Competitive
enough?
What
are the core competencies of the Indian manufacturing industry? What
holds India back from exploiting them to the fullest? The Machinist
takes a look
The
corporate world is abuzz with the recently released Global Competitiveness
Report 2003-04, published by the World Economic Forum covering 102 countries
in its ambit. On the Overall Growth Competitiveness Index India found
itself languishing at the 57th position. It did a little better on the
Business Competitiveness Index, perched on the 37th position, ahead
of its primary rival China, which is ranked 46th.
The result has been disappointing to many. Says Professor SN Chary,
Management Consultant and Former Professor, Indian Institute of Management
Bangalore, “It is indeed disappointing, but the fact is that India’s
manufacturing industry does not have any ‘core’ competencies.
It has none in either the category of men or money or machines or methods.
If it had any, it would not have languished in the bottom half of the
World Competitiveness ranking for so long. Perhaps in the long list
of nations, along the continuum of competencies, it performs better
than some other less competent ones.
Such, a performance is not worth speaking about.” While this may
sound too harsh an assessment, it does make one think about the core
competencies of the Indian manufacturing sector.
HR: LABOUR AND ENTREPRENEURSHIP
The comparatively low cost of labour has often been
touted as one of India’s strongest competencies. But as Mr Chary
points out, low ‘wage’ does not mean low‘cost’,
because ‘cost’ relates to ‘productivity’. While
the wages of Indian labour may be low, the advantage is often negated
by the archaic labour laws, slow regulatory bodies and bulging bureaucracy.
Mr Chary opines that so far, the‘cost’ has remained competitive,
particularly for products and services that are at the lower end of
the requirements of technology and quality. There is nothing wrong with
making use of this comparative advantage and selling products / services
where quality requirements from customers are not stringent and where
the needs for technology inputs are not complex. However, as the products
/ services become progressively more technology driven and quality conscious
this advantage is soon lost.
The long term costs arising out of inefficiencies in the process and
poor quality often negate the short term gains made due to lower labour
costs.
But the advantages of Indian labour do not end at the cost factor. The
English-speaking and knowledge driven work force of India has been a
driving force behind Indian industries. As Rajeeva Ratna Shah, Secretary,
Department of Industrial Policy and Promotion, noted in a presentation
made in November 2003, India has over 380 universities, over 11,200
colleges, 1,500 research institutions, over 200,000 engineering graduates,
over 300,000 post graduates from non-engineering colleges and 21,00,000
other graduates. Naturally this creates a large talent pool for the
Indian industry to pick and choose from. However, here too, Mr Chary
begs to differ.
.........CONTD
