BCG Manufacturing Leadership Survey 2014 - 13th Manufacturing Survey 2014

Confederation of Indian Industry
CII 13th Manufacturing Summit 2014
CII-BCG Manufacturing
Leadership Survey 2014
ADDENDUM TO THE BACKGROUND NOTE
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s
leading advisor on business strategy. We partner with clients from the private, public, and not-for-
profit sectors in all regions to identify their highest-value opportunities, address their most critical
challenges, and transform their enterprises. Our customized approach combines deep insight into
the dynamics of companies and markets with close collaboration at all levels of the client
organization. This ensures that our clients achieve sustainable competitive advantage, build more
capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with
81 offices in 45 countries. For more information, please visit bcg.com.
The Confederation of Indian Industry (CII) works to create and sustain an environment conducive
to the development of India, partnering industry, Government, and civil society, through advisory
and consultative processes.
CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a
proactive role in India‘s development process. Founded in 1895, India‘s premier business
association has over 7200 members, from the Private as well as public sectors, including SMEs
and MNCs, and an indirect membership of over 100,000 enterprises from around 242 national
and regional sectoral industry bodies.
With 64 offices, including 9 Centres of Excellence, in India, and 7 overseas offices in Australia,
China, Egypt, France, Singapore, UK, and USA, as well as institutional partnerships with 312
counterpart organizations in 106 countries, CII serves as a reference point for Indian industry and
the international business community.
Note to the readers
The CII-BCG Manufacturing Leadership Survey 2014 was launched to gauge the
pulse of industry leaders on the current scenario and future prospects for the
Indian manufacturing sector. The survey was hosted online and sent through email
to top management of CII member companies in the manufacturing sector.
The survey results, complied from 102 responses, have been selectively
incorporated in the background note for the summit. We would like to thank all
the respondents to the survey for their valuable inputs.
The following pages contain summarised responses for select questions in the
survey. The results have been complied from survey responses received and do not
necessarily reflect BCG's view on the subject.
Survey focused on three dimensions
Perspectives on manufacturing sector performance
Vision for Indian manufacturing
Perspectives on realizing the "Make in India" vision
The Boston Consulting Group • Confederation of Indian Industry | 1

Agenda
Exhibit 1 | Recent slowdown adversely impacting the sector
What has been the average annual growth of your sector's India operations in recent past?
Over the last five years Over the last year
39% 5.1% 7.1%

40 40
5.1% 7.6%
33%
31%
30 30
27%
24% 24% 24%
21% 21% 21%
20%
20 19% 20 19%
17%
13% 13%
11%
9%
10 10
7%
5%
0 0
<2% 2-5% 5-8% 8-10% >10% <2% 2-5% 5-8% 8-10% >10%
CEO survey responses 2013 CEO survey responses 2014 xx% : 2013 CEO survey average yy% : 2014 CEO survey average
2 | CII-BCG Manufacturing Leadership Survey 2014

Exhibit 2 | Similarly, effect of slowdown witnessed across
companies
What has been the average annual growth of your company's India operations in recent past?
Over the last five years Over the last year
5.6% 8% 5.7%
60 40
55%
35% 5.7%
50 47% 32%
29%
30 28%
40
20%
30 20 19%
20 17% 19%
16% 10%
10 9% 9%
12% 8%
10%
10 8% 8% 8%
0 0
<2% 2-5% 5-8% 8-10% >10% <2% 2-5% 5-8% 8-10% >10%
2013 CEO survey responses 2014 CEO survey responses xx% : 2013 CEO survey average yy% : 2014 CEO survey average
Exhibit 3 | Compared to last year, sector leaders more positive

about the future
Do you see stronger growth over the next 5 years compared to last 5 years?
In your sector? (in % change) In your company? (in % change)
48% 60%
<3% 2.6%
67% 77%
2.4% 1.9%
21% 13%
1.7% 1 to 3%
21% 13%
70% of the respondents expect
growth over next 5 years to be
21% 20% greater than last 5 years
-1 to 1%
9% 10%
8% 5%
-1 to -3%
2% 0%
1% 1%
<-3%
1% 0%
80 60 40 20 0 0 20 40 60 80 100
Survey Responses (in %) Survey Responses (in %)

