MANUFACTURING CHALLENGES FOR THE EMERGENT INDIA

Introduction Manufacturing industry plays a vital role in growth of any country. Manufacturing industry also affects everybody¶s life directly or indirectly as any article anybody possesses or use in routine is the product of raw material which has gone through various manufacturing processes. The articles used by common people may be as small as nail to as big as the transport vehicles. In this sense, manufacturing industry satisfies the material needs of human. Therefore it is important to have healthy and vibrant manufacturing sector for welfare and overall progress of the country. For a long time after independence, India¶s economic progress was stagnant. The economic reforms started in 1991 played an important role in improving India¶s economy. The Gross Domestic Product (GDP) in India expanded 7.7 per cent in the second quarter of 2011 over the previous quarter.

Now India is emerging as a global economic superpower. But India¶s economic progress till date is largely due to the good role performed by the service sector. At the global level India is very competitive in the service sector. The role of manufacturing industries in India¶s growth story has been limited so far. This situation is now improving due to emergence of some large companies in manufacturing sector that have vision and talent to compete and rise at local as well as the global level. Many core manufacturing companies in India has established their plants overseas. At the same time, many foreign companies are also institutionalizing their plants in India. Growth of Indian manufacturing sector during the quarter ended on March 31,2011 was 5.1% against 7.2% of the world and same during the quarter ended on June 30,2011 was below 5% against 5.2% of the world according to report on µWorld Manufacturing Production¶ Quarter 1, 2011¶ and µQuarter 2,2011¶ respectively by UN Industrial Development Organisation(UNIDO). Indian manufacturing sector showed moderate overall business sentiment in Jan-March 2011 quarter, as per Industrial outlook survey conducted by RBI for the quarter.

The land has to be bought from the state and central governments. so the useful area of land at proper locations for manufacturing plants is very limited. 2.But there are more challenges than opportunities before the manufacturing industries in India. The Tata Motors had to face major loss of time and money in the process of shifting their original plant due to agitation. The example cited above is just the beginning and manufacturing industries may have to face many challenges of this type in the near future. Tata Motors had to leave their original plant of Tata Nano in Singur. Though some of the formalities are important and required to some extent. importantly China. . in India. Government Policies and Taxation To establish a plant. The big players in industry can easily get away with these things but small scale and medium scale manufacturing industries have to face problems. India due to the protest of original land users and local people against them. forests. India is still the economy where risks are higher and have problematic business environment than any other Asian countries. Manufacturing units require good amount of area of land for the workshops. West Bengal. According to the analysts. Tata Motors¶ experience in recent past is the best example of this challenge. So the whole procedure wastes not only money. but also the time. Land Land is the most important resource. numbers of permissions have to be taken from various government departments at different levels of government. India is a very big market for consumer goods and has ability to outperform in manufacturing sector in the near future . Acquisition of land for the expansion of the existing unit and establishment of new unit is the major challenge for any industry. non-agriculture use and waste land respectively. 7% and 23% of the total land is shared by agriculture. As we look at the land distribution of India-47%. Challenging factors for manufacturing industry: 1. Even in non-agriculture use of land. Licencing is not a major issue now as it was before 1991. The licences issued have to be renewed time to time and this also follows the same experience.By looking at the above data. They are not much helpful and people seeking the permissions have to face harassment sometimes.But there are still many formalities that have to be fulfilled before starting an industry or plant. Many people remain dark as to what licences required and what the different requirements are of different government departments. India¶s manufacturing sector is still behind world¶s average performance level. This process is quite complex and take so many days. realty sector has huge amount of share. 23%. But the major challenge now days the industry facing is the protest by the local people and the original land owners from which government takes the land and sells to the industry. This is not the good sign for manufacturing industry. one has to take various licences from the government under the laws. The major problem lies with the attitude of the government officials.

land or all of them.78% of global emission according to report of International Energy Agency.This situation is still there even after E-governance system has been implemented to make the procedures faster and more transparent. The only way to have a higher growth with available resources is to conserve them and minimize the wastages during their use. There are number of laws and policies regarding the safety measures in the plants. . it is required that their consumption of power remains in limit as the power plants throw huge amt. It may happen that implementing the safety measures in industry may take some time and money. It is the challenge for the industries to keep their workers and workplaces safe from any hazardous events. Income tax and custom & excise duty are set by central government. The various solutions to simplify the tax structure and its payment procedure are being considered by the government and this may help the industry to this challenge. In near future. land etc. Safe processes and safe people are must in the industry. Even the rates of the taxes differ from state to state. There is an immense pressure on India to reduce its carbon emission. water. These measures should be strictly followed in the industries and there should be awareness about safety measures among the workers and employees. various level of government levies their own taxes. In India. 3. but it is essential for accident free processes and work places. The processes going on in many manufacturing plants pollute the air. there would be immense demand of these resources. Environment and Safety Manufacturing industries use various types of natural resources like water. State governments and municipalities have their own taxes. particularly in case of indirect taxes. India is on the fourth rank in that list. These resources are very important and wastage of them in their usage is not desirable. of CO2 in the atmosphere. As India is focussing more than 8% of growth in GDP during the next decade. India¶s share of CO2 emission is 5. Though manufacturing units are not directly involved in the emission of CO2. Manufacturing industries should be able to use them at their optimum value. Sometimes these taxes overlap and create confusion. This can be the bigger challenge for the manufacturing industries in near future. it would be very difficult to cop up with the scarcity of these resources. It will not be available very easily. So to get away with the government work is one of the challenges that manufacturing industry is facing in emergent India. The pollution of these resources is very harmful and is the serious issue for overall health of environment. in a large amount. India¶s taxation system is complex. Global warming is the hottest topic around the globe and serious steps are being taken to prevent the harmful effects of it at national as well as global level. minerals. Accidents in the workplaces harms not only the persons but company also have to suffer from financial losses.

