So finally, I got at least one item in Anand’s household that has a ‘Made in India’ tag. It is a small memo book with 80 sheets of 3×5 in size. Why are the Indian manufacturers not aggressively in competition with other countries that are exporting to America and other developed countries?
As rightly “>reported, “India has one of the lowest costs of labour and “on paper” a competitive price of power. In reality though, labour productivity is very low and power is unavailable for up to two shifts a day in many industrial clusters – forcing them to use inefficient diesel generator sets – that nullify any factor cost advantage. India’s road and port infrastructure are still far from ideal. Our port turnaround times are upwards of 80 hours – roughly five times that of Sri Lanka. The average truck speed in India is 35 to 40 km per hour roughly half of that in China.” India can’t be anywhere unless it improves the fundamentals for enhancing interest in manufacturing. The favourable exchange rate for export is hardly advantageous and matters on long term.
Even a country such as US is refocusing its policies to keep manufacturing growing. India must learn some lessons.
A 2012 report had predicted that United States would slip to fifth place from third in manufacturing competitiveness in the next five years as India and Brazil race ahead.
However, as recently reported, “US manufacturing competitiveness has steadily increased over the last decade in comparison with key peers. Analysts at Boston Consulting Group have been in the forefront of these predictions, estimating in 2011 that the US would largely reach parity in terms of effective manufacturing costs with the Eastern regions of China by 2015 – an observation a number of other consultants and analysts have also made.”
Some US manufacturers are moving production back to US soil or deciding to stay here rather than moving offshore.
And as BCG predicts, increasing US competiveness with China and advantages over most other developed economies is likely to lead to an export surge and a growing number of badly needed American jobs.
As “a result of its increasing competitiveness in manufacturing, US will capture $70 billion to $115 billion in annual exports from other nations by the end of the decade. About two-thirds of these export gains could come from production shifts to the US from leading European nations and Japan.”
While some agree, some though doubt the BSG’s prediction and opine that BCG fails to meet the burden of proof required to back up the numbers in its report, and even that the BCG analysis doesn’t seem to take into account rising Chinese productivity.”
Manufacturing still matters for the US and its companies. Obama government has given a new push for manufacturing in US. And even the company such as Apple though getting manufactured its iPhones and other products in Asian countries have started rethinking.
India must move ahead and I wish the big business houses encourage manufacturing sector by getting into the manufacturing of high-tech items, while India’s organised retail sectors must also encourage manufacturing in rural India through innovative means rather than selling only imported goods.