Indian Manufacturing Scenario

1. INTRODUCTION
Indian economy was liberalized in 1991 to allow foreign

contribution and participation in the Indian manufacturing industries. This

would allow Indian companies to pick up important lessons and tips on

improving competitiveness and India would find a place in the world

economy. But 1991 to 2001 has been a decade of all hope lost. In the year

1991 India had a debt of $ 72 billion which rose of $103 billion in 2000. India

has a total export of only $ 42 billion in 2000 while a USA has a total export

of $607 billion.

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 Indian Manufacturing Scenario

2. INDIAN MANUFACTURING SCENARIO

It is common knowledge that India's manufacturing economy is

now facing a crisis. Since the year 1991, the year in which the Indian

economy was liberalized - brought closer to the world economy - so that the

world may participate and contribute to the Indian economy and that the

Indian manufacturing companies, on the other hand, would pick up important

lessons and tips on improving competitiveness and would find a place in the

world economy, the hopes were raised. 1991 to almost 2001 - a decade should

have been a sufficient enough period for the Indian manufacturing to tone up

its muscles, sharpen its specific competitive weaponry, consolidate the

collective strategy, face the world and win some matches in the international

arena of business. The plan and hope had been to go from strength to more

strength. After all, in our country, the share of industry in Indian GDP has

been going up at the expense of agriculture since 1960s. Indian government,

on its part, had been busy setting up and embellishing the 'modern temples of

Indian economy' which, in a large measure, consisted of large industrial

production units. That these units were mostly in the public/government

sector is a different issue, several manufacturing industries in the engineering,

motor vehicles, cement, mineral exploitation and production, metals

production, chemical and petrochemicals production, consumer products

(durable and consumable), textiles, garments etc., came up in the private

sector also in a very large measure.

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 Indian Manufacturing Scenario

The emergence and growth of new Indian manufacturing giants

such as Reliance Industries in polyester fibber production and in

petrochemicals, Arvind Mills and Bombay Dyeing in the textile sector, HMT

and other machine tool manufacturers entering into the then newer technology

of CNC machines, the watch makers like Titan Industries, the rise of the

bicycle manufacturers Hero Cycles and the phenomenon in two wheelers -

particularly scooters - Bajaj Auto are only a few cases in point. At the end of

the 1990s, the status of India in the world of production / manufacturing was

creditable enough, as the Table # 1, given below depicts.

INDIA IN THE WORLD

Activity Relative Position

Coal production 9th

Bauxite production 9th

Electricity generation 10th

GNP contribution of manufacturing 11th

Sector in GDP 13th

Commercial vehicles production 14th

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 Indian Manufacturing Scenario

Crude steel production 15th

Merchant vessels 16th

Machine tools production 18th

Passenger cars production 19th

Crude petroleum production 19th

Exports 38th

Source : 'This is CEI' confederation of engineering industries, India.

It, therefore, appears that a little more than ten years ago, it was

confident India confident of its manufacturing base because of a network of

several industries producing different items as required by the internal

economy. We produced coal, petroleum, natural gas and other essential

natural resources, we produced electricity, steel and cement the building

blocks of any industrial economy, we produced vehicles and other transport

machinery which could facilitate the movement of goods and people, and we

produced consumable too. So, what is this sudden crisis about ? Why are the

manufacturing fortresses suddenly feeling that their bases are shaking ?

An important answer to this is in the Table # 1 itself. Look at

the relative position of India on the Exports front : It had been 38th in the

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 Indian Manufacturing Scenario

world. It shows clearly a very weak exports performance compared to the

domestic manufacturing/production performance. It means, the Indian

manufacturing giants were not too interested in exploring markets outside

India. They were content with establishing large production facilities and

marketing webs mostly within the boundaries of the country.

Comparative figures of India, China, Malaysia, Indonesia, and

other Asian countries in their export performance to Europe (E.C. - 12

countries) are presented in Table # 2 below.

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E.C. 12 IMPORTS BY PRODUCT AND PARTNER

Period : Jan. - Setp. 1990

Base Year 1900

Partner Values in 000 ECU

India China Malaysia Singapore Japan World Extra E.C.

Prod.

nomenclature

Electrical 9768 217151 72406 216145 1871263 26023378 9632834

Electronic 16806 681093 668870 1045139 6569071 37985102 19017377

Bicycles 324 54151 2483 73 13183 590028 322618

Motor cycles 1221 228 0 3 832974 134272 954618

Totalcycle 8233 56558 2831 18159 1099046 2978970 1749507

Cars 4012 199 44626 748 5802682 43087219 8369366

Vehicles 13854 2687 48375 3572 7148905 69955635 13357579

Machinery 71066 186511 49211 1130270 7887682 110473085 42727136

Data equip 21080 59324 22031 961849 3728210 33294163 15742665

Machinetool 1854 21307 85 5011 620671 5205956 2143333

Clocks 300 104301 5160 10471 226218 2210274 1752727

Tools 49833 140827 5581 30541 215871 6801292 2361143

arc. of Iron 2249 10990 40460 19539 32415 12156046 4311833

 Miscel 19322 887349 56609 69698 410382 16734807 5849250

Source : Eurostat - COMEXT, E.C. Statisitcal Office, Brussels

These, again, were figures for the year 1990. i.e., the same

decade-ago period that we have been discussing. The overwhelming

performance of China is obvious. Or, to put in the correct perspective, the

overwhelming under performance of Indian manufactures in being able to

capture markets abroad is very evident.

