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