Global Manufacturing scenario vis a vis India

Expert Views on Global Manufacturing- Exclusive coverage on Textile Sphere

Written by: Mr. S. Chandan

Industry and Management Expert

Sound manufacturing capacity and Good manufacturing practices always lead to economic growth and development of a country as well built manufacturing activities have multifaceted impact on diverse activities including GDP. Of course; manufacturing activities is preferred to be internal resource based instead of more dependence on imported inputs. This is an established myth across the globe. The developed countries had been playing a dominant role in manufacturing along with technology innovation across the globe since long but the trend slowly got changed and manufacturing activities started shifting to Asian countries after 2000.India had a meager share till that time, however; it got escalated to 2% during 11th plan and later it reached 3%. India has been able to upscale contribution in Global value chain in last one decade. China had had the access later but made it’s presence truly visible within a short span of time across the globe. China took an edge over United States in 2010 and established itself as top leader and still continuing with a huge share in global manufacturing. At present, a few Asian countries including India made their presence visible as top leaders in global market.

A Global manufacturer is a company that manufactures Components, sub-assemblies, assemblies and finished products by leveraging raw materials, manufacturing capabilities cost and efficient in supply chain that spans across the world.

UNIDO reports depict the list of leading global manufacturers and their share in the table below.

Source: UNIDO Statistics Report of 2019 & 2022.

The global manufacturing industry output is estimated to hit at $41.9tn in 2021 and registered an output growth of 3.3% on year o year. China leads the world production in terms of manufacturing output over $2.01 tn. United States is $1.867tn, Japan has the output $1.063tn whereas Germany is $700bn. and South Korea $372bn. However, data shows India $482bn and Italy $314bn in 2018

Global manufacturing share doesn’t envisage the true picture of domestic manufacturing capacity of any country in absolute terms. India is also no way exceptional. Though India has made it’s presence on global manufacturing map by contributing substantially in specific areas of GVA chain but contribution of manufacturing in country’s GDP is not very significant in recent times. Manufacturing activities had truly reached a low ebb since last one decade (though recent S &D may appear different). India’s manufacturing base had got shifted to import base instead of internal resource based that may invite a disaster in long run. In the last one-decade contribution of manufacturing to GDP also slowed down though target was to enhance contribution of manufacturing in GDP during the 12^th plan 25-26%. With the change of power gear in country’s administration that brought a big change in policy formulation & thought process but it had not made a good impact at all and monitoring mechanism got weakened. A good no. of manufacturing establishments had pulled down the shutter citing diverse reasons in recent years and Govt. perhaps failed to address such issues well that brought a big slump in growth indicator. Besides, there is hardly any big ticket investment in core sector in this regime. There is no doubt, there is a positive trend in service sector but we have to keep it in mind, service sector is always short lived that need constant innovation and upgradation to sustain for long. Hence, it will be too good to formulate policy framework to boost core sector manufacturing activities exploring the potential of available resources and infuse right technology & innovation with a plan of right product-mix & diversification to enhance contribution in GVA chain as well as give a fillip to manufacturing activities of the country well in near future and enhance contribution in country’s GDP.

Developed countries always dominated the global manufacturing as these countries had the capability, knowledge, Technology and innovation etc. EU was always powerful in domain knowledge, technological innovation and skill that made them capable to dominate manufacturing of high-end products and the global market for long. USA is a resource based country and decentralized the manufacturing activities along with Infrastructural development to have a big control on global manufacturing since nineteenth century. Industrial activity of China got a boost in late 60’s and early 70’s along with infrastructural development to improve connectivity among the regions and speed up manufacturing activities. Till 2000, manufacturing activity was overall moderate but played a dominant role in Sport Goods sector along with textile & leather. But after 2000, it took a different look with the advent of new industrial policy frame work with an easy inflow of foreign investment to speed up industrial activities in various sectors. Many developed countries shifted the manufacturing activities to China in core sector. China made an access to global market after becoming a signatory of WTO in December 2001 and made it’s presence quite visible within a short span and became a dominant player in core sectors & other disciplines.

India also followed the right path after independence and good initiatives were made by first Prime Minister to spread out the manufacturing activities by establishing PSUs in remote areas identifying the potential of internal resources. Simultaneously, infrastructure was also developed to articulate professionals to enjoy work at workplace. Indian PSUs can play a pivotal role, scaling up manufacturing activity in strengthening economy & contribution in GDP of the country, once undesirable intervention is totally stopped. Late PM Shri Rajiv Gandhi realized it and made a good attempt to encourage PSUs to improve performance by infusing good management practices but that impact was only short lived as such good initiatives couldn’t continue well for long due to diverse reasons. Later NDA Govt. came out with an idea of disinvestment of PSUs and subsequently moved to sell few PSUs at a throw away price instead of making any attempt to upscale capability & building competitiveness. However, Indian PSUs could be the strong pillar of manufacturing of the country, once such organizations were given a full liberty to function in a professional manner with no political & bureaucratic intervention. Recent decision-making process silently killing the well capacitated PSUs in various sectors instead of emphasizing to improve operational efficiency to scale up capacity and building competitiveness. Unfortunately, such policy initiatives of Govt. placed these institutions again in an uncertain mode. Perhaps that may place India’s manufacturing growth indicator in doldrums.

Note: Views are personal & based on long association with Industry.

Author’s profile:-

CHANDAN SAHA.

FIE.

Industry & Management Expert.

BSc. Tech(Textile) Calcutta University, M. Text (Engg.) M.S. University, Vadodara. System Management (JBIMS Bombay). Chartered Engineer, Qualified ISO Lead Assessor.
Fellow of Institution of Engineers India. Recipient of prestigious Er. Sadanand Memorial Award
Served more than four decades in Industry, Research Institutes and Ministry of MSME and NITI AYOG Govt. of India etc. A retired Senior official of Govt. of India, engaged in Industry planning & promotion, establishing Linkage among Industry & Academic and Professional institutions etc. Attached with various professional and academic institutions at various capacities for 35years.Made a significant contribution in industry promotion, product innovation, Skill development and adoption & practice on modern management tools in MSMEs etc.

Also, Read from the same author: