Why can't India be a World-Class Player in Manufacturing Industry as it is in IT & BPO Sectors?

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103 comments Page 1 of 11.

Anand S said:   1 decade ago
India could be a Manufacturing Hub in coming Years. As a fact all are aware that India labor force is the world 2nd largest after CHINA. INDIA holds it place in the World's fastest growing economies.

Nowadays, A normal life will be abnormal with out mobile, computers, internet. Everything behind this is TECHNOLOGY. IT gave us power to discover more. Right now it is possible for a 2 Year old kid to see the satellite view of the earth on a click of a mouse button in Google Map/Google Earth. We could talk/video chat to any person in the world with a simple login to SKYPE. No more slips we have carry in our pockets to drop it in bank door steps, you can do all in NETBANKING. Information Technology Era has changed the life of each and every human and as INDIANs we can proudly saw we are participating in the same sector to make life even simpler.

Yes, I accept with the points shared by the friends here, India has gained a mass face for IT/ITES/BPO and other back office processes, but we could also see more Foreign Direct Investments are flowing in for the MANUFACTURING/Mining/Power Generation.

For Ex: Chennai very famous for its IT presence has been witnessing FDI in Manufacturing. Chennai stands @ rank 2 in IT Exports after Bangalore of producing a GDP of 144, 214 crore during 2006-07. After recession Chennai faced JOB LOSSES in history majorly in IT/ITES sector. Later State Govt brought in more employment in Manufacturing, Power Generation[Wind, Solar, Nuclear].

Tamil Nadu state Govt revised the tax benefits and FDI in Manufacturing grown double in recent years, now Chennai is the base to around 30% of India's automobile industry and 40% of its auto components industry. [9] A large number of automotive companies including Hyundai, Renault, Nissan Motors, Ashok Leyland, Daimler AG, Caterpillar Inc. , Komatsu Limited, Ford, BMW and Mitsubishi have manufacturing plants in Chennai.

The Ambattur-Padi industrial zone houses many textile manufacturers, and an SEZ for apparel and footwear manufacture has been set up in the southern suburbs of the city. Chennai contributes more than 50% of India's leather exports.

Telecom and Electronics manufacturers based in and around Chennai include Nokia, Nokia Siemens, Motorola, Dell, Wipro, Zebronics, Foxconn and Siemens among others. Telecom giants Ericsson and Alcatel-Lucent, pharmaceuticals giant Pfizer and chemicals giant Dow Chemicals have research and development facilities in Chennai.

Well, how many of you people know that Coimbatore, Tamil Nadu is major gold jewellery manufacturing hubs in India? Each and every DELL Laptop, Samsung LCD TVs manufactured in Chennai are labeled as Made in INDIA and sold across ASIA PACIFIC region.

All these are few fact figures, we have lot more to come in. India is not just for IT/ITES, we have our foot steps already set in for Automobile, Electronics Manufacturing sectors.

All the best. Go India Go!

Soumya said:   1 decade ago
Before speaking on the topic, I want to tell you that primary sector (agriculture, fishing etc) , secondary sector (manufacturing) and tertiary sector (services) are the three phases of development of an economy. Generally developing economies are dominated by manufacturing sector, while tertiary sector is the predominant contribution to the development of developed economy. But In case of India, there is a mismatch, India being a developing country is characterized by tertiary sector growth. So it indicates India has skipped the second phase of growth.

From the beginning of nineteenth century up to independence, agriculture was the main livelihood of people and thereafter followed approximately three decades of five-year plan. In this period, growth was minimal. But suddenly after 1990s, and in the beginning of 2000s, IT/ITes/BPO sector developed, because.

- Higher education was in its peak, thus engineering students graduated (increase in manpower).

- Willing to work in less pay.

- Private sectors were true gainers, used Indian skill to transfer knowledge and job to their country, thus getting a support from their respective country.

- For a moment, government thought that it is true development without realizing that the growth comes from outside, and any unexpected circumstance in their country could affect its growth rate.

- Although government launched certain manufacturing policies for development of R&D sector, heavy industries like petroleum and mineral industries, agriculture-allied0industries, still the growth was very minimal due to corruption and lack of interest among the men in power.

But one fundamental theory of manufacturing sector is that, wages and machines that are used to manufacture goods will depreciate, but human assets have their value. Thus it is best time for India to invest in manufacturing now as it has a lot of advantages.

- Large number of skilled and semi-skilled workers available.

- Best brains of India that developed in India are returning to India.

- India is one of world's largest economy, so it does not have to wait for the world to support its investment.

- Many companies have the capacity to invest heavily.

Thus finally, I will conclude that India could not be a world class player in manufacturing sector, but by dedicated and coherent partnership by Govt, public sector and private sector can help India being one of the biggest player in manufacturing.

Shashank said:   1 decade ago
I don't want to point these sector but I think these sectors which we are telling i.e.BPO and IT basically are not in search of talent (in India) , they basically need manpower and they train them to work as they want. These sectors are growing so much because it doesnt require much investment in production and manufacture. Only paying a small amount to the employee gets them money. We have got more manpower and people easily get attracted toward these BPO's because they don't require much education and youngsters can easily earn their living. Considering IT sector, now a days we see that a person doing mechanical engineering gets an IT job. They train them one month and then they are ready to run in the race course. This is what happening now a days.

