Opportunity knocks

June 26, 2014 5:18 am

As China’s workforce shrinks and its wages rise, large amount of manufacturing jobs might migrate elsewhere. Why shouldn’t those jobs come to India?
 Kemppi is one of the leading manufacturers of arc welding equipment and a provider of solutions for productive welding. The company still relies on the basic values that have guided its operations from the very beginning. Rashmi Mohapatra analyses India’s hidden strength to become global manufacturing hub.
Comparison and opportunityManufacturing has been a suffering sector in India. Manufacturing sector contribution to the GDP has stagnated around 16 per cent, while in other emerging economies like China, Brazil and South Africa the manufacturing sector has grown much faster than the GDP. China controls 15 per cent of the world trade with in manufacturing, whereas India controls a measly 1.4 per cent. In the past 10 years, 150 million people have been transferred from agriculture to manufacturing in China. In India 183 million people are expected to join workforce over next 15 years.  Manufacturing will have to provide at least 70 million of these jobs.
As China’s workforce shrinks and its wages rise, large amount of manufacturing jobs might migrate elsewhere. Here surely is an opportunity for India. Why shouldn’t those jobs come to India?
BarriersThe answer is that, India has too few  of the right sort of firms or workers and too many of the wrong rules. There are certainly some impressive Indian manufacturers, especially in car making, but they prefer to employ sophisticated machinery rather than abundant labour.
At the other end of the spectrum are innumerable small workshops, employing handfuls of people and outdated methods. India lacks in mid-sized, labour-hungry firms. Even during the boom years, it created many more jobs in construction than in manufacturing. It is hard for India’s young manpower to raise its sights while carrying bricks on its heads.
What govt. should do?The govt. should remove some of the bureaucratic bricks that now weigh on the heads of India’s entrepreneurs. These include India’s notorious labour laws which, on paper, prevent factories firing anyone without the state’s permission. It is true that by hiring labour from third parties, the country’s employers have blunted the law’s effect. However, in doing so they have also blunted their own incentive to train their workers. Skill programs for rural migrants and urban poor are must to overcome this huge gap.
Remedies• Develop infrastructure like China to attract the industry. In India, Gujarat and Karnataka stand out in manufacturing; as they almost don’t have power or transport issues• Unclog the energy sector: New power plants are worth little without enough domestic coal and gas to feed them, which is critical to growth• Land acquisition: The approach of the government is based on flawed legislation. This needs to be streamlined to ease the investment process• The familiar reforms: Streamline decision making, curb corruption, fiscal discipline to tame inflation• Increase depth in manufacturing with focus on domestic value addition.
Kemppi’s planningWith the current growth rate India will require at least 22 lakh welders in the next decade. Kemppi is committed to contribute strongly towards this having its training centre at Chennai.
Rashmi Ranjan Mohapatra, National Sales Manager, Kemppi India