Exhibit 4 | Significantly higher expectation of future growth, with
the vast majority expecting 5-10% growth in next 5 years
Given the recent announcements and the government's intent to drive manufacturing growth, how do you
see the manufacturing sector growth in India over the next five years?
Share of respondents (%)

60
5.1% 8.1% 85% of the respondents expect
growth between 5 and 10% over next
five years versus only 65% in 2013
48%
40 37%
34% 34%
20
15%
11%
7% 6%
4% 4%
0% 0%
0
<5% 5 - 7% 7 - 9% 9 - 10% 10 - 15% >15%
Exhibit 5 | Share of international revenues estimated to be low
What is your share of revenue coming from following geographies?
Average share of revenue (%)

5
4.8%
4.3%
2
3.7%
3.0% 2.8%
2.6% 2.7%
2.3% 2.4%
1 1.9%
0
South South Asia China Middle East Africa Latin Eastern US Western Other
East Asia America Europe Europe

Exhibit 6 | Improving trend in ability to bring in innovation
On average, do you see Indian manufacturing companies getting better at the following?
Product innovation Process innovation1

60 60 58%
47%
40 40
28%
21% 20%
20 20
12%
7%
5%
0% 1%
0 0
Strongly Somewhat Neither Somewhat Strongly Strongly Somewhat Neither Somewhat Strongly
agree agree agree nor disagree disagree agree agree agree nor disagree disagree
disagree disagree
1. For example shop floor process innovation –cost-efficient mix of labor & automation to improve turnaround time in an assembly line
Exhibit 7 | Divided verdict in ease of attracting talent
On average, do you see Indian manufacturing companies getting better at attracting top talent?
Survey Responses (in %)

50
43% ~40% respondents do not agree that

companies are getting better at attracting
40 top talents
30
22%
20%
20
14%
10
1%
0
Strongly agree Somewhat agree Neither agree Somewhat disagree Strongly disagree
nor disagree

Exhibit 8 | Talent management remains a key challenge,
specifically across leadership roles
In which levels of the organization do you see the largest recruiting / retaining challenge?

40
33%
30
25%
22%
20
16%
10
4%
0
Workmen Shopfloor management Allied functions Sales and Marketing Senior leadership roles
Exhibit 9 | Most companies will increase focus on R&D and talent

development
Will your company be investing more time and resources over the next 5 years compared
to last 5 years in the following?
R&D Talent intake and development

60 60
59%
48%
40 40
35%
32%
20 20
14%
8%
1% 1% 1% 0%
0 0
Strongly Somewhat Neither Somewhat Strongly Strongly Somewhat Neither Somewhat Strongly
agree agree agree nor disagree disagree agree agree agree nor disagree disagree
disagree disagree
1. For example shop floor process innovation –cost-efficient mix of labor & automation to improve TAT in an assembly line

Agenda
Exhibit 10 | Most leaders want India to grow at 9%+
What should be the target, aspirational growth rate for manufacturing in India from now till 2020?
Survey Responses (in%)

9.9% 10.2%
40
>65%
30
20
34%
29%
26%
10 20% 21%
17% 19%
13%
9% 7%
6%
0
<5% 5 - 7% 7 - 9% 9 - 10% 10 - 15% >15%

Exhibit 11 | Automobile seen as the top sector to drive growth
Supported by a diversified range of products including food products, textile and apparel, chemicals and
electrical and electronics machinery
Which are the key sectors to drive manufacturing growth in India and abroad, up to 2020? (select top 3)

