The Hindu Business Line : Will manufacturing emerge from services shadow?

IF it was hard watching 2003, it is harder still to behold 2004. From newsstands, stock markets, hotel lobbies, shopping malls and `India Shining' advertisements, the duo invade your mind with glaring optimism, a shade too harsh for belief.

Yet, that is by and large the mood in corporate India, a reason for it ostensibly being the new tangible edge to the evolution of Indian business into a global entity.

Simply put, India's cost advantage and technical competence in services was a theme beginning to tire as also one that was emotionally second to seeing Indian products or production ownership in markets overseas.

From a traditional perspective too, palpable rhythm to the elephant's dance is best felt when manufacturing begins to perform and starts its trek to international reckoning. As Mr B. Muthuraman, Managing Director, Tata Steel, asked at a seminar in the city few months ago, "Who is going to buy services if there is no manufacturing?''

More than the services sector and the IIT substratum from which it drew initial growth, manufacturing encapsulates in the public eye a wider cross-section of Indians seeking a place in the sun. It was where business ills peaked and factories suffered and where cost restructuring and efficiency improvement have since occurred.

So when hopes are renewed for an industry like textiles it not only represents likely reversal of sectoral fortune but also makes amends to the social effect of decline felt previously in textile centres such as Mumbai.

That is yet a dream. But a slow drift in limelight to manufacturing appears to have commenced in 2003, India's rising profile in the global automobile sector for example, adding sheen to cities like Pune and Chennai.

The former, its business significance founded on manufacturing, has a tradition of people working at one or few companies in that locality for long. Benefits of improved profile to Indian manufacturing are easy to imagine.

From Pune, the Mundhwa-based Bharat Forge has been buying order-books or assets abroad for growth. Not far off in Akurdi, Bajaj Auto is reportedly busy on plans for foreign manufacturing presence while from Pimpri-Chinchwad Tata Motors is doing due diligence to acquire Daewoo's commercial vehicle plant in South Korea.

Still, 2004 will be too naively welcomed if caution is thrown to the winds. Even as the first ambassador of Indian business awakening - the IT sector - tackles the BPO backlash, manufacturing's overseas ambitions are more physical in nature and hence tougher to handle.

Offshore operations or opening offices abroad is one thing, becoming the new owner of someone else's enterprise overseas is another. Further in many segments, growing importance for India coincides with a global shift in market promise to Asia, claimants therein for a piece of the world's wallet being many and mutually comparable in terms of cost. With China strong on the capacity front, Indian competence walks the thin line of value-added manufacturing, production with skilled manpower etc - rather qualified, because supply of unique ingredients have to be maintained.

Thus in the New Year there is challenge staring at corporate India, particularly where it has dependence. Mr Baba Kalyani, Chairman & Managing Director, Bharat Forge, otherwise confident of his company's growth, was a worried man few weeks ago when yet another grid failure hit Maharashtra.

In a recent conversation with Business Line, he said, "concerns'' are many but India always navigates its way through. Of interest was the belief that non-performing candidates were now being defeated in elections. Late October, a senior industry official and helmsman at a major business house cast another spin using elections. "Things are looking up with elections yet to happen. So what will it be like when they are over and the political environment is stable?'' he asked.

Which is where 2004 runs aground, for the jury is still out on whether political India wants change. Can a few IT savvy-ministers or skilful negotiators at international forums, alter the daily feel of life and business in India?

On the other hand, given Ayodhya's refusal to die, its penchant for reincarnation in new geographies, the lessons from Gujarat, the Bihar-Assam tangle, the Telgi scam - issues to unseat corporate India's peace and image are several. Worse, they linger alive, begging a kick-start.

Embarrassingly, most of these are cases of the house bringing itself down. This, despite global acceptance as an investor requiring factors deeper than mere currency strength.

Happy New Year, it certainly is. Anything more, it is wise to look back from 2005.