Manufacturing Sector- India’s Hope

“If India is to realize its potential as an economic superpower, it will have to keep following China’s path by becoming one of the world’s factories. The IT sector gives India a good brand image, but most Indian jobs will have to come from manufacturing.” Business Week

It is not the big houses that have contributed in big way. 99 per cent of businesses in India fall under the SMB (small and medium sized businesses) segment, and are responsible for almost 50 per cent of the GDP of the nation; account for around 40 per cent of the country’s industrial output; and 35 per cent of direct exports.

Some started with a lot of handicap.

Subhash Lohakare, a shoemaker from Pimpri, near Pune manufactures industrial shoes for small and medium enterprises. He started with one client. Today his quality has got many others placing orders with him and has an annual turnover of Rs 52 lakh. Lohakare is the epitome of an entrepreneur. And he’s a Dalit. And the likes of Lohakare are on increase.

In 2010, M&M will drive into the world’s biggest automotive market, the US. M&M will capitalize on the fuel savings and environment-friendly aspects of the Scorpio. Mahindra Farm Equipment Sector (FES) is already in US with a network of over 250 dealers, selling 10,000 tractors annually. About 15% of overall FES volumes come from global operations with US contributing half of its overseas revenue, followed by China, Africa and South Asia. Tata Motors is already getting Nano readied for US market. Auto components manufacturers and pharma sectors have grown world-class in manufacturing though both are far behind in scale of production. The launches of Nano, Scorpio, and many successfully selling two-wheelers show the capability of manufacturing sector. The winning of Deming Prizes by many companies of auto component sector makes India’s image robust. The Indian products can easily get into and compete effectively in developed markets. Will Indian manufacturers cash on this phenomenal opportunity and get confidently into global market?

It’s exhilarating to find India emerging as a centre of manufacturing for international vehicle makers, which are adding huge capacities. And as estimated by the Society of Indian Automobile Manufacturers (Siam), it will result in the hiring of five million new employees over three years between now and 2012.

Last year, Tata Chemicals (TCL) launched the Swach (clean) filter-based water purifier, targeted at people with lower incomes. TCL and other Tata companies filed 14 patents in the process of developing the product. The total project investment was Rs 25 crore. TCL envisages setting up a manufacturing plant in Haldia for the Swach purifier with an investment of around Rs 100 crore and a target to sell 1 million units in the first year. Will it catch the attention of other backward nations in Africa and Latin America for the households at the bottom of the pyramids?

Again the most exciting story was one of the Reva Electric Car Company driving into the American imagination. General Motors will use Reva’s technology to make the electric variant of its small car, Spark. Maini is at the forefront of GM’s clean-tech R&D in India. If the electric Spark takes off, it will put Reva’s intellectual property into the global spotlight.

While all these developments give hope that Indian manufacturing sector will grow fast enough to be a great global power, it will require some change in the mindsets of the country’s trading community that is hell bent on importing all the rubbishes from China for mass consumer market starting from the Kirpan for Sikhs to Ganesh and Lakshmi for Dipawali.

Another reason for this comes from the concept of “Reverse Innovation” and the role of MNCs in India that are developing products in India for selling worldwide. For example, GE India has developed a hand-held electrocardiogram that sells for about $1,000. Many are expected to follow GE’s route. Furthering the ho[e is the news that the largest engineering offshoring country is India, with about 25 percent market share.

With a government that now realizes the necessity of the growth of the manufacturing to take the mass of the population out of poverty, I hope all the speed breakers on growth path gets removed.

My hope gets boost with the media reports such as one in the editorial of Hindu’s Business Line: “Over the past several months, anecdotal evidence suggests that India may well be on its way to becoming a global manufacturing hub.

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