In order to take better advantage of the opportunities
being thrown up by globalisation, the Indian manufacturing
sector should improve its competitiveness. According to
V Govindarajan, member secretary, National Manufacturing
Competitiveness Council (NMCC), government of India, a
high level committee on manufacturing headed by the Indian
prime minister is meeting sometime next month to discuss
the macro economic initiatives required to make the domestic
industry globally competitive.
the captains of industry at the Confederation of Indian
Industry (CII) southern regional council, Govindarajan
said that the country is unable to build and maintain
competitive strengths needed to meet the global challenges
as well as develop a larger domestic market through low
cost production. "This is one of the major reasons
why the share of manufacturing has been stagnating at
a low level of 17 per cent of GDP for over two decades."
He said that if the nation's GDP has to grow at a balanced
8-9 per cent per annum, the manufacturing sector has to
grow by over 12 per cent per annum over the next decade
compared to less than 7 per cent growth in the last two
decades. The growth target of 12 per cent in manufacturing
would create about 1.6 to 2.9 million direct jobs annually
and two to three times indirectly, Govindarajan added.
According to Govindarajan even with a 12-per cent annual
growth, the contribution of the manufacturing sector to
the GDP may reach only 23 per cent by 2015. However, the
long-term goal should be a much higher contribution of
manufacturing in the GDP to over 25-35 per cent.
He said that though import tariff, taxes, cost of capital,
infrastructure bottlenecks and others affect the competitiveness
at the national level, the industry must strive to enhance
the firm level competitiveness by adopting modern management
practices and technology.
He said that the NMCC does not argue for subsidy or protection
but aims at gradually reducing an estimated 15 per cent
cost disability faced by Indian manufacturers on account
of taxation systems. The council will also take initiatives
to simplify various government related procedures in order
to reduce the transaction costs.
He said that government would need to deal with ensuring
macro-economic stability including containment of core
must strengthen education and skill building and enable
speedy development of infrastructure while industry must
come forward to invest in R&D and technology and show
a continuing commitment to skills development and knowledge