Manufacturing

Indian manufacturing sector contributes around 16% to the GDP and grows around 9-10% every year, till 2008. Strong automotive sector growth and ever expanding domestic market helped the sector grow. Though manufacturing had not been a traditional strength to India, it has made considerable progress in manufacturing, particularly in auto, computer hardware, engineering products and consumer durables. Many surveys have indicated India’s manufacturing strength like low manpower cost also coupled with quality management skills to bring modern technology and capital. No doubt as India’s education system produces 400,000 engineers every year.

 Multinationals like LG, Samsung,Nokia, Louis Vuitton in consumer durable sector, Volkswagen, Ford, Hyundai in auto, Airbus, Cummins have already set up shop and  made India has a global manufacturing hub. The sector growth had never been consistent and it was always fluctuating from (3% to 10%) boom in 90’s and a  lull in second half and peaking in 2002. Its growth too had fluctuated corresponding to its overall contribution to country’s GDP. Key factor is manufacturing  sector growth had always grown when there is strong consumer demand and global economy from 2001 had been pretty good. Can we can sustain it in the  coming years projected to be gloom with falling demand ?

It is time to test our de-coupling theory, whether our domestic demand is strong enough. With exports at the mercy of exchange rates, can India meet its target of manufacturing exports of US$300 billion by 2015 ? For this we need overall improvement in education, healthcare, labour training and corrective policies from our central govt.