India seeing a revival in manufacturing growth: National Manufacturing

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    Sep 22, 2012
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    Detroit MI
    MUMBAI: The present depression has bottomed out and with economic revival is on its way back, the manufacturing sector will soon get back to the 14-16% growth rate, which was the norm a decade ago. This was stated by Ajay Shankar, Member Secretary of the National Manufacturing Competitiveness Council while delivering the Inaugural Address at the CII 12th Manufacturing Summit, titled 'Manufacturing in India: "Winning in the New Normal"'.

    Shankar pointed out that business cycles were part of economic life in all open economies and India would have to come to terms with such cycles. "Economics as a field evolved to study business cycles with limited success," he said. Saying he was not a representative of the government but represented a manufacturing competitiveness council, which was a government-industry partnership, he said a problem in India was that manufacturing in India was not as strong as it should be, and urged the gathered corporate captains to evolve a consensus on pushing the case for manufacturing. "India is a democracy, in which the government listens to the public opinion," he said.

    Shankar impressed upon the audience that the debate between fewer but high-technology goods and mass-produced goods could not go on. "If you see India's requirement, we need manufacturing on a massive scale and we have no option but to succeed. The government has announced a National Manufacturing with the aim of generating 100 million jobs and we have to create an environment to make that happen," he said.

    He asked industry to come up with creative solutions for the problems bedevilling economic growth. He said instead of complaining about the rigid labour laws which made it impossible to set up factories in India that can employ a million people, industry needed to come up solutions to the labour laws and advocate the same to the government so that such factories can come up.

    Shankar pointed out that Indian manufacturing was strong in all sectors and that Indian industry was extremely competitive. The world was no longer with the Anglo-Saxon model of financial services and veering back to the importance of manufacturing, particularly after seeing the success of Germany. "A recent survey of global CEOs found India to be the 4th most popular manufacturing destination after US, Germany and China," he said, adding that most CEOs now believe the worst is over and the economy is on the road to recovery.

    Earlier, Bharat Forge Chairman and Managing Director , Baba Kalyani said Indian manufacturing was in the ICU. "Over the last 7 to 8 years, imports of manufactured items have gone up due to the removal of imports duty, coinciding with a drop in our industrial productivity in manufacturing. The fundamental problem is that there is nothing to manufacture because everything we need is imported," he said. Kalyani bemoaned the fact that manufacturing as a share of GDP had come down from 17% a few years ago to 14.6% at present, while the dream was to make manufacturing account for 25% of GDP by 2025.

    On a more positive note, he added, "There is no country in the world that is more competitive than India in manufacturing. We have the skills set and the capability if channeled in the right direction, and urged Indian companies to look at more exports and adding value to their products.

    Larsen and Toubro Managing Director & CEO, K Venkataraman spoke about how his company had bucked the economic downturn by increasing its exports and achieving excellence in its various verticals, and urged others to do the same. But he added that given the size of India, the domestic market would always remain the focus of the company. Venkataraman pointed out that India still had sectors that provided enormous opportunities to manufacturers such as nuclear power and defence industry, which were just opening up.

    Jamshyd N Godrej, Chairman, 12th Manufacturing Summit, CII, and Chairman and Managing Director, Godrej & Boyce Mfg Co Ltd, said the growth slowdown has put the focus on what industry can do and it was the company's internal strength and its own DNA that would make a difference in the sphere of manufacturing. "There's no easy way out," he said. Godrej also praised the small and medium enterprises (SME), which he said are critical to the manufacturing ecosystem. "SME contribute a lot and we need to look into the infrastructural and structural problems faced by them," he added.

    Pradeep Bhargava, Immediate Past Chairman, CII WR (western region), and Director, Cummins Generator Technologies India Ltd, gave the gathering hope when he averred that MNCs were increasingly looking at India to set up their manufacturing units. He also saved that collectively, industry had failed to influence the government to bring in policies favourable for manufacturing.

    Godrej Industries Managing Director Nadir Godrej read out a poem about the current economic and manufacturing woes, much to the delight of the audience. During the inaugural session, a report, "Powering Past Headwinds - Indian Manufacturing: Winning in an Era of Shocks, Swings, and Shortages', released by CII and BCG India. Speaking about the report, Arindam Bhattacharya, Managing Director, The Boston Consulting Group, said industry would have to learn and prepare to operate in a volatile environment, which could be caused by a depreciating rupee or an earthquake in some part of the world. "It is believed that by 2015, the US will become one of the most manufacturing competitive nations in the world, there are changes taking place in China, Africa is rising... all these present turbulence companies that adapt will thrive," he said.
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