Passage
to India
With
a slew of multinationals queuing up to make India their global manufacturing
hub, the industry expects better support from the Government, reports
Chitra Sethi
India
has emerged as one of the most preferred destinations for MNCs to outsource
their manufacturing activities.
Significantly, the country was ranked as the sixth most attractive FDI
destination worldwide in the year 2003 in the FDI Confidence Index brought
out by global management
consulting firm AT Kearney, ahead of more developed nations such as
the UK, Indonesia, Italy, Brazil, Canada and Japan.
The Korean car giant Hyundai Motor is present in India since 1998 and
is expanding operations at a phenomenal rate.
The company is planning to raise the annual output at its Indian arm
by 2,50,000 units this year, expanding its output capacity by more than
60 per cent by July and cranking up exports to Southeast Asian, Latin
American and European markets. Some companies like Delphi and Tecumseh
from the US, Yazaki from Japan, Renault from France and Endress+Hauser
from Switzerland, have also zeroed in on India as their manufacturing
base, either for a whole product or for one or more critical components.
The cost of hiring a skilled worker in the US is 10-15 times more expensive
than his Indian counterpart. Labour costs are almost 15 times more in
Europe than in India......................
COST
CONTROL
“India
is clearly the destination of choice for global manufacturing companies,”
says Vipin Sondhi, MD, Tecumseh Products India, the fully owned subsidiary
of the US cooling giant,Tecumseh Products Company.
“Drivers for the growing momentum in this area include fierce competition
in domestic markets, continuing cost
reduction pressures and seeking
growth in emerging markets,” he points out.
India enjoys a fairly strategic position in the hot zone for the compressor
making company. English-speaking workforce has always been India’s
key advantage.
The fact that a judicial system is in place works in India’s favour
too. “It might be slow but at the end of the day you know there
are certain regulations in place to settle disputes,” Mr Sondhi
feels.
Relatively lower labour cost was one of the main reasons for Tecumseh
to set up a manufacturing base here.........
QUALITY
QUOTIENT
While
India’s pool of low-cost English-speaking technical,
engineering and management talent represent the country’s greatest
strength, there are challenges too for manufacturing in India. A manufacturer
needs to meet global standards since quality is critical due to inherent
risk of product failure. Many of the Indian manufacturers meet the international
quality certification as well as meet the global standards. However,
the biggest stumbling block that India as a country faces is the negative
perception about the ‘Made in India’ tag. Getting past this
image is proving to be an uphill task for many MNCs.
“We started exporting to Southeast Asia first,” informs Mr
Bhandiwad. “Our products were accepted widely in
REGULATORY
ENVIRONMENT
The
Indian Government has been easing FDI in the country and that has attracted
many MNCs to establish
Export Oriented Units (EOU) here.
It allows 100 per cent foreign ownership of EOUs and of Electronic Hardware
Technology Parks (EHTP). EOUs and EHTPs do not have to pay any customs
duties on capital goods or raw materials. Nor do they have to pay income
taxes. There is no government requirement for indigenisation. Raw materials
can be procured from..
|
MANUFACTURING
POTENTIAL
•
Contributes one-fourth of total GDP
•
Employs 30% of non-agricultural workforce
•
Industrial output valued at $65 billion
•
Rise in growth from 2.7% in 1998-99 to 6.1% in 2002-03
•
Significant rise in index of growth for the manufacturing sector
to 6.5 % in February 2003 as compared to 2.9% in February 2002
•
Manufacturing sector exports have grown from -3.0 % in 1998-99
to 14.8% in 2002-03
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.........CONTD
