Manufacturing India: Manufacture and Export

“Unless India gets back to encouraging manufacturing, sees growth in manufacturing, it is critical as manufacturing ultimately creates the biggest jobs. We thought we could leapfrog that era and move directly to the digital era. That is not going to happen we need to promote manufacturing and promote exports.”
Anand Mahindra

While in US, I keep on wondering why India can’t export all those that the American households get from the Chinese source. I find every shops small or big in malls of cities such as New York or towns such as Cary of North Carolina flooded with the China manufactured items, where I hardly find any trace of similar items with ‘Made in India’ tag.(Even though I do see even the tags with the names of Bangladesh and Honduras). And the manufacturing technologies of these items for the American households are not some that are not known to Indian manufacturers, business persons or traders.

America is the world’s richest country and largest importer. In 2012, the US bought US $ 2.334 trillion worth of imported products.

Here are the top 10 US imports from China that cost America $ 444.4 billion and constitute only 19% of the total US imports.

1. Electronic equipment: $113.3 billion
2. Machines, engines, pumps: $102.2 billion
3. Furniture, lighting, signs: $24.8 billion
4. Toys, games: $23.1 billion
5. Footwear: $17.9 billion
6. Knit or crochet clothing: $15.6 billion
7. Clothing (not knit or crochet): $15.3 billion
8. Plastics: $13.2 billion
9. Iron or steel products: $10.1 billion
10. Vehicles: $10 billion

Interestingly, India’s exports to America only amounted to $41.9 billion and are only1.8% of overall US imports.
1. Gems, precious metals, coins: $7.2 billion
2. Pharmaceuticals: $4.3 billion
3. Gums, resins: $3.6 billion
4. Oil: $3.3 billion
5. Machines, engines, pumps: $2.3 billion
6. Organic chemicals: $2.2 billion
7. Other textiles, worn clothing: $2 billion
8. Clothing (not knit or crochet): $1.9 billion
9. Iron or steel products: $1.6 billion
10. Electronic equipment: $1.5 billion

The same is the case when one studies the exports of China vs. that of India to almost all the rich countries of the world such as Japan or UK.

India’s exports to Japan amounted to $7 billion or 0.8% of overall Japanese imports, while China’s exports to Japan amounted to $188.4 billion or 21.3% of overall Japanese imports.

India’s exports to the UK amounted to $9.3 billion or 1.3% of overall UK imports, while China’s exports to the UK amounted to $56.3 billion or 8.2% of overall UK imports.

It will require a total change in the mindset of the institutions and individuals who matter in making manufacturing the mainstay of the business thinking.

Is it not a shame to read a story in Economist, ‘300m menstruating Indian women eschew sanitary pads in favour of rags, dry leaves, straw or newspapers.’ Can’t the country that claims to innovate and manufacture the cheapest car of the world produce affordable pads and the governments and political parties distribute it free instead of handing over laptops or TV sets to the girl students and families? Will it not provide employment to many of the poor women in rural India and if executed properly can even be exported?

Why can’t micro spinning enterprises be established in every Panchayats in cotton producing areas of the country which in turn can provide employment too in rural India? Why does India show interest in exporting raw cotton or iron ores to China with no value addition?

Indian manufacturing will have to innovate and manufacture all types products required by the global market. Many more entrepreneurs, small and big, must get into manufacturing.The established ones must scale up the production, improve the quality, and reduce the life cycle cost and globally compete. The government and the institutions engaged in R&D must orient for encouraging manufacturing sectors.

A dawn of manufacturing is a necessity for India. It can come by developing export. Every establishment of the country must export, be it big ones such as Tata Motors and Mahindra and Mahindra or SAIL and BHEL or BMEL or HAL, and must change its strategy of surviving with government support in local market.

A ray of hope comes from a futuristic statement, “India should dream of exporting defence equipment instead of importing them.”

Finally, India must take lessons from the Walmart story in US and must safeguard the small manufacturing sector of the country from Walmart and global retail giants coming in India from selling all the goods from their Chinese sources that they have taken pain to develop. I give only two data for consideration:
1. Between 2001 and 2007, the value of products that Wal-Mart imported from China grew from $9 billion to $27 billion.
2.According to the Economic Policy Institute, trade between Wal-Mart and China resulted in the loss of 133,000 manufacturing jobs in the United States between 2001 and 2006.

MNC retailers must be encouraged to develop Indian manufacturers to produce the quality products for its outlets around the world and also to market the unique Indian produces.

I wish Manmohan Obama forthcoming meeting in US brings good news of US collaborating with India for manufacturing many items jointly rather than discussing only the deals of purchasing and selling of some military wares.

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