Students immediately after graduation gets a job in these sector easily and hence they get attracted more towards them. And hence it is but natural that these sectors will definetly grow.

Government should play a part in this. We have got organisations like AICTE and UGC in education which gives accredation to almost all the colleges approaching their door step.

Before giving accredation they must consider various points like.

1. Adequate and good faculties are present for each course which the institute is giving.

2. Students getting equal opportunities to get the job in their specialised field.

And many more.

These things can open the opportunity for the young generation like us to take the field in which we are interested.

If we are saying that we have not got talent this is totally wrong. The thing is we are not using our talent properly. Or we can say we are misusing it.

It is not that we are not more attracted towards the manufacturing industries but the fact is youngsters are not given much opportunity in these fields. So they try to move abroad and get settle there. This thinking must be changed and if Government is not providing the opportunity we must take a step forward make our own way. Their are lot of manufacturing indusries in our country. We must make our standard so high that we get into that.

Shivam said:   7 years ago
The main hurdles which India faces to emerge as a giant in manufacturing hubs are :

1. Lack of skilled manpower in-spite of being the 2nd most populated country in the world. There is an urgent need to update the work process as well as working environment, in order to survive in this era of globalization. This does not imply to remove the existing employees, but rather it suggests to upgrade their skills by imparting them with proper training.

2. India has abundant raw materials, but it does not have the appropriate industries to process them and make them ready to use. It is because of same reason that we need to export a lot of items from China. What could be the reason behind it ? Well, its simple and evident -"lack of government initiative". If government could take an active role in this, then surely India can be a manufacturing giant. Every year, a part of budget, approx. (12-15%) is spent in manufacturing sectors but still there is no sign of any positive outcomes. This is just due to the lethargic attitude of the politicians. Unless and until, there is a check on such people, India can't emerge as the hub of manufacturing market.

3. Lack of research and development works. The youth should be enlightened of the glory that R&D can bring to India. India is a pool of talents, but due to lack of R&D, these people get lost in the herd of men.

4. The existing labor laws are somewhere creating hurdles and obstacles. It needs to be revised and upgraded.

5. Lack of advanced education system. Still lots of colleges in India don't impart good education system. Students are driven to easy and short cuts methods. Engineers are being produced every year on large scale, but still we don't hear of any good research works which our youth did in past 10-20 years. It appears that they have opted to work in IT sectors, where scope of R&D is less, or even if it is there, its just what the company would want you to do. Due to lack of interest in youth, the dream of being a manufacturing hub is still in dilemma.

Ananth said:   1 decade ago
There are lot of issues with the manufacturing sector and if we overcome these issues, definitely we can grow in this field. The issues are.

1. Lack of funding in manufacturing industries and lack of support from government.

2. We are importing lot of materials from other countries rather than exporting which is a major problem and there comes a day where we need to import our lord Ganesha idol from other countries as this is the statement which is said by the head of kotak mahindra group which is so true.

3. Our education system lacks practical knowledge and we are more concerned with the percentage rather than knowledge and our education system should provide good industrial exposures to students and industrial training and internships to be included in the curriculum.

4. If an Engineer has to do higher education, he need to clear GATE which is a tougher exam comparatively in-order to go to quality institutions where the seats and the opportunities are less, whereas I have seen so many friends where they would be more willing to do GRE courses and do higher education in abroad where they get many more opportunities. So we need to set-up good quality institutions in India so that the percentage of students going to abroad would come down.

5. If you end up working in a small or medium scale industry then you would know the difficulties you have to face being a mechanical engineer as you have to work for low wages and your work will be more as their would be less departments in a small scale industries. So, fresh graduates get attracted to work in MNC companies (mainly IT sector) due to their benefits compared to our manufacturing sector.

These are the issues but this can be overcome by giving more encouragement to small scale and medium scale industries by reducing taxes and by giving good equal opportunities to Engineers of their corresponding fields.

A D S said:   1 decade ago
India has a huge amount of trained manpower and resources. So, the only problem of India being the leading country in manufacturing is its lack of infrastructure and the non-cooperation of the government. A BPO or an IT company merely needs a few computers, few small rooms and huge amount of manpower, not necessarily has to be trained. They could be trained in a month. Whereas manufacturing companies needs small but highly trained manpower, skilled labour, expensive machinaries, Huge infrastructure. So, this requires huge amount of investment.

Lots of hurdles in the Indian government and public sectors discourage high amount of investment to flow in the country. Corruption, inefficiency in every sectors of the government, elongated process time of applications etc. Are the key issues for disinvestment in the country. Indian political leaders and policy makers are also reluctant about manufacturing industries because they may be providing better economic development to the state but the IT companies provide more mediocre, stereotype jobs which is very much necessary to increase the vote-bank. IT companies don't want brains and innovative ideas, they only want a few 'overqualified clerks' to work for them at a 'cheap' rate. So, they outsource their work to developing countries and exploit the young Indian brains leaving them in a 'still developing' country. The only way to enhance Indian Economic and Technological scenario is to stress hardly on manufacturing industries as they can provide the necessary growth for the country.

