First things first – India is, now, one of the top 10 industrial nations of the world with a 1.5% share in manufacturing value added (MVA), according to the International Yearbook of Industrial Statistics 2011 report.
While the MVA of industrialized countries grew by 3.4% in 2010; that of developing economies progressed with a robust 9.4% growth. Even as India’s high growth of industrial production has made significant impact in its share of globally manufactured goods, a bitter fact remains that India still lags considerably when it comes to the voluminous manufactured exports from China.
Someone has rightly said that China is the world’s manufacturing hub. Moreover, this tag has not come by default – there was a strategic plan somewhere, which accounted for the principle of acceleration in manufacturing goods; better known as mega manufacturing hubs.
China’s rapid penetration into industrial markets accounted for significant migration of global manufacturing capacity to the mainland, backed by rapid move towards capital-intensive and high-technology industries – rendering its goods cheaper and most competitive globally.
On the other hand, manufacturing in India has been plagued by draconian laws, inefficient infrastructure facilities, land acquisition controversies, regulatory hurdles and various other bottlenecks to the path of industrial growth.
However, some trade analysts are of the view that China’s rapid aging population and one-child policy is set to dramatically shrink its workforce and allow India to take it over as world’s manufacturing powerhouse sometime in future.
Better late than never – now, even the Indian government is mulling creation of manufacturing hubs, in line with the model adopted by China to boost its manufacturing sector, by fast tracking the National Manufacturing and Investment Zones (NMIZs) spread over 2000 hectares.
The Department of Industrial Policy and Promotion aims to create massive employment opportunities, catalyze industrial growth and sustainable development in India through tax incentives, single-window clearance policy and flexible labor laws. These NMIZs are envisaged as bigger than SEZs, covering states and even groups of states and facilitating world-class infrastructure facilities.
During the Union Budget 2011-12, Pranab Mukherjee had targeted India’s share of manufacturing in GDP to grow from 16% currently to 25% over the next decade, powered by the new manufacturing policy.
So, I want your frank view, from the core of your heart, can India really replicate the Chinese model of creating manufacturing hubs?
” It recruited Indian teachers to teach English to their kids and learning services sector from India and taking over a piece of the services sector (atleast in Far East).”
I doubt if Chinese love Indian English teachers, for they are not much entertained by their accents. Frankly I didn’t see a single one in China.
It will be very difficult for India to become a manufacturing hub unless they do major economic reforms.Labour problems are rife in India which prevent foreign investors to invest in India.India with all its globalisation reforms are is still a protected economy and we need to increase the FDI Limit in all the sectors.Forget about the declining work force in China – it is a sign that China is progressing in India whereas in India the population has grown to 121 crores whereas it is said that population of China might come down to 600 million by 2050.India only needs 300-400 Million workforce,we can always use Machines to get the job done or else we need to create “fake jobs” like we do in our public sector through NREGA to sustain such a huge workforce.
I visited the Nokia manufacturing facility in my city and was shocked to see that they require only two people for an entire line.Such is the level of mechanization and automation involved in processes these days that you dont need a workforce anymore.Thats the reason why Korea has manged to become a world leader in electronics with a miniscule workforce.
u have nice skill
Nice article and a positive news for India.
When the word BRIC economies was coined, it was done with a purpose. The forefathers of global economic planning foresaw the four countries taking care of four key resources for the global economic growth. Brazil was seen as the supplier of minerals, Russia the energy (oil & gas), India the services and China the manufacturing.
For few decades, all the four countries conducted their responsibilities as planned. Recently China got greedy and is trying to eat into the Indian pie of services. It recruited Indian teachers to teach English to their kids and learning services sector from India and taking over a piece of the services sector (atleast in Far East).
If India is to survive, it either has to be more aggressive and more compititive in their own field of services. The other way is try to eat into the Chinese pie (manufacturing). Otherwise we will be left out and the term will become BRC instead of BRIC. Though we have our own set of problems (mentioned above like policy, infrastructure, land aquisition etc) the problems that Western companies face in China are much more worse. Though the start up time, infrastructure, cheap labor are positives for China, the companies fear Chinese govt for its opaque laws which can be tailor made to make the companies subjugated.
Example : When China wanted to get a stake in Australian mines of Rio Tinto, they did not beg for them. When Rio Tinto executives visited China, they got arrested on flimsy grounds and later released after Aussie govt got involved (and after it promised to open its mines to China)
Google faced problems in China and so are many other companies.
Western comapnies see India relatively safer compared to China though production costs and the red tapism is more.
India should take advantage of this fact and garner western companies in to establishing manufacturing hubs.