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Local issues hurt manufacturing sector: Industry

More than the competitive edge that China has in terms of cost, there are host of domestic issues like poor policy measures and infrastructure that create hurdles in India’s manufacturing sector, industry experts said here.

More than the competitive edge that China has in terms of cost, there are host of domestic issues like poor policy measures and infrastructure that create hurdles in India’s manufacturing sector, industry experts said here.

Lengthy regulatory procedures, poor infrastructure, delay in implementation of proper taxation norms and land reforms, and lack of modern labour laws are more detrimental to India’s manufacturing growth, speakers at the 11th Manufacturing Summit being organised by Confederation of Indian Industry said.

While India is steadily making presence felt on the global stage, all stakeholders including government and the private sector need to work in tandem for the country to fully capitalise the emerging opportunity and propel the economy on a manufacturing-led growth, they said. Also, China’s decreasing cost competitiveness due to Yuan appreciation, wage inflation and fall in investments as a percentage of gross domestic product (GDP) opens up more opportunities for the Indian manufacturing sector.

?The decreasing cost competitiveness of China is opening up a window of opportunity and India is definitely well positioned to capture this. Already, our sectors such as automotive compete with the best across the globe,? says Jamshyd N Godrej, the chairman of the summit and CMD, Godrej & Boyce Mfg Co.

CII, along with Boston Consulting Group, has also brought out a report ?Re-igniting India?s Quest for Manufacturing Leadership? that examines the country?s recent performance in manufacturing, relevant global trends impacting the sector, and presents the key interventions required to chart a course to achieve the goals in the National Manufacturing Policy. The report states that India?s manufacturing sector can unlock incremental GDP of $350 billion and create 70 million additional jobs.

Godrej said that over the last two decades, labour rate arbitrage was the main driver for offshoring of production to China and provided substantial costs savings, in spite of lower productivity levels. However, since 2009, production worker wages have inflated at almost four times the rate of Indian wages. In addition to this, the relatively low productivity as compared to the US standards, and China?s competitiveness in low cost labour is clearly eroding the latter’s advantage.

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First published on: 18-12-2012 at 01:26 IST
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