With a sustained labour cost advantage and a working population estimated to top 850 million before the end of the decade, India is destined to become the second most competitive manufacturing destination globally, leaving behind countries like the US and Germany.
The new National Manufacturing Policy is to help the Indian manufacturing sector increase its share of the country’s GDP from 15% currently to 25% by 2022. It will require a compound annual growth rate of 14%, raising the sector’s total output to approximately $650 billion by 2022, and making India the world’s fifth-largest manufacturing nation, up from ninth currently.
India today has one of the least skilled manpower among the top manufacturing nations. Firstly, only 17% of those entering the workforce are skilled. Secondly, the quality of skilling remains a big challenge—amongst the skilled workforce, a mere 5% of workers are classified as highly skilled, and a staggering 64% are associated with a very low level of skilling. As a result, despite having a seemingly limitless supply of low-cost labour, over 65% of Indian firms face difficulty in filling vacancies with rightly skilled workers.
Some manufacturing sectors in India such as automobiles and Pharma are already well on the way of becoming globally competitive.
The automobile industry account for 22% of the country’s manufacturing GDP.
According to Ministry of Heavy Industry and Public Enterprises, the total turnover of the Indian automobile industry was estimated at USD 73 billion and exports were estimated to be USD 11 billion in the year 2010–11. The announced cumulative investments in this sector were USD 30 billion during this period. The main automobile clusters are based around Chennai, Gurgaon, Pune, Ahmedabad, Aurangabad, Jamshedpur, Greater Noida and Bangalore. Chennai is the biggest hub accounting for 60% of Indian auto exports.
While Maruti Suzuki is still at top of the market share, Hyundai, Tata Motors, M&M, Honda, GM India, and Mercedes Benz are also major players. Nissan, Renault, BMW, and Fiat are also present.
World’s almost all auto manufacturers have set up plants in India. Volkswagen and Skoda in its facilities in Aurangabad and Chakan are producing top ends and mass market models respectively.
Ford India is setting up its second plant at Sanand for the plant, its second in India, in September 2011 and laid the foundation in March 2012. The Rs 4,500-crore plant will have an initial capacity of 240,000 cars and 270,000 engines. Its first plant near Chennai has a capacity for 200,000 cars and 340,000 engines. Commercial roll-out of the first vehicle will happen in the first half of 2015.
India automobile sector has grown significantly over the years. It can develop the cars that the people are looking for. The quality of the products is pretty good. If an automobile sector is any indication of the manufacturing strength, India is certainly a manufacturing power.