Financial Daily from THE HINDU group of publications
Thursday, Apr 03, 2003
Financial Daily from THE HINDU group of publications Thursday, Apr 03, 2003 |
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Industry & Economy
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Economy `Leveraging expertise key to beat China in manufacturing sector' Our Bureau
PUNE, April 2 THE very name `China' sometimes sends shivers across the industry. They seem to be omnipresent doing a lot better than the Indian counterparts. This situation has come to a pass since the Indian economy has not taken enough care about its manufacturing sector. This is the conclusion, which came about at the Confederation of Indian Industry, (CII) Western Region, which had its annual day with a theme on `Beating China'. Mr R. Gopalakrishnan, Executive Director, Tata Sons Ltd, notes that it is possible to beat China in the manufacturing sector, if India leveraged its expertise in the skill-intensive industry, where India has an edge. "We absolutely need manufacturing for economic growth on a sustainable basis'' while pointing out to its employment generation ability, far greater than that of the services sector. He noted that the Indian industry had the motivation to stand up and take notice of things only `when it is pushed to a corner' and noted that the time has come, which is the reason for the industry taking up such topics for discussion. It had happened with the agricultural sector in the 1960's when the US had refused foodgrains to India, everybody girded their loins and then there was this green revolution, the outcome of which is surplus foodgrains.
Currently, manufacturing industries are in the same boat with Chinese products offering stiff competition across the globe and hence the urgency to get on with the act, he added. According to the McKinsey and Company, which has presented their viewpoint at the session noted that in 1990, India and China had almost the same GDP per capita and since then, driven by its manufacturing sector, China's economy had grown much faster than India. The GDP per capita of China is $3,829 on a PPP adjusted basis in 2000 was 60 per cent higher than India, which stood at $2,407. To achieve faster rates of economic growth, India urgently needs to strengthen its own manufacturing sector and `discovering and applying the lessons in China's success will be one effective way to do so. But in India, the reasons behind China's manufacturing success are little understood and, consequently, many myths have arisen,'' they pointed out. They note that reviving India's manufacturing is not merely possible, but also urgently needed, as India will need to create a large number of manufacturing jobs to absorb the large increase in workforce expected by 2012. "If India does not act immediately, the manufacturing sector could decline further in the near future and to revive Indian manufacturing, the State and the Central Government would have to take a series of policy initiatives,'' they pointed out. Some of the suggestions include reduction in import duties to a single rate of 10 per cent by 2006, modify the special economic zone (SEZ) policy to allow sales to the domestic market on payment of prevailing indirect taxes and not prevailing high import duties.
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