India faces challenges from main Asian manufacturers
Maharashtra and Gujarat ranked among top states in terms of manufacturing emergence in mainstream states across India, according to a recent study by ASSOCHAM.
“While Maharashtra has topped with highest growth in entrepreneurs memorandum (EM) part-II filed by micro, small and medium enterprises (MSMEs), Gujarat has performed very well on parameters like change in capacity utilisation, operational ratio, value addition and input cost,” stated the study‘Manufacturing Excellence and Emergence in India: The state level analysis’.
The ASSOCHAM Economic Research Bureau (AERB) had considered various parameters like number of factories, output value, working capital, net fixed capital formation, fixed capital, finished goods, capital invested, total inputs and others to ascertain the states’ performance in terms of manufacturing sector.
Highlighting the methodology, the study stated that all states were divided into three major categories according to geographical conditions, viz., north-eastern, Himalayan and mainstream states. Mainstream states were further divided into two sub-categories, namely, excellence and emergence.
Further, the data was taken for each state from sources like Annual Survey of Industries, Ministry of Statistics and Programme Implementation, Government of India website for a five-year period between FY10 and FY15.
The study also highlighted various challenges being faced by India’s manufacturing sector – competitive cost and technology being offered by countries like Bangladesh, China, Indonesia, Korea, Singapore and Taiwan.
While development process in other countries follows a transition from agriculture to manufacturing and then towards services sector, however India’s growth has been services sector-led as such there have always been concerns about sustainability of such a growth.
The study also stressed upon the importance of increasing share of manufacturing sector in India’s gross domestic product (GDP) to absorb a young workforce as bulk of population relies on agriculture for employment.
“The Union Government must address issues relating to poor product quality, infrastructural bottlenecks and inadequate efforts at research and development from a holistic macro perspective as they have collectively taken a toll on India’s manufacturing competitiveness,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the study.
“Considering that majority of investment projects in the manufacturing sector are stuck in different stages of implementation, we at ASSOCHAM have time and again suggested the Union Government to develop a strong plan to prioritise speeding-up the process by creating a target-oriented roadmap,” said Rawat.
“At the same time private investors must also be held accountable and be penalised if projects get delayed or stuck due to improper planning, change of ownership, lack of finance, absence of co-ordination with contractors and other related issues,” added the secretary general. fii-news.com
