Question

Suggest any four ways through which the INDIAN industrial products can easily face global competition

Answer 1

With $2.3 trillion in GDP, India is the world’s ninth-largest economy and the third largest by purchasing power parity at $8 trillion. Yet manufacturing accounts for only 16 percent of the country’s GDP, compared with the services sector’s nearly 52 percent. India represents only 2 percent of the world’s manufacturing output, a tenth of what its neighbor China contributes. Clearly, India is punching below its weight in manufacturing.

Growth in manufacturing is crucial for India’s economic development. To capitalize on the demographic dividend, India must create nearly one million jobs per month over the next decade. Manufacturing has the potential to provide large-scale employment to the young Indian population and thereby enable a significant section of the population to move out of poverty. With this in mind, the Indian government has adopted “Make in India” as a core policy initiative to encourage and accelerate growth of the country’s manufacturing sector.

comparison, leading Chinese manufacturers are predominantly in the third quintile with a very strong improvement dynamic, and some new Chinese factories that were established as direct clones of Western automotive factories are already in the second quintile. Further ahead are Korea and Eastern European countries, including Poland, Romania, and Slovakia, which are catching up with the world’s leading manufacturers in Western and Central Europe and the United States.

The good news is that Indian manufacturers fare better than global averages for cost control despite low capacity utilization, primarily because of lower wages and a focus on reducing costs. However, compared to those in the top quintile, Indian manufacturers face more quality complaints and fulfillment delays. The pace of innovation is much slower (with Indian manufacturers requiring two to three times longer to launch new products), and Indian players’ agility to scale up or down is much lower. In short, manufacturing in India lags global competition in vital areas.

Our analyses point to four elements that contribute to India’s limited manufacturing competitiveness:

Low productivity. Manufacturers are held back by poor workforce productivity, primarily because of a lack of automation, outdated manufacturing processes, limited use of design-for-manufacturing, and numerous non-value-added tasks.

Talent and skill shortage. Rigid labor laws force companies to hire casual workers. Vocational schools are not well-equipped to train workers. Companies fail to focus on intermediate-level manager or foreman (meister) grades that can provide on-the-job training to direct labor, and Indian academics stress simulation and Excel modeling for engineers over kanban and kaizen processes.

Inefficient supply chains. Infrastructure bottlenecks and structural impediments attributed to state-level taxation policies have contributed to longer lead times and excess inventory across the value chain.

Lower levels of supplier competence. Many Indian tier 2 suppliers have been part-to-print suppliers that have not invested in improving their product development or quality control capabilities. This has made rework and returns routine, further reducing productivity.

Answer 2

Ans
i). Use of modern technology.
ii). Use of modern machinery.
iii). By reducing the cost of production.
iv). Reduction of taxes.
v).Appropriate policy interventions by the government.