25
22%
20
15 14%
13% 12%
11%
10
8%
6%
5%
5%
5
2%
1%
0
Automobiles Food Textile, Chemicals 3 Electrical Non- Metal Medical, Basic Rubber & Other
and products 2 apparel, and metallic products optical and metals petroleum
transport leather electronics products4 precision
equipment 1 machinery equipments
1. includes parts & accessories 2. includes beverages & tobacco 3. includes pharmaceuticals 4. includes glass, cement, ceramic, building materials, etc.
Exhibit 12 | Engineering talent & SMEs still seen as top two

competitive advantages for India
What do you believe is the biggest competitive advantage

for Indian manufacturing? (select top 3)
CEO survey responses 2013 CEO survey responses 2014
Surplus and quality

23% 23%
engineering talent
Entrepreneurial businesses/
22% 21%
large number of SMEs
Frugal engineering approach

14% 15%
(jugaad)
17% Low-cost labor 14%
10% Process capability/ quality 13%
10% Sufficient natural resources 9%
4% Technology 4%
25 20 15 10 5 0 0 5 10 15 20 25

Exhibit 13 | Labor considered to be the least sustainable
advantage for India manufacturing
Which of the competitive advantages is not sustainable / at

serious risk up to 2020? (select top 3)
30% Low-cost labor 31%
13% Quality engineering talent 15%
17% Natural resources 14%
13% Technology 12%
Frugal engineering
12% 10%
(’Jugaad’)
9% Process capability 9%
Entrepreneurship
7% 7%
(large # of SMEs)
30 25 20 15 10 5 0 0 5 10 15 20 25 30 35
Exhibit 14 | Various ambitions for India manufacturing, led by a

will to become a top-quality manufacturer
What would you like Indian manufacturing to be known for by 2020?
'Most preferred country for top-quality

37%
manufacturing' - the next Germany
'Most preferred country for low-cost manufacturing'

21%
- the next China
'Global leader in low-cost innovation ( jugaad)' 19%
'Technology and process leader in select

15%
manufacturing sectors' - E.g. Thailand
Other 7%
0 10 20 30 40

Exhibit 15 | Future growth drivers expected to be across domestic
and exports
What would be the key demand-side driver for manufacturing growth in India for the next 5 years?

60
2012
2013
2014
40
56%
51% 50%
43%
20 40% 41%
9% 7%
3%
0
Domestic Both Domestic and Exports Exports
Exhibit 16 | Over 90% of sector leaders aspire to take India's

share of world exports from 1.6% to more than 2.5%
What would be your aspiration for India's share in global exports in 2020 (currently 1.6%)?
Survey Responses (in %) 3.5% 3.6%

40
34% >90%
30
23% 23%
20% 20% 20%
20 19%
16%
13%
10%
10
3%
0%
0
1-5-2% 2-2.5% 2.5-3% 3-4% 4-5% >5%
Note: 1.6% represents India's share of global merchandise exports in 2014

Exhibit 17 | Higher export aspiration across Asia, Middle East,
Africa and Latin America
What is your share/ your target share of revenue coming from following geographies?
Average share of revenue (%)

8
+2.0%
+2.4% +1.7%
+2.7% +3.0%
6
+2.6%
+2.6%
+1.7%
+1.6% +2.0%
4
6.9%
6.1% 5.8% 6.1%
5.7%
5.2% 5.0% 4.8%
4.3% 4.4%
2 3.9% 3.8%
3.7%
3.0% 2.8% 2.7%
2.6% 2.3% 2.4%
1.9%
0
South South Asia China Middle East Africa Latin Eastern US Western Other
East Asia America Europe Europe
Current 5 year target xx% : Below 2% xx% : Above 2.1%
Exhibit 18 | China and South East Asian countries seen as the

biggest competitors for India in export markets
Which countries will be our biggest competitors in the export markets, between now and 2020?
(select top 3)

40
60%
35%
30
26%
20
13%
10
7% 7%
5%
3%
2%
1%
0%
0
China South Latin East European South USA Middle Africa Others
East Asian American European countries Asian East
countries countries countries countries

Exhibit 19 | Increasing impact of digital and technology trends in
manufacturing sector
Do you see an in increasing impact of digital / technology trends in manufacturing sector?

