CII, in association with their Knowledge Partner, The Boston Consulting Group (BCG), released a report titled "Future of Indian Manufacturing: Bridging the Gap", against the backdrop of the CII 14th Manufacturing Summit 2015 organised by CII on 24 September, 2015 at Mumbai.
The report takes stock of the recent progress of the manufacturing sector and the Make-in-India initiative, an year down the launch. The outlook is broadly positive given the growth in IIP as well as clear uptick in the manufacturing FDI. The overall IIP grew 3.2% in the first quarter and 14 of the 22 sub-sectors showed positive growth. The buzz around Make in India has been positive and many large ticket announcements have been made. The report also notes the efforts on reforms related to land, labor, GST and procedural simplifications. However, only 20% of the executives surveyed feel that there has been an improvement in 'ease of doing business'. Nevertheless, 42% of the executives feel that the government's manufacturing drive has been effective, as against the 21% who feel otherwise.
The CII-BCG report highlights the declining attractiveness of China as a manufacturing base due to labor and yuan challenges, and emergence of new destinations such as Ethiopia and Vietnam which are becoming competitive. In addition, the report notes that the adoption of advanced manufacturing technologies is disrupting the advantages of low labor cost. According to an analysis by CII-BCG, the cost of industrial robots will decrease by an estimated 20% by 2022, while their performance has been increasing at 5% per year. These developments point to a clear imperative for the Indian industry to focus on innovation. The survey responses also corroborate this focus as 75% of the respondents indicated innovation as focus of their technology investments.