Can India have a strong manufacturing sector?

Adneya Audhi 12304 Dipti Kale 12314 Mrinmayee Kulkarni 12330 Chaitanya Parab 12339 Nishigandha Tilak 12358

History and Evolution of Industry

At the time of attaining independence in 1947, primarily agrarian industry Second five-year plan, which laid emphasis on the heavy industries and sought a greater role of the public sector in industrialisation. arms and ammunition, transport, energy, coal, iron and steel and oil came under the governments control. Liberalization, new industrial policy of 1991gave boost to the industry

History and Evolution of Industry

But physical infrastructure failed to play its part hence, sectors that did not rely too much on the physical infrastructure displayed international competitiveness. garments, leather, gems and jewellery As physical infrastructure improved , 2006 onwards, so did the other areas of the manufacturing automobiles, petroleum refining, capital goods, engineering products.

Manufacturing Sector in India

Share of manufacturing sector in GDP is around 16% Accounts for 50% to countrys exports

Indias share in world manufacturing is 1.8% India has large market size and potential.

Sectors in Manufacturing Industry

Automotive Capital Goods Electronics & Electricals Machine Tool Industry Metal and Metal Products Textile Machinery Textiles Cement & Ceramics Chemicals & Fertilizers Leather and Footwear Food Processing Tyre

Problems faced

Poor Infrastructure - electricity, roads , water

Political issues (Corruption , paperwork, time lag)

Poor Research and development Poor planning and poor implementation FICCI estimates that the higher input costs for the Indian manufacturing sector as a result of cascading effect of indirect taxes on selling prices of commodities

Brief comparison
A study on export of Advanced Technology Products (ATPs) to the U.S indicates that while China and its surrounding countries exported 59% of the ATPs imported by the U.S., India does not at all figure in the list of countries which exported to the US clearly indicating that the Indian advanced technology production is way behind.

Comparison
Among the countries that posted high rate of growth of manufacturing the policies followed by Korea, Taiwan, Singapore, Hong Kong, Malaysia, Thailand, Indonesia, China have been examined. Korea and Taiwan implemented interventionist policies in deepening their local technology and enterprises with selectivity of FDI. Singapore depended on FDI for its growth it provided efficient and high skilled base for MNCs. Hong Kong concentrated on light consumer goods, but did not absorb any technologies.

Comparison

Malaysia, Thailand and Indonesia have been dependent on FDI for technology upgradation ,but this has only helped in creating a low level type production base.This hasnt made the manufacturing sector grow to a finer level. China on the other hand being new entrant has progressed quickly. It is known as the Worlds Manufacturing Factory. It has through incentives and subsidies helped in deepening the technology and also helped in building a low level production base. This has been a middle road between Korean and Malaysian Policies.

Higher cost of utilities like power, railway transport, water, higher cost of finance and high transactions costs Efficiency of work (Indian mentality) IT and services sector Youngsters opting for jobs in IT

Positives to improve the manufacturing sector

We have a pool of talented graduates, post graduates. We also have a labor pool of about 400 million people. These two can join hands and work in tandem.

Base for export to foreign countries - Hyundai Motors using. India as export base for foreign markets

Emergence as global manufacturing hub with presence of MNCs such as LG, Samsung, Hyundai, Pepsi, GE, General Motors, Ford, Suzuki etc

Increased implementation of state-of-theart IT technologies current IT usage of 15% India may become the fifth-largest manufacturing nation from ninth position at present - if the country is able to increase the share of manufacturing in GDP to 25 per cent, a Boston Consultancy Group

Segments showing high potential: automobiles, steel, aluminum, cement, auto ancillaries, forging and pharmaceuticals.
With about 430 million labor force, one of the largest pool of manpower across the globe, India just need to impart proper training to them. the manufacturing sector has high potential but is extremely underutilized. So if the Indian Govt. shows enough commitment then the target can be easily achieved.

Investments in Indian Manufacturing

Parker Hannifin India, has established a Rs 100-crore (US$ 18.32 million) - factory near Chennai to manufacture components for a wide range of industries like automotive, telecom, Oil and gas etc. Company considers India as an important component to propel its growth in the Asia-Pacific region. India accounts for a revenue of about US$ 130 million

Investments in Indian Manufacturing

Home appliances brand Godrej Appliances has announced a technology-collaboration with Bosch and Siemens (BSH) to develop an entire new range of energy-efficient refrigerators for Indian, Asia-Pacific, West Asian and African markets. The refrigerator range manufactured under this partnership will be marketed by Godrej and BSH under their respective brand name in India, AsiaPacific, West Asia and Africa

Investments in Indian Manufacturing

Shanghai Hitachi Electricity Appliances Company, a joint venture (JV) company of China-based Shanghai Highly Group and Hitachi Appliances of Japan, has decided to invest Rs 500 crore (US$ 91.58 million) over 2013-15 in Gujarat to manufacture airconditioning compressors and relevant refrigeration products to focus on India and West Asian markets.

References
FICCI-Manufacturing Survey report March 2013 Planning com Manufacturing The next triumph card for India-Knowledge Network - Cisco Systems Confederation of Indian industry

Thank you