100
86%
80
60
40
20
13%
1%
0
Yes Somewhat No
Exhibit 20 | Digital advancement to impact manufacturing more

than market-oriented activities
How does digital/ technology impact manufacturing industry the most? (Select top 3 choices)

70
158%
60
138%
50 120%
103% 103%
40
30 68%
63%
20
33%
10
3%
0
Increase Enable real Improve Reduce new Optimize Enable real Foster Optimize Other
productivity time product product product time demand innovation pricing
manufacturing quality development delivery management
and stock life-cycle
management
Market-oriented activities Factory oriented activities Mixed activities (market and factory)

Exhibit 21 | Auto, electrical & electronics machinery and medical
equipment expected to be the most impacted by digital trend
In what areas do you see the impact of digital/ technology trends the most? (select at least 2 choices)

30
27%
21%
20
16%
10 9%
9%
7%
4%
3%
2% 2% 1%
0
Automobiles Electrical Medical, Food Chemicals Textile, Metal Rubber & Non- Basic Other
and and optical and products apparel, products petroleum metallic metals
transport electronics precision leather products
equipment machinery equipments
Agenda

Exhibit 22 | Industry views both policy as well as implementation
reforms as key drivers for growth
What is the magnitude of change required in policy conceptualization and implementation to

support manufacturing growth in India?

100
84%
80
60
40
20
12%
2% 2%
0
Significant change Significant change in Significant change in Minimal change across
in conceptualization implementation conceptualization conceptualization &
& implementation implementation
Exhibit 23 | Polity and ability of PM / central vision to be

translated into right policies seen as key challenges
What do you foresee as the biggest challenge for manufacturing growth in India over the next five years?
(select top 2)
Restrictive Regulations 33% Unstable polity 73%

Lack of translation of central
vision into the right policies 53%
Unstable Polity 20%
Low/ no innovation 40%
Infrastructural Constraints 16%
Rising labor costs 29%
Raising Labor Costs 10% Infrastructure constraints 24%
High Cost of Capital 8% Currency fluctuations 21%
High cost of capital 22%

Currency Fluctuations 7%
Instability of bureaucracy
21%
to implement industry-friendl
Demand Slowdown 5%
Demand slowdown 9%
Manufacturing Over Capacity 1% Manufacturing over capacity 5%
0 10 20 30 40 0 20 40 60 80
2013 CEO survey responses 2014 CEO survey responses
Note: Other challenges listed include availability of skilled manpower labor reforms, labor availability , skill shortage, competition from low cost countries like China and Vietnam, global economic and political
uncertainty, higher taxes and duties, lack of comprehensive, consistent and stable policy framework, no real cost competitiveness due to energy, taxes, freight transaction, taxes, ...

Exhibit 24 | Strong confidence in the "Make in India" campaign
How confident are you in the ability of the "Make in India" campaign to becoming a reality?

50
40
30
49%
44%
20
10
6%
0
Highly confident Somewhat confident Not confident
Exhibit 26 | Infrastructure, labor reforms and support to industry

seen as top three priorities
What are the top requirements towards making "Make in India" a reality? (rank top 2)
State-of-art infrastructure to support manufacturing 18%
Driving labour reforms 15%

Changing manufacturing policies around incentives and
support (e.g. tax incentives) to industry 12%
Political stability 9%
Aggressively marketing/ re-branding Indian
manufacturing image in international scene 9%
Deeper linkage and coordination between central and
state departments 9%
Incentivized high-tech imports and R&D investment 8%
Reducing burden of compliance 8%
Concerted help to SME sector to drive innovation 6%
Incentives 5%
Others 2%
0 10 20 30 40 50 60

Appendix – Respondent profiles
Exhibit 27 | Respondents spread across all industries including

diversified businesses
Please specify the (major) sector of operation for your company

30 29%
Includes construction
equipment, gems and
21% jewellery plastics, ...
20
12%
10 9%
8%
6%
5%
4%
3%
2%
1% 1%
0
Automobiles Other Diversified Non- Metal Chemicals Basic Electrical Rubber & Textile, Food Not filled
and businesses metallic products (includes metals and petroleum apparel, products
transport products pharmaceuticals) electronics leather
equipment machinery