 As the table depicts, even much smaller economies such as

Malaysia, Thailand and Indonesia, seemed to have performed better or at least

as good as India. What the table also shows are the gigantic imports from the

E.C.-12 countries from outside European Community, which was the

potential for exports by any country like India. It shows as to what was the

size of the pie available and what portion / fraction of it our manufacturing /

producers could avail for themselves. Figure show that our share of this

market had been abysmally low - something like parts per thousand or less.

Whereas, during the same period, China's figures do look respectable.

Therein lie the seeds of the present manufacturing crisis. The

genesis of the trouble is in our production firms keeping themselves away

from the world outside of the familiar home-ground. It points to a situation

where we didn't want more customers, didn't want to persuade newer clients -

in fact, our manufactures did not want to make any effort in that direction. So,

it is a story where the manufacturers kept themselves away from customers -

further away from customers who might be more choosy, more demanding.

Indian manufactures - not all, but collectively in a large measure - suffer from

"customer - phobia", an aversion to the demands of a customers, a disdain for

some one who asks for more. It is, perhaps, a cultural phenomenon where a

businessman knows best and whatever handed down by him has to be

accepted without any complaint by the buying public. It may have been

typical Indian cultural - even with caste overtones - phenomenon but it surely

does not fit in with the world today.

 Our manufactures are jittery of the increasing voice of the

customers, bewildered by the variety of demands made by the now much

more informed customer -his knowledge of the manufacturer's wares and

those of the manufacturers's competitors worldwide, stymied by the quick

access to information, speed of contact and the velocity of transactions in

products of all kinds. Indian industries have always dealt with their customers

from at least an arm's length. They preferred, if it were possible, not to

interact with the customer. A famous quote by Rahul Bajaj, Chairman of

Bajaj Auto, mentioned in the recently published book "Managing Radical

Change" by Sumantra Ghoshal, Gita Piramal and Chris Bartlett perhaps very

effectively illustrates this point of view.

Rahul Bajaj is quoted as saying to the effect that for Bajaj Atuo

they do not really need a marketing department; their dispatch department

will suffice. That is the kind of market (!) our India manufacturers liked to be

in and even now-in the new millennium-like to have. Typically, our

manufacturers would prefer producing the goods and somebody lifting those

goods away without any effort from the producer. This is the case with most

types of producer - they may be even agricultural / plantation producers. They

may be producing pepper or Cardamom or some other spice, or Tea or

Coffee, or they may be manufacturing steel or machinery or chemicals' the

mind set is similar. It is elementary enough to understand that in order to be

productive one needs to put in efforts. While the term productivity is defined

mathematically as the ratio of output produced to the input put in, no

improvement in productivity has ever come about without substantial,

concentrated and focused effort.

So, there seem to be several kinds of aversions of our industry

and manufacturers :

1. Aversion to the customers per se

2. Aversion to the customer's demands

3. Aversion to put in effort without seeing immediate gains.

It is, indeed, the case of asking for 'Having the cake and eating

it too' or what in vernacular Hindi is termed as "Aam ke aam our guthli ke

daam". In what world are our producers living in ? To repeat, productivity

never came about without a tenacious effort. Manufacturing excellence had

never came achieved without a sweat,without a focused drill and work out.

No wonder, that when the going is getting hot, many of our Indian

manufacturers are abdicating.

The table (#3) tells the story.

REDUCING INVESTMENT FLOWS

Sectors Year 1996 Year 2000

Manufacturing 252194 147541
Food and beverage 9087 5847
Textiles 1649 3554
Chemicals 102528 84797
Cement 17610 12115
Metals 78518 23535
Electrical manufacturing 2349 2082
Business houses
Tata 17435 13767
Birla 33923 13271
Thapar 9794 1045
 RPG 20930 10132

As the table shows, the India corporate gaints have stopped

putting their eggs in the manufacturing basket. There are always some

exceptions - Sundaram Fasteners, Sundaram Clayton, Asian Paints, Ranbaxy -

but, they and large, the manufacturing's share of investments and share of

GDP has come down over the past four - five years.

