Ad Here  
TIAM turns a full cycle ONGC at KG Basin Vibrant Gujarat A proud Madrasi Revving up the manufacturing sector Silver Years of Madras Musings Roaring Ro-Ro facility Kudos to NDTV... Towards speedy justice Diamond jubilee of Egmore Samskrt School Streamlining mandatory third party cover Five star activism stalls development activity Fortune 500 review Tribute – M V Murugappan The nuclear option London, London Narayan TELANGANA at last…BUT Banning booze... Kinetic Karnataka Wanted: a second airport for Chennai Don’t seem to feel the pulse… MHC should not return to its old indisciplined ways Why this malaise in medical education? Shanti and Sadhana through Music No mega rail project for Tamil Nadu Insurance companies bleeding, yet no decision on increasing FDI limit! S V Raju – a ‘good’ true liberal Waning interest in public discussions… Scientists urged to take up farmer-oriented research Convulsions in The Hindu The balancing act Tatas moving out of urea production... An enemy’s enemy is a friend The Jan Dhan bonanza Dr C Rangarajan returns to Chennai When small is no larger beautiful.. Editor's Notes EVM is tamper-proof Sweeter prospects for sugar Intellectual of rare qualities A professional at the helm of IRDA... Where a state respects its litterateurs… Discoms deserve better… Alexa – Talking Wikipedia F C Kohli - his concerns all embracing Delhi Chalo... How Air-India loses customs... Boy, can you beat these? China invests in India Quality education through the PPP mode Airlines in India: cost and space He saved millions from starvation... Robber barons everywhere Align crops to agro climate endowments… For whom the MIDS bell tolls? Tatas moving out of urea production... Welcome focus on core competence WTO Meet: resolved to meet again Maximising the micro pricing … An informal presentation - analytical, forward locking... When TN politicians can emulate Kerala's Like Hinduism: many paths to reach God... No Maha Koottani in TN... Welcome GST Contrarian cousins Adharma of opposition politics Bihar elections - the Rajaji formula worked A C Muthiah – his munificent bequeaths to science Sri Lanka votes for change Lalu’s envy, India’s pride SoA @ 80 A more liberated TN… Delhi is distant… Nuclear power at the nucleus A glass full of corruption Russi Mody – a tribute L&T: focus on infrastructure and more infrastructure… Why land prices zoom in TN? Making ‘my Amaravati’... Solar thermal shines… New IT products of Ramco in the pipeline… Bihar – Nitish Kumar adopts the Lalu model Modi and the lady Rs.1600 crore paper board plant of TNPL Permanent secretariat for TN GIM Muffled voices for merit… For whom the bell tolls? Another Indian music maestro at the UN Modi storms Silicon Valley Where is Rajaji? Gas is the way forward Adapt Vajpayee dinner diplomacy Colour-Chem’s colourful KRVS All eyes on Sankara Nethralaya Cutting the nose to spite the face West Bengal: mindless malignancy Chennai and Kolkata miss opportunity to grow as Delhi and Mumbai The rise and fall of Annamalai University L&T- the specialty of special purpose vehicles The brown list of Venkitaramanan Building loyalty through the stomach The sea- saw battle continues... The why of tax incentives Wise Presidents Road development slows down Shale gas and its shallow future Poor representation for Kerala and TN in Cabinet Welcome thrust on trade in Modi’s foreign visits... Polls and promises Tribute A welcome initiative by the judiciary The ‘Ayyo-yes’ is no more Shaming of Tamils by Tamil farmers at Delhi Put expensive assets created to use... Readers' Mail GM Technology at last! Inflation: are we emulating Argentina and Brazil? Not just in-laws (and outlaws); they’ve renowned academics at the helm! An inexplicable neglect Delhi returns to BJP A Grand Finale for SN’s MS centenary at the US… Odisha: spectacular win by Naveen Patnaik CRS, a jewel among managers, is no more. Poor quality of university VCs Engineering seats go abegging Online not in line with brick and mortar businesses... The Swadeshi Trump Tihar, Puzhal not different from Parappana Agrahara Valli, they are more marginalised …and of a popular trade leader Revive development banks... Lesson from Chandrababu Naidu More Shakti to resource mobilisation... No engine for this car R Sridhar steps down as CEO of Shriram Capital Marketing expert Balagopal is no more Strengthen the base... TN-leverage strength of BHEL, NLC... Noble nonagenarians... Godspeed, Chief Minister JJ CIPET hqrs to stay at Guindy – for the present? Reliance’s TV – 18 ready to launch Tamil News Channel Fall in crude prices help in oil sector reform Paytm karo... Varuna (rain) in 2015; Vaayu (air) in 2016. Chennai devastated EEC at the National Media Centre Padma Bhushan for A Ramakrishna Eternal support for capitalisation of PS banks Increasing non co-operation of state leaders The ‘Jayanthi Tax.’ Mu Sigma – is no more GNS - 100: our first subscriber More tributes to GR Multi-faceted Venkat Tribute – Manikam Ramaswami A yen for wastage… Editor's Says CII projects higher growth… The star of Spencers is no more Auto components surge… Pharma – overdose of copying A Grand Finale for SN’s MS centenary at the US… PC’s preference for professionals IPL - no surprise this scam Welcome changes that testify to Jayalalithaa’s return to health The Gulf aviation boom Which side are you, Montek? Gay abandon in pricing PPP mode for upgrading Corporation Hospitals Funding the un-funded Come elections, come advertisements... Computation of GDP – conundrums continue IAS invades NDDB... When Ratan Tata visited SRM Moily’s bold thrust When nations steal growth from one another… When the President was rendered homeless… Shipping woes of Chennai companies TN – agglomerate land holdings without alienating ownership Naidu’s return augurs well for Seemandhra Recognition to role of NBFCs.... Things happen by accident and not by design... CSR and CMI: promise of another Srinivasan Ramanujan... Make standards certification mandatory... Return to king coal for urea... Measuring roof tops in terms of KW/MW Haul over the coal IPL type auction for VCs? A rich pool of talent not utilised…. This scant respect for Law Solar, solar everywhere … Land reclamation from sea appears cheaper! Music happens The rise and rise of KCP Cleaning Ganga – relocate tanneries and install electric crematoria Fuel for thought Remembering Indira Sivasailam... Small units prefers to remain small... Air Asia India will set new benchmarks for budget travel Fortune for Indian Airlines Telangana in top gear… A friendly business group More heat than light Should we change the official year? The few handicaps... Medical costs hit the roof... There was flood of milk. Reason: no milk commissioner! Delhi is distant Naidu will soon build a new Hyderabad TN accounts for the largest recruits by the IT sector Limit foreign borrowings to hi-tech, export potential projects... Kulandai was a giant Parliament in paralysis... Sweet news for TN sugar mills Of course, Gujarat is vibrant Tax agriculture Excel Generators provide the vital back-up Plummeting profits of PSBs B H Kothari - a tribute Build close rapport with business leaders A think tank for Chennai The Ports’ Pasha expands into Tamil Nadu Rahman at CIC Mersal magnified Tough task taking states together Tribute – UCAL Selvan… He continues the focus on social amelioration S Ramanathan – a versatile musician, musicologist The power-full Hindujas Whistle-Stop Tour of Raghuram Rajan Breaththrough in malaria control Infrastructure funding – lessons learnt When online building permits work…. Cement prices continue to rise… Focus on quality of power - its only around 170-180V Preserving for the future TGS- The king storyteller More Shakthi to Das’ elbow to the lack of interest on the part of these to focus on original research. This despite the much lower costs of such research in India. The industry which thrived on the protection of a closed economy and the advantage of a vast domestic market, has failed to organise its evolution on healthy lines Demise of a media baron... Quality silica from Neyveli Secularism and anti-Hinduism Protest masters... Liberal imports idling indigenous capacities
Revving up the manufacturing sector