Exhibit 28 | Most respondents having a global footprint while
manufacturing only in India
Please specify your company's footprint (Indian / global)

50
45%
40
30
21%
20 18%
11%
10
0
Sales in India, Sales in India, manufacturing Sales in multiple countries, Other
manufacturing in India in multiple countries (incl manufacturing only in India
Exhibit 29 | Respondents across various company sizes with

majority from businesses of more than 1,000 Crores revenue
What is the size of your company's India operations? (in terms of annual turnover in Rs. Cr.)

70 69%
13%
10 9%
5 4%
3% 3%
0
<100 Crores 100 - 200 Crores 200 - 500 Crores 500 - 1000 Crores >1000 Crores Not filled

NOTE TO THE READER
Acknowledgements Mr Umesh Asaikar Mr K Vaidyanathan

We would also like to thank all 102 Executive Director, Deepak Nitrite COO, HEG Limited
respondents to the CII-BCG Limited
Mr Pankaj Munjal
Manufacturing Leadership Survey
Mr Pramod Kumar Agrawal Co-Chairman & Managing Director,
2014 for their valuable inputs
Chairman, Derewala industries Hero Cycles Limited
including:
Limited
Mr N K Ramaswamy
Mr Anuj Bhagwati Mr Satish Mehta CEO, Hydro S&S Industries Limited
Director, A.T.E. Private Limited Chief Executive Officer, Emcure
Mr Sarangarajan
Pharamaceuticals Limited
Mr K. Sundar Vice President, Hyundai Motor
Executive Director, ABI showatech Mr K Srinivasan India
India Limited Managing Director, Emerald Jewel
Mr Sunil Duggal
Industry India Limited
Mr M.L.S. Rao Dy. CEO, HZL
Director & Chief Executive, Addison Mr Blaise Costabir
Mr Vilas Kamat
& Co Limited Managing Director, GMI Zarhak
General Manager, IFB Industries
Moulders Private Limited
Mr Rajiv Dube Limited
Director, Aditya Birla Group Mr A. K. Pandey
Mr Bhagwandas Bhojwani
Chief Strategy Officer - Airports,
Mr M. R. Shankar Managing Director & CEO, Imerys
GMR Group
Head of Purchase, Akzo Nobel India Minerals India Pvt Limited
Limited Mr Anil Lingayat
Ms Kalpana Suryavanshi
Executive Vice President &
Mr Rajiv Rajgopal Executive Secretary to Chairman,
Business Head, Godrej & Boyce
Director, Decorative Paints, Akzo Indiana Gratings Pvt. Limited
Mfg. Co. Limited
Nobel India Limited
Mr K. L. Dhingra
Mr D. E. Byramjee,
Mr Rajive Saharia Chairman & Managing Director, ITI
COO, Godrej & Boyce Mfg. Co.
President, Trucks, Ashok Leyland Limited
Limited
Limited
Mr Bagavathy Appan
Mr K G Shukla
Mr Kawaldeep Sahni EVice President - India Operations,
Executive Director & President,
Sr Vice President, Bhushan Steel JCB India Limited
Godrej & Boyce Mfg. Co. Limited
Limited
Mr Subir Chowdhury
Mr P.D. Lam
Mr Prasad BXV Vice President — Procurement, JCB
Associate Vice President, Godrej &
Senior Vice President, Biocon India Limited
Boyce Mfg. Co. Limited
Limited
Mr Rohit Raina
Mr Rajesh Alreja
Mr K Srinivasan Head Corporate Affairs, Jindal
Business Head & EVice President
Managing Director, Carborundum Stainless Limited
for MHE division, Godrej & Boyce
Universal Limited Mfg. Co. Limited Mr P. K. Murugan
Mr C K Ranganathan Senior Vice President, JSW Steel
Mr Channabasappa Mugali
Chairman & Managing Director, Limited
Manager Business planning, Harita
Cavinkare Pvt. Limited Fehrer Limited Mr Anil Gupta
Mr Ajay S. Shriram Chairman, Kei industries Limited
Mr Rajendra S Shah
CFO, DCM Shriram Limited Chairman, Harsha Engineers Mr Aniket Kulkarni
Limited General Manager, Kirloskar
Mr Jitendra Kumar Jain Brothers Limited
Chairman & Sr. Managing Director, Mr Arun Sureka
DCM Shriram Limited Director, Hartex Rubber Pvt Limited

