Manufacturing Sectors
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Growth in the manufacturing sector has the potential to elevate much of the Indian population above the poverty line by shifting the majority of the workforce out of low-wage agriculture. This would initiate a virtuous circle of higher production, incomes, savings and investment, and a more stable and prosperous India will in turn attract more business and higher growth opportunities. The resurgence of India's manufacturing sector has been quite magical. During in 2005-06 of the total 140 manufacturing sectors in the country reporting production, 27 recorded a growth rate of more than 20 per cent. Forty-three sectors recorded a growth rate of 10-20 per cent and 50 sectors registered growth of up to 10 per cent. Indian manufactured products are now gaining acceptance in world markets. India already exports about US$ 50 billion a year in manufactured goods and this is increasing at the rate of 20 per cent a year. |
A study by the Confederation of Indian Industry (CII) and McKinsey & Co. on manufacturing sectors in India estimates that Indian manufacturing export has the potential to touch US$ 300 billion by 2015, growing at an annual rate of 17 per cent as against the historic growth of 11 per cent. Of this, nearly US$ 70 - 90 billion could be captured from just four sectors — apparel, auto components, specialty chemicals and electrical and electronic products.
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 India’s expertise in skill-intensive manufacturing sectors such as auto components, pharmaceuticals and textiles gives it an edge over other low-wage producers. While many other Asian countries can provide relatively low skilled labour force at a minimal wage level, the introduction of high technologies into manufacturing makes it necessary to source from a country that can provide high tech, skilled labour force – and this is where India scores. |
Indian manufacturing is also leveraging innovation like never before, using it to push the envelope on operational efficiencies. Faster product development, smart supply chains and deployment of lean manufacturing for dynamic production have become the order of the day. Lead time for new product development has come down by as much as 50 per cent in the past three years. For example, the development of the brake system in India takes 6 months, in Korea it is 8 months, in Germany 12-14 months. Inventories are being reduced too — by about 20 to 30 per cent in the last four years, added to which is the reduction in defects from about 20,000 parts per million (ppm) to below 100 ppm.
If Indian manufacturing can address these key factors, helping in improving the competitiveness, then the future looks promising for Indian MSMEs.