Rahul Pathak said:   1 decade ago
Hi friends,

I would like to quote here an example of UK based entrepreneur Mr. J. C. Bamford (founder of JCB: one of the world's top earth moving equipment company). He started his work in a small rented garage purchasing second hand welding set costing him 1GBP. He made first farm trailer from worn out war materials and worked with his small team of six people for a long time making those trailers and later bringing in more variety. Today JCB is the biggest player in India in earth moving equipments and third across the globe.

But unfortunately this business has never taken a giant stride in our country that it could have. I don't remember any Indian "standalone" player who has made its presence felt in and around the Asian continent.

Prominent Indian automobile companies like Tata, Mahindra, Ashok Leyland, Eicher etc. Have cutting edge technology in engine designing and fair enough assembly plants. I don't think for such companies to diversify in this segment is hell a big task. The foreign players are now the early birds in meeting India's demand in earth moving equipments. The point is why such companies not become the early adapters and why are they waiting to extend their excellence in such a prospective and lucrative business. The government has always been so reluctant to bring in foreign players in Indian market (a protectionist approach). Despite that we've not been successful enough to grab that early advantaged and probably losing out on huge untapped potential market.

Thanks for listening.

Shulin said:   10 years ago
There are several factors because of which India has not been able to develop into a manufacturing superpower. The major ones are:

1. India, barring a few states, is a power deficient country, there are no proper Power, logistics and transport facilities readily available.

2. We are surplus in labour but rarely the labour is skilled, this can be accounted mainly due to focus on academics and lack of practical knowledge. Managing and upgrading skills is poor and need major overhauling.

3. India has stringent labour laws, workers cannot be employed from so and so states, political backing, labour unions etc.

4. Lack of transparency on processes and clearances. There are no proper demarcations afa processes are concerned at state and central levels. File clearances, bribes to be offered, babus involved etc. One major example is that of POSCO project not getting clearance and the infamous "Jayanti Tax". Kumarmangalam Birla recently announced his reluctance to invest 4000 crores in business due to the lack of support from the government.

5. Lack of investment in R&D and strategic planning. Most of goods finished products have to be imported. Arms, cosmetics, etc.

6. Political interests, land disputes etc. Ex. TATA NANO -Singur case.

7. Mindsets, people in India prefer White colour jobs and do not want to get their hands dirty by having "On the floor jobs".

8. Innumerable Taxes and laws for setting up projects.

9. Finally the monster corruption and scams that fends off global investors.

Tarundeep Singh said:   7 years ago
There is no denying the fact that India is the hub of outsourcing companies. The tremendous growth opportunities, cheap labour and friendly Government policies have made easy for foreign companies to:

India is a developing country & the manufacturing industry has seen a similar boost in the recent years with the likes of famous industrial giants like TATA, Ambani Brothers and much more who have proved their mettle in the manufacturing industry.

Moreover, the scenario is changing nowadays. For example, Chennai is the base to around 30% of India's automobile industry and 40% of its auto components industry. A large number of automotive companies including Hyundai, Renault, Nissan Motors, Ashok Leyland, Daimler AG, Caterpillar Inc. Komatsu Limited, Ford, BMW and Mitsubishi have manufacturing plants in Chennai.
Wages and machines that are used to manufacture goods will depreciate, but human assets have their value. Thus it is the best time for India to invest in manufacturing industry due to many advantages:

* Economic conditions are improving.
* Brain drain has reduced.
* Many improvisations and innovations in technology.

Further, Most of the developed countries have derived their major share of GDP from secondary (manufacturing) & tertiary (service) sectors. Thus it becomes very vital for a country like India to give a boost to its industrial sector to recover from the sagging economic depression.

Dennis said:   1 decade ago
India had a lopsided growth compared to other countries. Normally a growth in agriculture is followed by a growth in manufacturing industry which is succeeded by the service industry. But in India we shifted from the agriculture development to the services sector which catapulted our growth to one of the mainstays of the world economy.

Because of the huge growth of services, the manufacturing industry was shadowed and contributes hardly 22pc to the GDP which is decreasing further. India currently spends only 1pc to RnD. Also inspite of having a strong patent system, the govt has not encouraged soft loans for inventors to develop and market their product. Another reason as already stated is the huge flux of engineers moving to the more glamorous I. T. Industry thus leading to a mis allocation of skills and lack of skilled people in the core engineering sectors, which offer lesser pay and where jobs require more effort and energy.

Having poor infrastructure has discouraged foreign manufacturers from investing in India. It has been calculated that we need $1 trillion to completely develop our entire infrastructure. Hence there's a lot of work to be done.

ALso some of the brightest minds from iits and nits prefer the huge pay packages in foreign countries which has affected our r&d sector.

All these factors have prevented India from being a strong player in the manufacturing industry.

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