An analysis of the productivity levels in 23 major manufacturing sector segments shows that there is significant potential for improving labour productivity.

Our Bureau

New Delhi, March 6

AN analysis carried out by the Federation of Indian Chambers of Commerce and Industry (FICCI) states that the high cost of input materials and utilities coupled with high finance and transaction cost in India compared to competing Asian players such as China, Malaysia and Korea, have conspired to depress productivity and thereby blunt India's edge in global markets.

FICCI has suggested improving productivity of the laggard segments in manufacturing through the cluster approach in 82 identified areas in 23 industries spread across the country.

This would go a long way in addressing the problem of low per worker output which currently more than offsets any advantage the manufacturing sector derives out of labour cost advantages vis-à-vis major Asian economies.

It has advocated a balanced growth approach for accelerating growth of large manufacturing clusters across all sectors and States.

The FICCI analysis of costs of raw materials and utilities (infrastructure) across 15 important manufacturing segments points out that on an average the share of input materials and utilities (infrastructure) in total output value was as high as 81.3 per cent in India as against 75.5 per cent in China, 68.7 per cent in Malaysia and only 58.5 per cent in Korea.

The 15 manufacturing sectors are: food products, leather & fur products, textiles, wood products, metal products, industrial chemicals, non-ferrous metals, plastic products, rubber products, transport equipment, electrical machinery, non-electrical machinery, iron & steel, glass and printing & publishing.

An analysis of the productivity levels in 23 major manufacturing sector segments shows that there is significant potential for improving labour productivity.

The FICCI analysis calls for benchmarking the industries according to its labour productivity.

This could be the first step in improving the overall productivity levels in the manufacturing sector.

Accordingly, it has identified as many as 79 odd large clusters spread across 23 major manufacturing segments where there is sufficient scope for significantly improving productivity levels.

The laggard States where there is significant scope for improving productivity levels in the different manufacturing industries through the cluster approach and their current share in total output of the segment are:

Food Processing: Maharashtra (17 per cent), Uttar Pradesh (11 per cent), Tamil Nadu (7 per cent), Punjab (5 percent) & Karnataka (5 per cent).

Textiles: Tamil Nadu (24 per cent), Gujarat (15 per cent), Maharashtra (12 per cent), Punjab (7 per cent) & Rajasthan (7 per cent).

Wearing apparel: Tamil Nadu (19 per cent), Karnataka (18 per cent), Haryana (10 per cent), Maharashtra (7 per cent) & Uttar Pradesh (7 per cent).

Tanning and dressing of leather: Tamil Nadu (36 per cent), Uttar Pradesh (26 per cent), West Bengal (10 per cent), Haryana (6 per cent) & Delhi (6 per cent).

Wood products: West Bengal (15 per cent), Maharashtra (13 per cent), Kerala (10 per cent), Uttar Pradesh (8 per cent), Andhra Pradesh (8 per cent), Tamil Nadu (7 per cent) & Gujarat (7 per cent).

Paper: Assam (14 per cent), Andhra Pradesh (9 per cent), Tamil Nadu (7 per cent) & Karnataka (6 per cent).

Refined petroleum products: West Bengal (5 per cent) & Assam (5 per cent).

Chemicals: Maharashtra (19 per cent), Tamil Nadu (7 per cent), Andhra Pradesh (6 per cent) & Uttar Pradesh (6 per cent).

Rubber and plastic products: Maharashtra (17 per cent), Gujarat (10 per cent), Kerala (6 per cent), Tamil Nadu (5 per cent) & Andhra Pradesh (5 per cent)

Non-mettalic mineral products: Rajasthan (12 per cent), Gujarat (12 per cent), Karnataka (6 per cent) & Uttar Pradesh (4 per cent)

Basic metals: Jharkand (12 per cent), Chhattisgarh (9 per cent), West Bengal (8 per cent), Orissa (6 per cent) & Tamil Nadu (5 per cent).

Fabricated metal products: Uttar Pradesh (12 per cent), Punjab (5 per cent), West Bengal (5 per cent) & Karnataka (5 per cent).

Machinery & equipment: Gujarat (10 per cent), Andhra Pradesh (4 per cent), & Punjab (4 per cent)

Office accounting and computing machinery: Karnataka (8 per cent), Maharashtra (6 per cent) & Haryana (3 per cent).

Electrical machinery: Maharashtra (17 per cent), Karnataka (9 per cent), Uttar Pradesh (7 per cent), Gujarat (7 per cent), Uttar Pradesh (7 per cent), Madhya Pradesh (6 per cent) & West Bengal (4 per cent)

Radio, communication and television equitable: Karnataka (8 per cent), Andhra Pradesh (5 per cent), Tamil Nadu (3 per cent), Punjab (3 per cent), Delhi (3 per cent) & Kerala (3 per cent)

Medical, precision and optical instruments: Maharashtra (15 per cent), Haryana (7 per cent), West Bengal (45 per cent) & Gujarat (3 per cent)

Motor vehicles: Karnataka (7 per cent)

Transport equipment: Punjab (11 per cent), Uttar Pradesh (6 per cent) & Karnataka (3 per cent)

(This article was published in the Business Line print edition dated March 7, 2005)
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