I am in a happier mood these days. Let me assure, it’s nothing personal. But some reports about the manufacturing sector, my lifelong fad, are really exciting. It’s becomes a little more spicy when it comes with a simultaneous comparison with China and headlines such as ‘PMI rises in India falls in China’, or ‘China slows to cruising speed, India perks up‘ and ‘India zips past China in commercial vehicles’.

Interestingly, according to a recent Deloitte report, India has been ranked second, ahead of the United States and South Korea, in terms of manufacturing competence globally. “Perhaps more surprising is that India is now positioned at number two and will gain an even stronger foothold over the next five years. The country’s rich talent pool of scientists, researchers, and engineers along with its largely well-educated English-speaking workforce and democratic regime make it an attractive destination for manufacturers.”

I firmly believe that the potential of Indian manufacturing is just limitless.

Historically, India started well with government plans of manufacturing everything in the country from ships to airplanes, from missiles to nuclear plants. It went on for everything that one can think of: watches, machine tools, TV sets, cars and scooters. But it could hardly sustain and grow. It all came in public sector. Nehru was skeptical about private sector and the industrialists also didn’t do much to prove him wrong. And soon politics came behind every government policy. The worst was nationalization. Because of very poor course correction based on real time global situations, India missed the manufacturing bus that could have taken it to prosperity of the common people, as it did for China.

But manufacturing made a comeback in late 90s. It certainly started with automobiles and auto components sector. Today, India has manufacturing facilities of almost all the reputed two-wheeler, car and commercial vehicle makers of the world with equally strong domestic manufacturers such as Hero Honda, Bajaj Auto, Tata Motors, Ashok Leyland and Mahindra &Mahindra. Auto component sector has also grown to global manufacturing standard.

Other sectors, be it home appliances or heavy equipment are doing good business and are expanding the manufacturing facilities. However, unfortunately in many of the sectors there are hardly any significant domestic players. For example, in home appliances South Koreans are in lead with LG and Samsung at top. Indian manufacturers are falling behind or getting out because of the competitive strength of the global players. Further, many OEM Indian manufacturers prefer to get the products manufactured in China and to import. For example, all the domestic mobile phone companies are getting its wares from China or Taiwan.

India with its huge market is now the favoured destination of the global manufacturers including the Chinese ones. How long the government will keep them away on the excuse of security in the world going all out for free market?

As a very welcome trend for the manufacturing sector, at least some private companies are setting up manufacturing facilities to compete with the PSUs. For example, L&T and Bharat Forge will soon manufacture power equipment and compete with BHEL.

The government must not only open but encourage well established private companies to come in for manufacturing the items of defense requirements that is the biggest drain on India’s resources. Why should India keep on importing 80% of it? As reported, “a Rs 5,000 crore defence contract can sustain or create about 20,000 high-end jobs. For each high-end job, there are about four support jobs. So, India’s projected $80 billion arms imports over the next decade could create six million to seven million jobs within the country.”

It is strange but a fact that all the government departments today prefer to import everything from abroad as those responsible for procuring them get a fat bribe for it. And so the officers and politicians collude to do anything to maintain the status quo and not allowing local manufacturers to get into the business.

However, even after all these constraints India’s manufacturing sector has become globally recognized for its innovation, quality and cost too. It’s moving fast and booming too. And even ‘mobile phone companies are pushing through a big indigenization effort by bringing global component vendors to set shop in the country. The move is part of a strategy to make India a global manufacturing hub for mobile phones.’

Is it not a good reason to be happy?