Why Indian manufacturing is yet to become world-class
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But that may not be so simple. Today India boasts of world class companies which set strong standards not just in India but also in the global markets. India Inc. is also hopeful of strong growth in sales and profits in the years to come led by strong growth in the economy. But unless Indian companies are careful, certain issues could well prove to thwart their growth efforts. Take labour issues for instance. Recently, auto major Maruti has had to deal with loss of production of around 1,800 units at its Manesar plant due to strike by workers. Earlier this year, a 50-day long strike by a section of workers at the General Motor's Halol plant cost the firm to lose production of 2,000-2,500 units.
While for the time being these might be near term concerns for Maruti, India Inc. in general will have to ensure that this kind of labour unrest does not become a regular feature. For indeed, a restrictive labour law environment has been one of the major hurdles to the development of the Indian manufacturing sector. Thus, corporate India will have to evaluate existing labour laws which are quite archaic on a priority basis. It will have to work towards ensuring that there is a major overhaul in these laws in keeping with the changes in the economic and industrial landscape. Otherwise, India's hopes to become a world class manufacturing behemoth will only be a distant dream.
Do you think that India's restrictive labour laws are the prime factor that could hamper its manufacturing industry in the future? Share with us or post your comments on facebook page.
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Markets in US, Europe and even Japan have seen tougher times. Lower economic growth as well as the heavy burden of debt has forced investors to look away from them. With higher returns, emerging markets have been attracting investments in recent times. However, a major part of these funds were invested in the commodity sectors. However, commodity prices have seen a cool off in recent times. This has led global investors to look at alternatives. And consumption driven sectors appear to be the new hot favourites.
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The US is yet to implement Basel II capital adequacy standards, which the EU implemented in 2006. Post the crisis, major industrialised nations agreed to cut back on incentives for risk-taking. But, the US mostly used non-binding terms to implement this deal. It does not enforce a particular cash-limit on executive bonuses. Paying fat-cat bankers hefty bonuses and later having to bail them out caused significant public outrage a few years back. For the public to have faith in the banking system and regulators, the US needs to work on ironing out these issues. They may not get a second life next time around.
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Saudi Arabia has already raised its production ahead of cartel's meeting. However, there are others OPEC members like Venezuela and Nigeria that choose to under produce. With underlying political tensions among the member nations, this meeting is definitely going to be a charged one. What makes the policy trickier is balance of supply among the member nations. Any proposition to change the relative share can lead to further political tensions among them. But what is in it for us? Any boost in quotas up to or less than 1.3 million barrels per day may not translate into actual increase in supplies. This is because the earlier supply limits have already been flouted and a limited increase will only formalize it.
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5 Responses to "Why Indian manufacturing is yet to become world-class"
jay
Jun 7, 2011that is right know one thinks of bull, every body needs of production targets, as by the age working capacity is reducing but does"t says u can fire him ,you have to upgrade and tell and situation of the company.
jay
Jun 7, 2011Every body is concern about this labor, one day u will have no labor then what will happen to the GDP ,have u ever thought , in India u pay less to labors and give more to executive who's output is less, they can negotiate for there salary but labour can't, why labours are not given more salary then executives as they are the backbone of your company, now a days every body wants white color job one day labour class will be vanish then GDP will be not there to calculate,in America labours have become CMDs of company because they knows how to fine diamond from stone,here stones are there but no one to polish it to make diamonds,that is why they are ahead of us . British left india 63 years back we are still using there system of work and how to carry work,we do not have our own system or laws because all systems/laws are copy pastes,that is going on till date will carry on .
krisham51
Jun 7, 2011the labor laws in India are the real threat to india next to corruption.while the workers in organised sector are ( the worst are in the govt sector)pampered ,the workers in the unorganised sector are badly exploited.the minimum wages are mostly on paper and compliant officials make the exploitation beyond the law.the management principles swing from compliance at one end to exploitation at the other.
AKS
Jun 7, 2011The labour laws in our country are indeed due for a change to match the needs of the current manufacturing enviornment of our country. It is not about wages and the facilities available to the workforce but todays manufacturing industry would like to pay wages commensurate with the skill set a worker possesses. The catagories of the wages prescribed in the various manuals defines the catagory but not the work out put that may expected from the worker. Another very important quality that is desired in a productive worker is DECIPLIN, this unfortunately is totally lacking in most of the blue collared workers. a manufacturer hires a worker out of need and his free will, he should logically then be allowed to fire the worker who does not yeild the desired work out put. WHEN ONE CAN HIRE THEN WHY CAN'T ONE FIRE ALSO?
Most often than not labour unions are formed under political patronage, they serve the political bosses and are exploited by the politicians for the benifit of the political leaders. This too must stop by having the labour commissioners who are answerable and responsible to safe guard the interest of the workers but MUST ALSO BE RESPONSIBLE TO ENSURE THAT THE PRODUCTION TARGETS ARE MET WITH.
The laws must be ammended to deal with labour rights and production targets. Let the law work as the bullock cart driver who nudges the bullock to keep moving till the destination is reached, he does provide the required food ,water and shelter to the bull that pulls the cart.
Santosh Bhatnagar
Jun 8, 2011It is not only the labour lawas alone that are the stumbling blocks in achieving quality. Uncertainty of Power, the quality of raw materials, skill of the workmen, the knowledge and understanding of owners and senior officers are the main hurdles. The Government should ensure continuity of power as most of the continuous processes need continuous power. One interruption means 2-20 % process waste, depending upon the process. The substandard generated during the interruption is normally sold at reduced cost or refined and mixed with the main product. Overloading the machines and shortcuts, directed by the owners / senior officers from time to time lead to almost. These persons are responsible not only for the poor quality of the product but also for creating hazardous conditions by taking shortcuts and poor maintenance of the plant and machinery. Every one needs cheap labour, though the cost contribution due to labour in the product is usually the lowest. You employ cheap labour and after picking up the skill, the labour vanishes. You would have noticed that the units started and managed by the technocrats are more successful than the units managed by finance or commercial people.