Manufacturing India: the necessity of product development

One like me, who has seen the Indian manufacturing from very near quarter for almost fifty years, gets amazed to read such news. “The large royalty payments by MNCs and the consequent outflow of foreign exchange totalled $37 billion last year.”

Maruti Motors alone paid ₹2453.8 crore to its parent company Suzuki in 2012-13 itself. And during last five years between 2009-2013, the total amount of the royalty outgo from Maruti to Suzuki amounted ₹7843.9 crore. One can very well imagine what it means for an automobile plant. Suzuki could have easily set up at least three new manufacturing plants with a capacity of 1,50,000 per annum each in the last five year with only the earning from the royalty.

One may blame the government policy or something else. But anyone in the position of Suzuki would extract the maximum from the country dependent on import of technology. The amount may vary. However, the real challenge lies in creating a situation where India too start earning such royalties through its own innovations and product designs that are superior and in demand by the customers all over the world. Indian companies will have to pour sufficient money in R&D and world class product development. The government will have to facilitate to have an ecosystem for that.

One of the main reasons of poor show in manufacturing of critical high-tech items is the over-dependence of the Indian government on public sector units run under various ministries set up over years that had hardly kept pace with the global technology development in critical areas.

BMEL has languished as assembler of Tatra trucks for army over all these years. It could have certainly developed a better product. BHEL could hardly meet the domestic demands of power plant equipment with its old technology. A company of its size with so many years of experience could have certainly become a significant global player.

Except for L&T, hardly any other big manufacturing company came in private sector. Even Tatas that one time manufactured locomotives and earth moving equipment, could not upgrade its products to the world class standard of technology, and closed the business or carried on with domestic market.

There are many areas where India has lagged in the manufacturing capability. India is today top importer of arms in the world. Very lately it has just sought to diversify its sources from different countries including USA, but done very little to develop the defence arms and equipment with the cutting edge technologies indigenously that can reduce its import significantly.

DRDO and its 50 establishments as well as the five defence PSUs, four shipyards and 39 ordnance factories were expected to develop, produce and deliver all the weapon systems. However, its performance till is far short of the need of the nation. Unless the India develop and manufacture defence equipment and hardware, as well as be able to sell them in a competitive global market, the country can’t be rated high in manufacturing capability. Unfortunately, the government has till date hesitated to involve the private sector in the manufacture of the defence items. There are reasons to believe that some Indian companies are capable to do that and also interested in investing for it.

Ajai Sukla, who keeps on writing on this issue, has a wish list for the political leadership of the government that comes after Election 2014: The next government “must lay down specific goals to galvanise indigenous defence such as: by the end of this decade (a) the Indian Air Force will field an indigenous medium combat aircraft powered by engines built in India, and the military’s range of light and medium helicopters will be India-designed and developed; (b) the navy will deploy indigenous nuclear-powered and conventionally powered submarines, and one nuclear-powered aircraft carrier; (c) the army will field an indigenous main battle tank and infantry combat vehicle, both with indigenous engines; and (d) all three defence services will develop secure terrestrial and satellite networks that have minimal foreign components.” However, it must commit itself in implementing all what is required to have it fast in reality with its benefits to the manufacturing in India.

Surprisingly, I found a programme ‘Innovating for a better tomorrow’ on CNN-IBN that talked about one defence achievement, the Brahmos, the world’s fastest cruise missile that can be maneuvered while still in flight.

Another product that got mention was the development by Dr Reny M Roy, DRDO scientist of the Explosive Detection Kit (EDK) that uses chemicals to trigger reactions and detect explosives.

One gets impressed with its specifications. But unless India puts it in operation and also export it to the leading user countries, India hardly gets its benefits.

In other areas too, some Indian innovative products made impressive reviews by even the manufacturing experts of developed countries.
@ Tata Motors: Nano, the cheapest car of the world and then ACE, the mini-truck
@ M&M : Scorpio, the cheapest SUV

Bajaj Auto, and Hero Moto are now world class two-wheeler manufacturers with its own products. However, in high end products, both are still to make the presence felt. Other Indian innovation worth-mentioning are:
• Hindustan Unilever: For Pureit Water Purifiers, a breakthrough innovation developed and designed locally for low-cost domestic water purification.
• Godrej & Boyce ChotuKool: A compact small fridge that runs on both electricity and battery for the mid- and low-income urban and rural markets.
• GE Healthcare: For introducing MAC 400, a low-cost ECG machine that has profoundly impacted clinical guidelines and ECG standards, and made ECGs available to every physician, every patient, everywhere.

India could have gone ahead with better integration of its IT talents with product development and manufacturing. However, there is hardly any visible indicators coming from the Indian manufacturers.

All Indians are looking with hope for the new government arising out the general election 2014 to take up the growth of the manufacturing seriously and do everything for its growth at 12-15 percent per annum for next five years. That alone can make India a superpower, not the services. India will have this as its last opportunity.

It is a welcome sign that both the national parties in election fray for winning the election in 2014 are at least considering manufacturing as the key sector for the growth of the country. Narendra Modi wishes the country to focus on the manufacturing sector, particularly electronics and defence, to reduce the high dependence on imports and ensure inclusive growth. ” Rahul Gandhi does also promise to make India ‘a manufacturing hub of the world’. Unfortunately, the mechanical engineer, Arvind has only one point plan of stopping Modi in his bid to reach the top chair.

Let us wait the best for the nation.

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