Manufacturing drives economy [June 2012]

June 19, 2012 10:48 am

The manufacturing sector has come a long way emerging from agriculture to the service sectors contributing towards the growth of Indian economy- Amar Kaul, VP & GM – Industrial Technologies, Ingersoll Rand India
Journey of the manufacturing sectorIndia has emerged from an agrarian economy to a service led economy. However, in this journey, the manufacturing led industrial economy was ignored. With a population over a billion and a high unemployment rate, manufacturing sector can play a significant role in what is called as ‘sustainable and all inclusive growth’ of the country. However, for this to happen, a robust manufacturing policy backed by strong government initiatives is a necessity.
There has been structural transformation of Indian economy with the growth of services sector which now accounts for about 50 per cent of the GDP. A growth in agriculture is followed by growth in manufacturing sector which is succeeded by the service industry. But in India the shift from the agriculture development to the services sector catapulted growth to one of the mainstays of the world economy.
On the road to recoveryAt present, there are many challenges to the growth of manufacturing sector. Volatility of Indian Rupee against US dollar and euro remains a prime challenge, followed by power shortages and inflationary pressures, in spite of recent rate cuts by RBI. Both inputs and output prices are still higher. IIP grew 4.1 per cent in February from a year ago, way below the 6.6 per cent expected by analysts. According to Amar Kaul – VP & GM, Industrial Technologies, Ingersoll Rand India, “There are signals that our manufacturing sector has bottomed out now and is slowly on the path of recovery. At Ingersoll Rand India, we are focused on investing towards local manufacturing of state-of-the-art compressors, tools, fluid and material handling products which lead the industry in terms of efficiency, quality, reliability and safety”.
The green movementSustainability is the key today and to achieve the same one needs to adopt sustainable practices like operational excellence and six-sigma. Amar Kaul – VP & GM, Industrial Technologies, Ingersoll Rand India shares his view, “The customers are becoming more conscious now about technology and reliability as against just being price conscious. This is driving manufacturers to adopt practices that lead to manufacturing excellence. Also, adoption of green and energy efficient manufacturing practices is growing in India. Ingersoll Rand is committed to environmental sustainability and our products, services and solutions are at the forefront of environmental stewardship. We endeavour to minimise the environmental impact of our actions. Ingersoll Rand has pioneered technologies that help our customers across industries conserve energy”. Factors affecting the sectorA knowledge-based economy has to be supported by a growing manufacturing economy for sustained growth in the long run. Looking at the current scenario, India needs strong measures for enforcing growth stimulants. Two driving growth forces like government finances and corporate finances which can help in achieving 9 per cent GDP as per the 12th plan should be reinforced. Factors which affect the Indian industry include: lack of infrastructure investments, inflation, slow growth of agriculture, need for significant employment creation and taxation issues, among others. With these factors, industrial manufacturing which is regarded as one of the engines of economic growth for the country has become uncompetitive in India and is facing lot of challenges.
There are no short-term solutions to the problems which plague Indian manufacturing sector, but there is no alternative as well to investment in manufacturing. “The manufacturing sector can help our large, partly employed rural workforce to change into higher income, higher skilled economic activity. There are challenges related to land, infrastructure, skills and finance availability for the manufacturing sector that need to be addressed. The proposed national manufacturing investment zones is one welcome step from the Govt. The NMIZ shall boost manufacturing sector and create jobs. It should bring about major reforms in our current education system which has very small piece towards the practical, hands-on industrial training. Significant investments in ITIs are required to enhance quality of skilled labour. Further, the government can encourage banking sector to launch entrepreneur friendly, attractive finance/loans scheme for MSMEs on the lines of Small Business Administration (SBA) loan scheme in the United States”, said Mr. Kaul.
Expectations from the 12th five year planMr. Kaul talks about his expectations, “The 12th Five Year Plan to focus on sustainable and more inclusive growth measures. It should address faster creation of jobs especially in manufacturing sector, stronger efforts at health, education and skill development. We expect liberal FDI and trade policies to attract quality investment in critical areas. The plan should help Indian industries develop greater domestic value addition and more technological depth to cater to growing domestic demands and improve trade balance”. He further added, “Improvement in business regulatory framework i.e. ‘cost of doing business’, transparency, incentives for investment in R&D, local innovation among others are expected to give a fillip to the Indian manufacturing industry. States should develop ‘special industrial zones’ with good connectivity and infrastructure. Some sectors should be given special attention because they contribute most to our objectives eg: textiles and garments, food processing industries, electronics, capital equipment for infrastructure growth, automotive, pharmaceuticals and medical equipment”.Ingersoll RandIngersoll Rand is a $14 billion global diversified company that provides products, services and solutions to enhance the quality and comfort of air in homes and buildings, transport and protect food and perishables, secure homes and commercial properties, and increase industrial productivity and efficiency.
In recent years, Ingersoll Rand has transformed itself into a multi-brand commercial products manufacturer serving customers in diverse global markets, and away from the capital-intense, heavy-machinery profile of its past. Today, Ingersoll Rand is a world leader in creating and sustaining safe, comfortable and efficient environments that creates competitive advantage by combining strengths to serve customers better.
Ingersoll Rand is committed to India and is implementing strategies for product innovation and design for industrial technologies; security; food safety; energy, efficiency and sustainability. The company is based out of 18 locations in the country. “Ingersoll Rand believes that innovation for emerging economies is critical for products to succeed in these markets”, Mr. Kaul said.

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