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Bangalore , Sept. 8

THE Northern region, which once recorded faster growth than the Western and the Southern regions in the pre-liberalisation period, has to catch up with the dynamics of the global market to regain its comparative importance in the national economy.

Key issues that seem to have weighed down the region are marketing and the crucial "people factor", that got little attention.

Many companies in the North, particularly the small and medium companies, tend to restrict their markets to local areas. With the rapid globalisation and the need to focus on these issues assumed greater significance as can be seen from the South's impressive march in the post-liberalisation phase.

With its good manufacturing competitiveness and very high record of work attitude (50 per cent) coupled with improvement in research and development, South has consolidated its position during the post-liberalisation phase.

Industries in the North have shown very little enterprise in this direction. This is one of the weaknesses that was highlighted in a study: "Strategies for Competitive Manufacturing Sector in the Northern Region," conducted by the Confederation of Indian Industry and G.P. Services, a Delhi-based management consultant company.

About one third of the companies have not taken any initiative to develop activities even in the domestic markets, while only 24 per cent indicated of high activity. In an interesting revelation, 45 per cent of the companies had reported no activity in new market development. At the international level, the situation was dismal with only ten per cent reflected a high activity in new market development.

Research and development, a sector that leverages the strength of quality manpower, was very strong in the South. As much 60 per cent of the R&D labs set up by MNCs are located in the South, against only 12 per cent in the North. Besides, the expenditure on R&D in the North was less than half at 0.5 per cent as compared to 1.5 per cent spent by one single company (TVS Motors) in the year 2002. The company's increased spending at three per cent in 2003 on R&D is close to the industry average of Japan, where it is 3.6 per cent of the turnover. Sectoral companies spend much higher with communications and electronics accounting for 8.6 per cent.

An assessment of the customer perspective of suppliers (mostly automotive field) from different parts of the country also gave a clear edge to Southern region, which was said to be more technology oriented than its Northern counterpart.

The study pointed out "that several respondents observed that there are no inherent major differences and that, with effort, most suppliers would deliver quality and price. While there are good and bad suppliers in all parts of the country, typically, greater effort is required to get the same quality from suppliers in the North".

Regional differences in industrialisation and manufacturing between different parts of the country are responsible for disparities in the GDP growth of different regions.

The West and South have shown growth rates comparable to the Northern States in the pre-liberalisation phase. The post liberalisation saw a reversal in North's position, which recorded a growth rate of 5 per cent as against 7.2 per cent in the South and the West.

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