Power of the talent funnelled into innovative power is a important factor to stimulate India towards a global manufacturing hub
Atlas Copco (India) Ltd. provides its customers the solutions they need to enhance productivity and achieve their manufacturing goals. Filip Vandenberghe talks about what could be done to make India a global workshop.
No ‘no’ to talent in IndiaWith a contribution of about 15 per cent to the GDP, which is around 10 per cent lower than the agricultural sector, in times with a GDP growth of 7 – 8 per cent, a little could be shared about the manufacturing industry in India being a regional or global hub.
Still the talent present in India, definitely has the seeds to create a manufacturing hub, not primarily based upon low labour costs, but on manufacturing industry that is lead by innovation, technology intensive as a competitive advantage and thus much more like the Japanese model in the 80s and 90s and not like the Chinese model.
However, geographical perspective puts India in an excellent position to serve economies in Africa, South America and some parts of the Asian-Pacific region. It can also serve European and North American markets. Today Indian export to these markets is probably around 10 per cent only. To really claim the special status, of course India needs to increase its labour resource efficiency a lot, its work ethics and must possess high standards with regards to quality and discipline.
Discouragement >> stimuliPower of the talent funnelled into innovative power is a very important factor to stimulate India towards a global manufacturing hub, but it will lead to nothing if there no manufacturing friendly environment or platform available in the country. The economic infrastructure is far behind. Availability of quality electrical power 24/7 is a dream, road infrastructure for optimal logistics, ports, airports, available land are also some serious drawbacks.
Besides the very complex tax systems, the bureaucracy and extremely poor ethics within the public sector make it very difficult for any investor in sector. Today the industry does not carry much sustainable support from a government viewpoint. It is rather seen as a milk cow than a contributor to sustainable welfare of the country. Discouragement is much higher than stimuli.
Middle-class consumption should be stimulated to make it grow outside the metro cities also, which actually should offload to new cities and around these new cities the infrastructure work should create power, roads, and land to bring SMEs and create the 20 million jobs per year.
Govt’s expected strategy It is the govt. who can make the things much easier. Power and infrastructure, tax regulations need to be simplified. Regulations and laws regarding factory acts should be simple and less bureaucratic. Making more land available and in much better conditions is also required.
The govt. should also insist agricultural sector to make 200 to 300 per cent efficiency gain on usage of the land and stop subsidising inefficiency by food or other unpayable bills on the medium term. What next for Atlas Copco?Atlas Copco does not have direct intentions to use India as a manufacturing hub for rest of the world. However, its export level to the neighbourhood markets is around 15 per cent and Atlas Copco assures that it will grow consistently and steadily.
Filip Vandenberghe, MD, Atlas Copco (India) Ltd.
