Sunday, June 6, 2004
Making India a Manufacturing Hub

Indra Sharma (who has an excellent blog) writes:


Everyone thinks alike on some critical national issues. For a country of a size of India and with the resources available, the manufacturing sector must go in a big way. Why should we take pride in exporting mineral ores, we must export value added products. If India lags behind, it shows its technical and commercial incompetence or loosing on competitiveness. Small scale industries which are already well developed can play a major role. Some data of small scale industries (SSIs) are revealing.

- There are some 35, 00,000 units in India.
- SSIs produce about 8000 items.
- Value addition in manufacturing sector is about 39%.
- SSIs contribute nearly 34% of the national export
- Direct employment in SSIs goes over 20 million persons.
- Contribution is about 7% to GDP

What is this world class manufacturing that I am talking of? I am talking of the ability of a company to effectively compete with the best performing companies around the world. I am talking for empowering of all the employees to continually improve their products, processes, operations and systems to achieve significant improvements in customer service, quality and profitability. I am talking of a condition where every employee does things he is assigned to do right the first time. I am expecting the owners to emphasise on quality at the source giving workers responsibility for quality. I am talking for involving everyone in eliminating of waste of all types (counting, moving, storing, expediting, searching, transferring, accumulating, and inspecting). I am talking of proving the best on-the-job training. He must know what he is doing. He must know his machine and equipment. There are thousands and thousands of stories of innovations of common men and women which changed the face of this good earth. Let the managers and the owners of the companies take care of these basic requirements. Let them first appreciate the universal use of statistical quality control as a principle to survive as Japanese did and became the world leaders in manufacturing. Is it some thing very difficult that the worker can not understand?

Government and other institutes should provide free training in the world class manufacturing practices, but no other concession to make easy profit. After all manufacturing is not only a trading business with ensured good margins. In manufacturing, a lot of professional technical inputs are required. It is hard but very satisfying enterprise.

SSIs are to be categorized on the basis of their potential to go world class in scale too in steps. Many have potentials. Every 2 -4 years they may get promoted to next higher level. And I am dreaming an India of 1000 or more world class global manufacturing companies growing from these SSIs providing employment and opportunity for the whole of the country. India has all the strength to become a global manufacturing hub. SSIs require mature nursing of these SMEs and not bottle feeding.


IT has to play a critical role in the modernisation of SMEs. This is the next big opportunity in India.

Emerging Markets | PermaLink | Comments (2)

I have to think that keeping socialist-era labor laws on the books isn't conducive to India's emergence as a global manufacturing hub. The Chinese Communists seem to have learned this lesson, but their peers in India unfortunately haven't.

Major industrial concerns also need access to lots of electricity, and it has to be available to them on a reliable basis. Deregulating and liberalizing the power industry would go a long way towards solving this problem, but again, the Communists have other ideas.

Posted by Eric

My question is simple: how small is a small scale industry? From the data above it appears to have an average size of less than 6 employees. What, I wonder, is the median size. Having 3.5 million SSIs employing only 20 million is a worrying sign. It implies horrible inefficiencies. The productivity is of course abyssmal given such small scale. That goes a long way in explaining why we produce so litte (which is another way of saying that India is poor.)

So how do these horribly inefficient SSIs continue to be in business, you may ask. They do so because the average level of efficiency is low in the domestic market. If and when they are forced to compete against foreign producers, their demise will be assured.

Posted by Atanu Dey
Collaborative Weblogs

Slashdot points to a paper which discusses four collective blogs: : MetaFilter, Plastic, Kuro5hin, and Slashdot. "The group weblogs, like the individual weblogs, do seem to constitute separate counterspheres to the mainstream media’s public sphere. Their relationship to that dominant sphere is a complimentary one. While they cannot hope to replace it, they have the potential to impact it through the spill-over effect – boosting an issue to such a high presence that it finally arrives on the mainstream’s radar – and the potential to improve it, if the mainstream is willing to incorporate some of the practices that these group weblogs are refining."

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