The Hindu Business Line : CII sees new challenges to growth

Stumbling blocks
Employee attrition is about 20-30 per cent
Salary inflation is about 20-30 per cent
Cost of conforming to norms, alien to Indian conditions
Consumers no longer equate cost with quality

Mr R. ParasuRaman, Chairman of CII - Southern Region

Chennai , April 7

Employee attrition, ballooning salaries, mounting costs of compliance to alien standards and tight-fisted consumers, who no longer believe high price means high quality, are some of the new challenges facing Indian industry, according to Mr R. ParasuRaman, Chairman, Confederation of Indian Industry - Southern Region.

Of greater concern, he says, is that industries, whether in manufacturing or services, are yet to recognise these threats.

Complacency

The euphoria associated with the high growth across the entire range of industry segments over the last two years may have contributed to this complacency.

But CII is going to draw attention to what it believes are threats to sustaining growth, he said.

At the annual regional meeting and session on emerging challenges in sustaining growth, to be held here on April 8, industry representatives will address these issues, he said.

Whether it is business process outsourcing, information technology-enabled industries or manufacturing outsourcing, a lot of business is coming to India due to low labour costs, he said.

Losing the edge

Employee attrition is about 20-30 per cent across industries, salary inflation is about 20-30 per cent - about 10 times economic inflation - at this rate it will not be long before India loses its low-cost advantage, he said.

Add to this the cost of conforming to norms that are foreign to Indian conditions.

A vendor or a buyer in Europe or the US may dictate standards of accounting or health or environment norms that are often irrelevant here but add to the cost all the same, he said.

Finally, the consumers - no longer do they equate cost with quality. The premium for perception of quality is lost, he said.

So how long can industries hope to sustain growth under these conditions, Mr ParasuRaman said.

The CII may not have the solutions now, but it will strive to bring about change.

Those addressing the meeting are: Mr Ashok Soota, Chairman and Managing Director, MindTree Consulting Pvt Ltd and past President CII, on attrition and employee cost increase; Mr Ravi Uppal, Vice-Chairman and Managing Director, ABB Ltd, on compliance and process costs; Mr Y.C. Deveshwar, Chairman, ITC Ltd and President, CII, on the social responsibility; and Mr R. Seshasayee, Managing Director, Ashok Leyland Ltd and Vice-President, CII, on the no-premium-for-you consumer.

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