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Service with a smile, but core's where growth is
China the bogey surfaced once again, this time at the Confederation of Indian Industry (CII) Pune council's annual day meeting. At a session on 'Beating China', the CII-McKinsey study on 'Improving India's manufacturing vis-à-vis China' held
centre-stage.
The study destroys the myths that China's growth was driven only by an increase in investments and not by productivity, that its manufacturing is export-driven, faulty accounting drives low prices in China, its exports have grown due to marginal pricing and its products are of poor quality. The urgency to revive the domestic manufacturing sector was stressed since this, and not the services sector, will create jobs for our growing population.
Outlining the need for the manufacturing sector to get on with production and productivity, R Gopalakrishnan, executive director, Tata Sons, said the reality for India is that we are not Hong Kong or Singapore, to rely on the services sector for growth. "We absolutely need manufacturing for economic growth on a sustainable basis," he said, pointing to its employment generation ability, far greater than that of the services sector.
Mr Gopalakrishnan emphasised that there was a lot industry can do on its own without waiting for the government to step in. However, there is a societal dimension to manufacturing which has still to be absorbed by Indian society, he said. The strategy to beat, or at least take on the Chinese dragon will have to go beyond merely being low-cost, which can only be an entry-level move, Vinod Dasari, executive director and president, Cummins India (CIL), said.
"Cost and quality are entry points," he said, adding that basing a strategy only on these is not sustainable. Sustainable advantages can be created out of engineering capability to design, develop and manufacture, which India has, he said.
BN Kalyani, chairman and managing director, Bharat Forge (BFL) showcased its success story in China, where BFL expects to become a major force as an auto component supplier by '04. The export-led strategy of the forgings major has lead to its top five customers during '02-03 being global companies, with not a single Indian featuring in the list. Mr Kalyani said this contrasted sharply with its top five customers in '97, when all the companies were Indian.
Export-manufacturing in China employs 50m people now while India's IT exports account for 4 lakh people getting employment. This is expected to rise to 20 lakh by '08.
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