Giants like Reliance and RPG groups are also very actively

looking for avenues other than manufacturing such as IT and telecom, hoping

perhaps that the gains there will be quicker, larger and easier as the field is

virgin and the international players have not yet moved in.

There is nothing wrong if businesses look for greener pastures;

if they find them in services or other- than- manufacturing areas. What is

distribing is the lack of commitment, lack of tenacity to see it through, lack

of will power to make it in the face of competition. The Indian manufacturers

appear to be quitting the game even before the first few balls were bowled.

An over of pace- balls and they want to change from the game of Cricket to

Golf.

Why this quitting ? There seems to be this fear of never having

had substantial interaction with the customers who are now the demanding

type. Their is a strong feeling that the competitors from other countries who

are already used to dealing with tough customers will anyway score better.

The customers, even Indian customers, would now be better informed and
there will be more and more opportunities for them chose from. Competition

will be on all fronts:cost, quality, variety, timeliness, constant improvements,

increasing applications, repair and replacement, to name a few. Globally, now

the customers expect constant enhancement in the value for money, a pressure

which the hitherto insulated Indian manufacturing industry has never been

used to. Customer was never a force to reckon with / bother about in India

and Indian manufacturing industry has made itself grow under such

comfortable, relatively relaxed conditions. Investments were made of the

wrong king - with the comfort level for the manufacturer in mind. Capacities

grew but not the efficiencies. Variety, understood as several different items

made under the same roof same manufacturer - grew but not the flexibility

and adaptability to quick changes. Size of the manufacturing industry

increased but not the capabilities of the people manning them. The

consequence of this has that the imports from other countries such as China

have become a major source of concern for our manufacturers.

In our country, we speak much about world class

manufacturing (WCM). However, one cannot develop world class capabilities

without facing the world. World class manufacturing first starts with

reckoning the world. Its basis is in knowing the world of customers. WCM is

not so much about the manufacturing technology, it is about some new

fangled structure, system or procedure. If a set our customers are best served

by means of a particular manufacturing architecture, production and logistics

system or procedure, then that will be right structure-system-procedure. That

will be a world class thing to do.

'World class' does not ensure that one will remain so for a long

time to come. It is not something where you have 'arrived' and so you can

safely assume you will continue to stay there. Rather, being a world class

manufacturer means being on one's toes all the time, continuously rejecting

the status quo. It is about being ever-vigilant ever-conscious of the

environment and continuously adapting oneself to fit in the evolving world. It

is world of customers, perhaps, diverse, that one is speaking about. Without

the sensitivity to the customer and a commitment to keep up with him / her,

the focus is lost. Manufacturing maybe a process internal to the firm

(internally defined, internally driven), but world class manufacturing is

customer driven and consists of any and all operations that will keep the

customer happier than earlier. It is a firm-wide value system. That the

customer is the most important person in one's business and, therefore, one

should do everything possible to serve him better. World class manufacturing

begins with service, a commitment to service. It pre supposes humility.

 3. REASONS FOR DOWNFALL OF INDIAN

INDUSTRIES

1. Lack of huge foreign estement.

2. Rebutonce to adopt new technologies.

3. Government policies foursing self referring.

4. Government control on industries and import.

5. Shuning away from international business.

 4. CONCLUSION
Indian Manufacturers should ask themselves

1. Are we committed to total customer focus in all our operations,

processes and systems with a plan for continuous improvement on all

performance measurements, including new products ?

2. Are we actively committed to continuous development and up

gradation of competence throughout the firm, including management ?

3. Do we accept than continuous change will be the future pattern of life

in manufacturing, and act accordingly.

4. Do we have the courage and determination to be able to look the bear

(the global competition) in the eye ?

Even after looking of the gloom remending the Indian

manufacturing industries where we look at the follows fig we cap breath a

right of relief.

i) Indian manufacturing industry showing 15% growth is year 1999-

2000.

ii) Per man productivity improved from Rs. 666000 to Rs. 1510000.

iii) Indian machine tool industries share at Rs. 587 crores is (99-2000).

One is World Class Manufacturer only if the answers to the

above basic questions is 'yes'. World Class Manufacturing is not for quitters

or. It is a world of the humble and the brave.

 Indian Manufacturing Scenario

REFERENCES

1. Machinist : A Journal of Manufacturing Technology

2. Economic Times

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 Indian Manufacturing Scenario

ABSTRACT

India, a country with a population of 1 billion, the largest

democracy in the world and one of the fastest developing countries in the

world. All this may seem true but the fact is that India is one of the most

poorest countries in the World.

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 Indian Manufacturing Scenario

CONTENTS

Sr. No. Particulars Page No.

1. INTRODUCTION 01

2. INDIAN MANUFACTURING SCENARIO 02

3. REASONS FOR DOWNFALL OF INDIAN INDUSTRIES 12

4. CONCLUSION 13

5. REFERENCES
14

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