For a couple of years now, there has been interest on the part of the policymakers and industry associations to increase the share of manufacturing sector in the GDP. The idea has been gaining momentum over the last three years. Speakers at the national convention of CII referred to the need to increase this share to 25 per cent of GDP. Presently, it is in the region of 14 per cent.

The experience of China in building a very strong manufacturing sector was often cited as a shining example. In recent years, China emerged a large manufacturer of a variety of goods. This was aided by the country opening up investments in the manufacturing sector. China developed a number of special economic zones for exports. It opened up investments, especially from the US, through liberal incentives. Large multinationals from the US and Europe, Japan and Korea were attracted by these incentives offered.  The major attractions included the ease of setting up and operating businesses and, most importantly, cheap labour. China also took care building a strong infrastructure in terms of roads, transport, port facilities… and offered other liberal incentives.

In a very short time, multinationals rushed to China and helped the country build a massive manufacturing base. The booming Chinese economy followed.  In quick time China emerged a strong economic power next only to that of the US. Chinese products gained in quality as a result of such investments and the cheap labour enabled the country to win custom for a vast range of products at low prices.

An immediate fall out of this is the huge surge in exports. In recent decades,  it is common sight to find in the US department stores several goods offered, carrying the label Made in China. Particularly pervasive is the share of a vast range of consumer goods including appliances and other items of daily use. In quick time such an experience also helped China upgrading its skills and win custom for more sophisticated goods.

 Unfortunately, a similar wave has not struck India largely because of the slow pace of reforms. Investment policies do not still attract major corporates across the globe to set up shop to produce a vast range of manufactured goods. This is sad in the light of the existence of several multinationals working in India for several decades. The several restrictions in doing business in India and the various clearances still required from the government and most importantly, corruption at the high places, have been major deterrents. Unlike China, infrastructure is also extremely weak. Ports are still congested. Road infrastructure to carry goods from and to the port is still poor and the cost of basic requirements like power is pretty high, besides being uncertain. Tamil Nadu, which used to be in the forefront of attracting such investments for several decades, offers an instance of this deficiency: over the last two years, power shortages have been rampant forcing industry to take recourse to power generation through diesel gensets which shoots up the cost. Simultaneously, there has also been a huge increase in the cost of grid power. Cost of power in China is estimated to be less than half of that charged for Indian industry. Of course, there is also the uncertainty of supplies and unsteady voltage. While the government and CII have been stressing the need to take the share of the manufacturing sector to 25 per cent of GDP, the lack of skills, lack of a strong work culture and the absence of training facilities come in the way. Sadly, education even at engineering colleges and higher institutes of learning do not prepare the students for ready employment in industry.  

 The target for raising the share of the manufacturing sector to 25 per cent of GDP thus appears tall. Even for a highly developed country with a strong manufacturing base like Germany, the share is just around 23 per cent; for countries in south-western Europe like France, Spain, Portugal and Belgium, the share is less than 15 per cent of GDP.

IE has been suggesting serious efforts to improve the share of agriculture in the GDP. India has good natural endowments in terms of arable land and agriculture season extended round the year. By proper policy back up it will be possible to enable the agriculture sector to emerge strong which in turn can also support a strong industrial sector.

Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236