Focus on energy, labour for growth of manufacturing sector, say industry leaders

Cluster development, sustainable manufacturing, better use of energy and revisiting labour laws were some of the suggestions for growth given by industry leaders from the manufacturing sector at the CII-South Region Conference on ‘The next wave of growth – South India,' at Bangalore today.

The Indian manufacturing sector contributes 15 per cent of India's GDP and comprises 50 per cent of the country's export earnings. Although it employs close to 12 per cent of the Indian workforce, the sector's labour laws of the sector are six decades old.

To jump from the current sector contribution of 15 per cent to the country's GDP to 20 per cent by 2020, the sector needs to address pressing issues like rising power tariffs, develop specific skills, wages, policy swings and increased entrepreneurial activity.

“Power is expensive; at Rs 11.50 a unit it is 2.5 times what the rest of the world pays. This will negatively impact the industry,” said Mr T. Kannan, Past Chairman, CII and Managing Director, Thiagarajar Mills Pvt Ltd. The Indian manufacturing sector is heavily skewed towards small single ownership enterprises and 43 per cent of these do not use power in their units. “Productivity would go up at least 2-3 times if they resort to the use of power and automation,” he pointed out.

Mr Ramesh Mangaleswaran, Director, McKinsey & Co, said that entrepreneurial energy, talent and physical infrastructure could help develop the Indian manufacturing sector. He also mooted the idea of developing the sector through ring fencing zones and giving targeted support to these zones through cluster specific plans. Mr Vikram Kirloskar, Vice-Chairman, Toyota Kirloskar Motors Pvt Ltd, stressed on sustainable manufacturing, safety of employees and international salary benchmarks, which he said were key to progressive manufacturing today. Ms Suchitra Ella, Co-founder and Joint Managing Director, Bharat Biotech said that academia and industry partnership is needed for better talent pool availability.

South India is already the IT/ITeS hub of the country contributing 65-70 per cent of country's IT earnings. But it also needs to strive for that status in other services like healthcare, BFSI and tourism, according to Mr Shailesh Kekre of McKinsey & Co.

The talent shortfall is 1.8 million professionals currently in the healthcare and widening, said Ms Shobana Kamineni, Past Chairman, CII South Region and Executive Director, Apollo Hospitals.

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