Mr Sanjay Kirloskar Mr P S Rao, President Mr Indra Kumar
Managing Director, Kirloskar Rane brake lining Limited Global Program Manager, Timken
Brothers Limited
Mr Rajesh Sarada Mr Jun Shimoda
Mr Antony Cherukara A Vice President, Reliance Managing cordinator, Toyota
Vice President, Kirloskar Oil CementCompany Pvt Limited Kirloskar Motor
Engines Limited
Mr Sukumar Narasimhan Mr Naveen Soni
Mr Rajit Gosh S Vice President, Reliance Vice President, Toyota Kirloskar
A Vice President, KOEL Industries Limited Motor Pvt Limited
Mr Koji Tsuyuguchi Mr Toshihiko Sano Mr P. B. Panda
Corporate Officer, Indian Business CEO & Managing Director, Renault E Vice President, TRL Krosaki
Development Dept, Krosaki Harima Nissan Automotive India Pvt Refractories Limited
Corporattion Limited,
Mr P. K Naik
Mr N V Venkatasubramanian Mr Dilip Sawhney Vice President, TRL Krosaki
Chief Executive, L&T Valves Limited MD — India, Rockwell Automation Refractories Limited
Mr Shivesh K Sinha Mr Harsh Goenka Mr Sharad Kumar Sharma
Chairman, Lafarge Mining Chairman, RPG Enterprises Vice President, TRL Krosaki
Refractories Limited
Mr R Rajendran Mr Shankar Krishnan
Director Finance, Lakshmi machine Group head - strategy, shapoorji Mr Soumyadip Roy
works Limited pallonji group COO, TRL Krosaki Refractories
Limited
Mr Rajesh Jejurikar, Mr Ajay K Dixit
Chief Executive - Farm Equipment CEO Energy Management, Siemens Mr Prabir Ray
& Two Wheeler Division & Member Limited, India Executive President, UltraTech
of the Grouip Executive Board, Cement
Mr Rajeev Budhiraja
Mahindra & Mahindra Limited
Vice President, SMIPL Mr Rajesh R Gandhi
Mr Galla Vijay Naidu CMD, Vadilal Industries Limited
Mr Sunder Rajan
CEO, Mangal Industries Limited
President, Sona Koyo Steering Mr B. Srinivas
Mr. M. M. Singh Systems Limited Senior vice president, VE
Chief Mentor, Maruti Suzuki India commercial vehicles Limited
Mr Ashish Bharatram
Limited
Managing Director, SRF Limited Ms G Saroja Vivekanand
Mr Pankaj Jhunjhunwala Managing Director, Visaka
Mr P Ramnath
Managing Director, Maxim Industries Limited
CEO, Sterlite Copper
Infrastructure & Real Estate Pvt.
Mr Rajan Shringarpure
Limited Mr Ranaveer Sinha
Managing Director, Vishay
Managing Director, Tata Hitachi
Mr Suresh Kumar Poddar Components India Pvt. Limited
Construction Machinery Co. Limited
Chairman & MD, Mayur Uniquoters
Mr A M Muralidharan
Limited Mr Avinash Gupta
Chief Operating Officer- Domestic
Head Spare Parts and Aggregates,
Mr Arun Malhotra Projects Group, Voltas Limited
Tata Motors Limited
Finance Head, Nagata India Private
Mr M. Gopikrishana
Limtied Mr Girish Wagh
President, Voltas Limited
Sr. Vice President PPPM-PVBU, Tata
Mr C K Birla
Motors Limited Mr V. Thiagarajan
Chairman, National Engineering
General Manager (TQM & Six
Industries Limited Mr Rino Raj
Sigma), Wabco India Limited
Vice President, Tata Sons
Mr Frederic Fabre / Shashikant
Vaidyanathan Mr Abraham G Stephanos
India-Pacific Regional Manager, Managing Director, Tata Steel
PCA Motors Private Limited Processing And Distribution
Limited
Mr Vikram Pandit
Executive Vice President, Praj Mr Tarun Daga
Industries Limited Managing Director, The Tinplate
Company Of India Limited
Mr Ashok Wadhawan
Group President, Punj Lloyd Group Mr Ashish Vaishnav
General Manager, Cooling SBU,
Thermax Limited

