Proactive and pro-industry govt. policies anticipated

June 26, 2014 5:23 am

Proactive and pro-industry government policies are anticipated to boost the manufacturing sector in India, which could have a multiplier effect on the economy and generate more employment opportunities
 Shakti pumps manufactures diverse models of submersible pumps and motors and other application pumps for a wide range of applications. Over the years of steady growth, it has become one of the leading pump exporters in India. Dinesh Patidar talks about proactive participation from govt side to make India bigger in manufacturing.
Tremendous possibilities for growthWhile manufacturing in India has remained healthy, it is driven largely by domestic demand. Still, the percentage contribution of manufacturing to GDP in India is far below than that of China, a country with which India is often compared.                                                                                                                                                                                        Encouraging factorsThere are many positive factors that encourage investors to set up manufacturing facilities in India. India itself is a big market with over 600 million rural consumers and wages in India are substantially lower than in China. India has a large pool of talent with a strong engineering eco-system. Various initiatives are taken by government also to boost the manufacturing sector to enhance contribution to GDP and set up various SEZs across the country to encourage local manufacturing. But still India has a long way to go in terms of generating desired results.
Current roadblocksWhile India offers many competitive advantages, the manufacturing segment is crippled with various challenges like lack of sufficiently modern technology, inadequate infrastructure like rail, road, ports and power.
Another challenge is high turnover manpower. When the economy grows at a robust rate of 7-8 per cent, companies face skills shortage. This leads to an unstable manufacturing environment due to talent shortage. Further, Indian firms rarely qualify for bidding for big infrastructure projects due to lack of previous experience, which is a prerequisite in many cases. This results in awarding the projects to more experienced foreign firms. A focused approach to address these concerns will help India in the long term to compete with other nations and become a manufacturing hub.
Proactive participation of govtProactive and pro-industry government policies are anticipated to boost the manufacturing sector in India, which could have a multiplier effect on the economy and generate more employment opportunities. This in turn will increase industrial production, quality of life of people and enhance the consumption that creates more demand.
Further, it is needed to invest heavily in infrastructure and R&D to enhance the manufacturing output. To move up the value chain, considerable investment in R&D is necessary. This can also be done by augmenting the academic infrastructure. Despite  having institutions like IITs, which have achieved global acclaim, India still has to go a long way before catching up with western academic counterparts.
Innovations in manufacturing models can be a solution to absorb the surplus, but largely unskilled Indian labour pool. Also there is a need for financial sector reforms to create easy access to capital for entrepreneurs.
The Indian government should also come up with incentive schemes to boost manufacturing exports. These should consist of a mix of tax holidays with simplified and supportive tax structure and reduced rates of interests for project fund with attractive export incentives.
Dinesh Patidar, Chairman and MD, Shakti Pumps (I) Ltd.