Some of these companies are old names like Tisco, Telco, Bajaj Auto,
TVS Motors, Sundaram-Clayton, Gujarat Ambuja, Dr. Reddy’s Laboratories,
Asian Paints, Hindalco and Ballarpur Industries that have reinvented
themselves remarkably-Arvind Mills may well join this list soon. But
there are some fresh names like Vardhaman Spinning, Zodiac, Balrampur
Sugar, Bharat Forge, Moser Baer, Hindustan Inks, Sigma Corporation and
CG Igarshi Motors that are leading the international charge of Indian
manufacturing. In addition, foreign companies like GE, Tecumseh and
Hyundai have started using India has a manufacturing base for their
world-wide operations. Public sector companies like BHEL, Bharat Electronics
and Hindustan Aeronautics are also demonstrating their manufacturing
capabilities.

Of course, Indian manufacturing continues to face severe handicaps,
apart from poor infrastructure. Small-scale reservation and restrictive
labour laws have prevented the emergence of a vibrant labour-intensive
manufacturing industry to serve both home and global markets. The incidence
of indirect taxes-both central and state-has prevented the mass growth
of the consumer goods industry. Whenever fiscal levies have been lowered
in the past, like in the case of refrigerators and colour TVs, total
revenue collections of the government have actually increased on account
of the growth of overall demand. Innovative corporate strategy that
focuses ruthlessly on cost-reductions also leads to market expansion
as the example of Nirma showed in the 1980s and as the example of the
Ghadi detergent brand is now showing.

In some specific areas because of the legacy of policy mistakes in the
past, governmental initiative will be needed to force the pace of restructuring.
The steel and textile industries are two prime examples which have to
see the type of fundamental restructuring that industries like, for
example, cement are going through. We cannot aspire to be an IT superpower
without building a domestic hardware base. On a different plane altogether,
a special focus is also needed in those areas of primarily unorganised
manufacturing that are the life-line of towns and cities across the
country like Surat, Rajkot, Bhiwandi, Meerut, Aligarh, Moradabad, Jalandhar,
Coimbatore and Tiruppur.

Contract manufacturing and international sub-contracting holds great
promise. Sundram Fasteners showed that FDI (foreign direct investment)
is not absolutely essential for Indian companies to occupy global niches.
But given that between a third and a two-fifth of international trade
in most manufacturing industries is intra-company sales, FDI will play
a catalytic role in global expansion as it has in China. But for this
to happen, companies coming into India to make India a global platform
have to see the expansion of the domestic market as well. The emerging
frontier is the integration of services into manufacturing. For example,
embedded software is the wave of the future whether it be automobiles
or refrigerators. This is an area where Indian companies can capture
world markets like the Chinese have today done in labour-intensive manufacturing.

India’s economic future depends crucially on the revival and expansion
of its manufacturing industry. This has begun but the process must accelerate.
The establishment of a broad-based National Manufacturing Competitiveness
Council is urgently called for. Instead of waiting for the government
to move, for a change industry must take the lead and force the pace.