© The Boston Consulting Group, Inc. 2014. All rights reserved.
For information or permission to reprint, please contact BCG at:

Email: bcg-info@bcg.com
Fax: +91 226749 7001, attention BCG/Permissions
Mail: BCG/Permissions
The Boston Consulting Group (India) Private Limited
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For information or permission to reprint, please contact Confederation of Indian Industry at:
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Confederation of Indian Industry

CII 13th Manufacturing Summit 2014

Survey focused on three dimensions

Perspectives on manufacturing sector performance

Vision for Indian manufacturing

Perspectives on realizing the "Make in India" vision

The Boston Consulting Group • Confederation of Indian Industry | 1

Perspectives on manufacturing sector performance

Vision for Indian manufacturing

Perspectives on realizing the "Make in India" vision

Exhibit 1 | Recent slowdown adversely impacting the sector

Over the last five years Over the last year

39% 5.1% 7.1%

2 | CII-BCG Manufacturing Leadership Survey 2014

Over the last five years Over the last year

Exhibit 3 | Compared to last year, sector leaders more positive

In your sector? (in % change) In your company? (in % change)

Survey Responses (in %) Survey Responses (in %)

The Boston Consulting Group • Confederation of Indian Industry | 3

Share of respondents (%)

Exhibit 5 | Share of international revenues estimated to be low

What is your share of revenue coming from following geographies?

Average share of revenue (%)

4 | CII-BCG Manufacturing Leadership Survey 2014

Product innovation Process innovation1

Survey Responses (in %) Survey Responses (in %)

Exhibit 7 | Divided verdict in ease of attracting talent

Survey Responses (in %)

43% ~40% respondents do not agree that

The Boston Consulting Group • Confederation of Indian Industry | 5

Survey Responses (in %)

Exhibit 9 | Most companies will increase focus on R&D and talent

R&D Talent intake and development

Survey Responses (in %) Survey Responses (in %)

6 | CII-BCG Manufacturing Leadership Survey 2014

Perspectives on manufacturing sector performance

Vision for Indian manufacturing

Perspectives on realizing the "Make in India" vision

Exhibit 10 | Most leaders want India to grow at 9%+

Survey Responses (in%)

The Boston Consulting Group • Confederation of Indian Industry | 7

Survey Responses (in %)

Exhibit 12 | Engineering talent & SMEs still seen as top two

What do you believe is the biggest competitive advantage

CEO survey responses 2013 CEO survey responses 2014

Surplus and quality

Frugal engineering approach

17% Low-cost labor 14%

10% Process capability/ quality 13%

10% Sufficient natural resources 9%

Survey Responses (in %) Survey Responses (in %)

8 | CII-BCG Manufacturing Leadership Survey 2014

Which of the competitive advantages is not sustainable / at

CEO survey responses 2013 CEO survey responses 2014

30% Low-cost labor 31%

13% Quality engineering talent 15%

17% Natural resources 14%

13% Technology 12%

Survey Responses (in %) Survey Responses (in %)

Exhibit 14 | Various ambitions for India manufacturing, led by a

What would you like Indian manufacturing to be known for by 2020?

'Most preferred country for top-quality

'Most preferred country for low-cost manufacturing'

'Global leader in low-cost innovation ( jugaad)' 19%