatore in Tamil Nadu.This will mark the entry of private players in aircraft component manufacturing for bigger jets at a time when India alone is going to buy 500 civilian planes in the next five years for scheduled operations. Until now, state-run Hindustan Aeronautics Ltd, or HAL, was the only company undertaking the manufacturing of components such as doors for bigger passenger planes made by Airbus SAS of Toulouse, in France and Boeing Co. of Seattle, Pratt and Whitney (P&W), the US-based aircraft engine manufacturer, is planning to invest $30 million towards infotech and spare parts in its manufacturing facility in India. According to company sources, the investment could be doubled in the next three – five years, looking at the growth prospects in India.

The success story of Hanung Toys: The order book of the Rs 275-crore (Rs 2.75 billion) soft toys and bed linen exporter is crammed: in just the past three weeks or so, Hanung has tied up deals worth over $265 million (Rs 1,060 crore). That includes a Rs 600-crore (Rs 6 billion) order from Swedish home furnishings giant IKEA, as well as contracts with two unnamed American companies, the combined force of which is likely to catapult Hanung into the big league.

‘Manufacturing units hit by rising rupee, Chinese imports‘: Impose dumping duty on China till they float yuan, says L&T chief. Larsen & Toubro feels that the rupee appreciation combined with the Chinese artificially locking in their currency is affecting some of the manufacturing units in the company. It has appraised the Centre of this and wants it to act before Indian manufacturing is badly affected.

GE plans wind turbine facility: US conglomerate General Electric Co. (GE) plans to set up a green-field facility in India to manufacture wind turbines of capacities of 1.5MW and 2.5MW.

Fabrication in India: Santa Clara, California-based SemIndia had originally announced a $3 billion fabrication facility in Hyderabad that is expected to be ready for chip production by mid-2008. The company’s focus will be around manufacturing chips for the telecommunication, entertainment, broadband and digital satellite. Hindustan Semiconductor had also announced a $3 billion investment in India to set up a fabrication unit.

Maruti, Magneti Marelli, Suzuki form joint venture: Magneti Marelli, Suzuki Motor Corporation and Maruti Suzuki India Ltd have signed an agreement for the creation of a joint venture in India aimed at the production of electronic control units (ECUs) for diesel engines. Tata Motors, Fiat ink JV for car making: Fiat Group Automobiles and Tata Motors on Thursday signed a 50:50 joint venture (JV) to build passenger cars, engines and transmission with an overall investment of E650 million for the Indian and overseas markets.

L&T to buy Tamco switchgear units: India’s top engineering firm, Larsen & Toubro Ltd, is buying the switchgear businesses of Malaysia’s Tamco in Malaysia, Australia, China and Indonesia for about $110 million.

How India Clusters Growth: A slew of new manufacturing hubs, or “clusters,” developing across India, from Chennai in the south to the hosiery and knitwear capital of Ludhiana in the north. For instance, the Ambur area has been home to leather workers for over a century, and the state of Tamil Nadu is India’s leather capital: Of the $3 billion in annual leather exports from India, 40% to 45% comes from Tamil Nadu, and a total of $750 million comes from the Ambur area alone. The cluster strategy is one reason that India is in the middle of a manufacturing boom. These clusters will be the base of India’s manufacturing revolution, and more important, represent a way to restore the vitality of India’s guild system.

Gee Whiz, It’s A Reva! Manufactured by Bangalore-based Reva Electric Car Company (RECC), the G-Wiz was launched in the UK with an order of just 40 vehicles in 2004 have grown more than 900 units plying on London’s roads. Exports account for about 70 per cent of Reva’s total sales.

Automation city to come up near Pune: The automation city project is meant for development, promotion and deployment of automated manufacturing technologies for Indian as well as global markets with an investment worth Rs 258 crore. “We have entered a joint venture agreement with Cenetic, a French manufacturing company, to work on the vehicle assembly solution and another with a Canadian company, Valient.”

Alcoa planning India facility: The world’s third biggest producer of aluminium, Alcoa Inc., plans to manufacture aluminium architectural products and systems in India to meet the rising demand for such products-used in commercial buildings-in the world’s second largest growing major economy.

Bharati, Apeejay form Rs2, 000 cr shipbuilding JV: Bharati Shipyard Ltd and unlisted Apeejay Shipping Ltd said on Tuesday they would invest Rs2,000 crore in an equal joint venture to set up a modern shipbuilding yard along India’s eastern coast. While Indian shipbuilders are expanding their capacities with buyouts of other yards and assets, Indian shipping and engineering firms are planning to set up shipbuilding yards to exploit the sector’s surging potential.

And the story continues.

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