The Hindu Business Line : Manufacturing exports poised to reach $300 b by 2015: Study

MANUFACTURED product exports from the country could see a more than seven-fold increase from the current level of $40 billion to $300 billion by 2015 if India were to take advantage of the current global trend to manufacture and source products from low-cost countries (LCCs), a Confederation of Indian Industry (CII)-McKinsey study has said.

For achieving acceleration in manufacturing exports, the study has underscored the need for Indian players to adopt a global mindset. It has pointed out that the vast majority of manufacturing companies in India are largely domestic-market focused, sub-scale and pursue mostly undifferentiated business models. For India to fully capture the potential from manufacturing exports, the study has said that the export focus needs to get broad-based across sectors and across companies within a sector. The Government should also implement key reforms in taxation, infrastructure, clusters (SEZs), labour and skill development to help unlock India's manufacturing potential, the CII-McKinsey study said.

The study has said that the global trend to manufacture and source products in LCC is likely to gather steam over the next 10 years, especially in skill- intensive industries where India has a significant competitive advantage.

Riding this global trend can create 25 million to 30 million jobs in India in the manufacturing sector by 2015 and two to three times this number in the allied sectors like construction, education and entertainment due to the multiplier effect, the study pointed out.

In particular, the study has highlighted that India has several advantages in areas such as auto components and pharmaceuticals, where the next set of offshoring opportunities would arise. Apart from low wages, theadvantages include engineering skills (process, product and capital engineering), established raw material bases, a mature supply base and a growing domestic demand.

The CII-Mckinsey study has also said that out of the $300 billion of total manufacturing exports, $7 billion to $90 billion could be captured from just four sectors — apparel, auto components, specialty chemicals and electrical and electronic products.

In the apparel sector, global trade could grow from $200 billion in 2002-03 to over $300 billion by 2015. Of this, India could grow its exports from $6 billion to $25 billion to $30 billion by 2015, adds the CII-McKinsey study.

On auto components, the study held that LCC offshoring is poised to take off and could reach $375 billion by 2015. "India should aspire to capture $20 billion to $ 25 billion of this by 2015 as compared to exports of just over $1 billion in 2003," the study said.

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