With Make In India Government fully committed to push India as Manufacturing hub
Manufacturing sector key to India’s growth and social equality
“We have to do a lot to inspire both Indian and the global investor to invest in India. And this can happen only through genuine partnerships, be it between manufacturing and services or business and labour. We have to create 100 million jobs in the country if we are to remove inequality and poverty,” said Mr. Ajay Shankar, Chairman, Expert Committee on Regulatory Affairs, Department of Industrial Policy & Promotion (DIPP) Government of India at Confederation of Indian Industry’s (CII) flagship 14th Manufacturing Summit 2015.
Highlighting the connection between the services and manufacturing sector, he said, “For a long time we had this wrong idea that we will bypass manufacturing and directly become a service industry economy. The world has changed and so has this old way of thinking manufacturing and services as different. The two have to become partners in creating jobs and value in India. Manufacturing is finally getting the centre-stage it deserves. Growth in the manufacturing sector is no longer an aspiration but a necessity for us. We have to succeed in creating jobs because if we don’t we risk social instability.”
Mr. Shankar said, “We have had some extraordinary successes but we are nowhere in the global scale for conventional labour intensive manufacturing. This is a weakness for us. Because of rising labour costs, 300 million jobs are moving away from China. There is a window of opportunity of 100 million jobs there. We can get 50 million of those if we get our act together.”
Sounding a positive note, he said, “There was a genuine industrial recession but we are seeing early signs of optimism. But we need to find creative ways to find more domestic demands for domestic value addition. This we have to do without becoming protectionists. We have a huge challenge before us because many of our policies have become dated. Hence we have to look at creating modern policies to help the manufacturing sector without giving way to protectionism and instead inspire competitiveness.”
Talking of creating a competitive environment for the manufacturing sector, he said, “It’s a misconception that IT growth happened inspite of the government. IT sector growth happened because of the government and the laws and policies they implement to support the industry. Manufacturing needs the same policy push to deliver results and drive competitiveness.”
On an optimistic note he said, “We have a great future ahead. I am hopeful that we will get our acts together. We are exceptionally privileged that we have one of the most creative hub in design and IT with the right ecosystem for start-ups and incubation centres for making entrepreneurs for the future. That exists for the services sector. Now we need to see it in manufacturing as well, create an ecosystem for mentorship of future entrepreneurs.” He added, “The big picture is in place. Where we need to work is in the micro level. Competitive federalism is the way forward. States are aware and politically motivated for it. Bureaucracy can at times create layers. It is a lot of hard work but we will get there if we get things right. We have to see labour as partners, become innovators and creators and work in a green, environment friendly way.”
Dr Naushad Forbes, President Designate, CII and Director, Forbes Marshall Ltd., highlighted the problems to the growth of manufacturing when he said, “We rate 140 in the global ease of doing business marker. We can quickly get into the first 80 by simply matching the best practices of different states in the country.” He further said, “Growth is 10% dependent on law and 90% dependent on implementation. At an inter-ministerial level there is a lack of clarity, an ambiguity that causes obstacles and delays in implementations of routine matters. We, as an industry, need to work closely with each other to take care of these issues. We can create a list of minor issues that are proving obstacles and the industry and the government can work together on removing that.”
He said, “The longest unpicked, low hanging fruit has been to bring the software and manufacturing industry together. Software can help bring innovative solutions in the industry and a productive interplay can take place. Software can make a firm more efficient and then it can go on to make another.”
Dr. Forbes talked of the global supply chain: “If you look at manufacturing around the world, its distinctive role is its position at the heart of the global supply chain. In India we have many independent and successful first rate manufacturers. But we do not play a part in the global supply chain. We do to an extent in the auto parts and pharmaceutical business. What about other areas like electronic and apparel which are two huge opportunities for us right now. Working together with the government we should figure out how we can be competitive and effective players in these exciting segments.”
Mr. Jamshyd N Godrej, Chairman CII Manufacturing Summit and Past President CII & Chairman & Managing Director, Godrej & Boyce Mfg Co Ltd. said, “Strength of services sector combined with the strength of manufacturing is the future. To reach our full potential though, we need close co-operation among a vast number of agencies especially between people involved in complex system of manufacturing. We have to understand all connections and complexities of its working.”
Mr. Godrej further said, “We have some of the finest manufacturing companies based in India doing exemplary quality production. We have strength but the question is how do we build on those strengths and improve upon areas that need improvement. We have to realise that the industry cannot ask for protection. Because the more protective we become the world will react in the same way. Our strength comes from competitiveness and not from protection. India benefits from essentially being more competitive.”
A CII-BCG Report titled ‘Future of Indian Manufacturing: Bridging the Gap’ was released on the occasion. The report underlines the efforts industry and government can make to harness the potential of the manufacturing sector. Highlighting the progress we have achieved, it points out the places were gaps need to be bridged.
Mr Sudhir Mehta, Deputy Chairman, CII (WR), Chairman & Managing Director, Pinnacle Industries Limited, in his welcome address said, “Good news is that India is the fastest growing large economy in the world. The Prime Minister’s ‘Make in India’ campaign has had a seminal impact on the manufacturing summit. Companies of the future will be the ones where intellectual assets matter and where new software, data, algorithms, brands and R&D will matter, even in manufacturing.”
Mr Pradeep Bhargava, Co-Chair, CII National Committee on Industrial Relations & Director, Cummins India Ltd. talked about the CII Naoroji Godrej Centre of Manufacturing Excellence which runs ‘Intensive Programme on Manufacturing Excellence’. “Besides playing the role of a catalyst and enabler, we are also looking at the centre as a bridge between industry and industry. The idea is to drive the idea that we make in India but we make for the world.”
24 September 2015
Mumbai