Interview India: Boosting Indian Manufacturing!
Sanjay Kirloskar, Chairman of the Confederation of Indian Industry (CII) Western Region and CMD, Kirloskar Brothers Ltd., talks about India's manufacturing secenario and how it should leverage the given opportunities.
What is the current market scenario of the manufacturing sector in India?
Sanjay Kirloskar: Though the Indian manufacturing sector has grown steadily to develop significant capacity across key sectors, the contribution of manufacturing to gross domestic product (GDP) has stagnated at around 15% for the past 30 years. The performance of the manufacturing sector in recent years has been below par. In the fiscal year (FY) 2013-14, manufacturing activity contracted for the first time in 22 years. However, a gradual recovery has begun and the time is ripe to exploit the growth opportunity.
Against this background, what are the opportunities involved for the domestic manufacturing sector?
Kirloskar: Taking a cue from the Centre, many state governments have been making pioneering efforts by effecting simplification of policies and procedures to foster a business-friendly investment climate in the states. Many States are doing their best to appear more investor-friendly than others when it comes to attracting entrepreneurs and investment and in turn provide a fillip to the ‘Make in India’ initiative. State governments are now holding Investors Summits to attract investors which is a sign that things have changed on the ground. The lead taken by states to usher in labour law reforms, to bring their own land acquisition laws to boost infrastructure projects, among others underscores the commitment of states to promote investments.
According to you, which segment in the manufacturing sector will be the most profitable? And why?
Kirloskar: India will need to focus on a mix of sectors: some industries in which India has already established its competence and some in which it needs to do so for strategic reasons. In sectors such as chemicals and textiles, India is already an important exporter and will continue to offer strong potential. Sectors such as capital goods and metals form the base for India’s engineering industry and these should be further encouraged. Sectors where India should make a bigger push for strategic reasons include electronics hardware, railways and defence manufacturing.
CII is actively involved in assisting the government to understand the requirements of the manufacturing sector. As Chairman of CII Western Region, what are your suggestions to the government?
Kirloskar: The Indian manufacturing sector has the potential to contribute 25-30% of the country’s GDP and create up to 90 million domestic jobs in the next 10 years. What’s needed now is to ensure a supportive policy framework. At a time when 63% of our population is in the economically active age group, the only way to reap the demographic advantage and catapult the Indian economy to a higher growth trajectory is by providing a thrust to manufacturing. While the government should not pick winners and losers, there is some logic in focusing on specific industries which have high domestic demand as well as export potential. Focus on infrastructure related sectors is extremely important for building competitiveness of the manufacturing sector. Policies such as development of industrial parks with excellent investment environment and developing human and technological abilities through collaboration with universities would go a long way in realizing the potential.
It is also imperative to provide skills training to the youth in specific trades to cater to the demand of the manufacturing sector. Slotting into high-skill high-technology global manufacturing chains can deepen India’s strategic footprint in the world.