Indian manufacturing offers challenges and opportunities
An interview with Dr. Andreas Gruchow of Deutsche Messe
On the eve of Hannover Messe’s four major international manufacturing trade shows in Bangalore, India, Plant Engineering editor Bob Vavra discussed the key issues facing India with Dr. Andreas Gruchow, m ember of the managing board of Deutsche Messe AG, Hannover, and how those trends could affect global manufacturing
Why is the India show an important one for manufacturing professionals to attend, regardless of location?
From 10 to 13 December, Bangalore will be hosting four trade fairs themed around automation, materials handling and logistics,that no other event can offer.
What is especially unique about this show and what should attendees expect?
Four trade fairs under one roof profiling all the latest trends in automation technology, from electricity generators, industrial robots and power transmission to logistics, materials handling and energy technology — this is truly unique. Deutsche Messe, based in Hannover, Germany, is one of the biggest and most experienced international trade fair organizers. Our fairs around the globe always set the very highest standards. The attendees can expect more than 500 exhibitors in three halls. The shows take place at the new Bangalore International Exhibition Centre (BIEC), which is considered India’s most technically advanced venue for staging exhibitions for capital goods.
What are some of the key manufacturing issues in India, and how do these compare with other manufacturing regions? Are there some unique challenges in India?
The manufacturing sector is large and diverse, composed of several independent sub-sectors. The 10 key sectors that comprise the bulk of Indian manufacturing are:
• Machine tools
• Food processing
• Future technology such as biotechnology
India has a growing workforce that is English-speaking, highly skilled and relatively low cost. India ranks among top three of 30 nations in terms of availability of skilled labour force.
India has one of the lowest labor costs per hour compared to other developed and developing countries. Labor costs form the majority of the total costs of manufacturing various products.
Thus, there is a distinct cost advantage for companies having manufacturing bases in India. Furthermore, India’s independent judicial system began under the British, and its concepts and procedures resemble those of Anglo-Saxon countries.
India’s outlook on future availability of productive manpower is positive, unlike most competing countries. Unlike China, where the proportion of working age citizens is likely to fall from around 2010, India is likely to have a growing population of employable workforce for at least the next 20 years resulting in high domestic demand. An increasing labor force can enable higher growth rates and creates an urgent need for expansion. India’s comparative advantage offered by its skilled labor force is likely to extend well into the future.
Similarly, where has India improved in recent years, and what are some of the things you’ve seen as India has emerged as a manufacturing leader?
Since the beginning of the liberalization process, India has made significant progress towards becoming a strong economy. The emphasis on forward-looking policies in a stable political and
macro-economic environment has resulted in a steady and sustained economic growth of 5.6 per cent (CAGR) for the past 20 years. This is expected to improve further to a level of around 8 per cent in the future. Thus, India’s strong economic growth over the past decade and a half has been driven primarily by the services sector, followed by manufacturing.
India’s manufacturing sector has historically been associated with low-quality products, unreliable delivery and uncertain pricing. But things have changed drastically.
In May of this year, Hyundai Motor Co., for example, announced that it had exported 500,000 cars from its manufacturing plant near Chennai in South India. Head to markets in Africa, Europe and Asia, many of the exported models are manufactured only in India. There are other automobile companies that produce high quality products in India and continue to expand their manufacturing operations in India.