India lags behind in technological advancement in manufacturing processes therefore most of the processes are done manually. Technological capabilities can be best described in terms of three levels: the basic level involves the ability to operate and maintain a new production plant based on imported technology. theoretically there should not be any difficulty in fulfilling the requirements for any industry. There are chances that these differences may create dissatisfaction among the employees and may harm the work environment within an industry. Due to better opportunities in different companies. Each of them is required according to the need of the industry. Strike of workers in General Motors India¶s Halol plant (Gujarat) and Maruti Suzuki India Limited¶s Manesar plant (Haryana) are its recent examples. In India. Still industries are facing problems regarding human resource and its management. the intermediate level consists of the ability to duplicate and adapt the design for an . the workers have their unions which are protected under the labour laws. There are mainly following types of employees in manufacturing industry (1) Skilled workers (2) Engineers (3) Management and support staff (Including finance) (4) Unskilled labours. The dissatisfaction of workers ends in a strike. India is the country where people having different cultures and languages work together. 5. Human Resource Management The human resource is the biggest asset for any industry. The main challenge is to motivate the people working in industry. This situation arises frequently all over India and is becoming the major challenge for the management of manufacturing plant. To keep the harmony between employees and to take the advantage of different cultures to create healthy work environment can also be considered as the challenge. As the work in manufacturing plant is repetitive and very exhausting. One more problem being faced by industries is the loss of intellect and experience due to switching of the job by its engineers and managers. Most of the industries are facing problems with skilled and unskilled labour. To reduce the attrition rate of employees is becoming the headache for HRM of the companies. a lot of man-hours are wasted and production is stopped. the people get bored and tired. productivity and competitiveness of the industry.4. Technology Technology development is the critical in improving efficiency. So this issue becomes critical. As India is the country having very vast human resource. These laws are essential to protect them from being exploited but sometimes clashes with the management causes adverse effect. The climatic condition of India also causes laziness in the people. the new trend of switching of the jobs within manufacturing companies is getting pace in industry.

This is a huge backdrop for any manufacturing plant. But the area in Indian manufacturing sector lags behind is the innovation in product and process technology. the number of innovations from India are less in numbers. This is also the major challenge for emergent India. good transport facilities of roads. As India generates lower power than the demand. The rates of toll taxes are also higher. particularly for manufacturing unit of a single company. The trains also suffer from delayed journeys. To continue the chain of supply of raw material and machines to the plant and delivery of manufacturing goods to the customer at home or to overseas. Good infrastructure helps in improving efficiency of operations and quality of services of the industry. The power is supplied to them either by government electricity boards or the plants have their own powerplants to satisfy the needs. The power requirement of manufacturing plants is very high. In India. 6. Infrastructure Infrastructure is of prime importance for efficient running of any industry. This situation may become worse in the near future and industries will have to be prepared for this challenge. industries have to suffer a power cut at least once in a week. To have a high quality product with minimum cost. Though there are number of R&D activities are going on in the educational institutes as well as in industries. Both these results are harmful for any industry.imported plant while an advanced level involves a capability to undertake new designs and to develop new production systems and components. This situation is worse in some backward states where power generation is very low. The most of sectors of manufacturing industry lags in technological capabilities. Bad infrastructure adds to the overall cost and reduced quality of services. Delay in raw material supply may affect the production of goods and delay in delivery may be reflected in customer dissatisfaction. raw material may be considered as the components of infrastructure for the manufacturing industries. India is having good port . Transport facilities. So they have to rely on electricity boards for power. to have own power-plant is not feasible as it would cost much compared to the size and capacity of the plant. water. Some of the Indian companies have got mastery in duplication of technology and operating it very well. The technological dependence on foreign countries increases the cost of manufacturing and thus end user has to suffer in terms of product cost. Many of them are at basic level and have to depend entirely on imported technology. railway and seas are must. India do not have very good road network throughout the country. India¶s manufacturing sector has to focus to become self-sufficient in terms of technology. power.

The National Manufacturing Policy is much .facilities but the location of plants may not be near the ports. Lowering the cost of manufacturing and improving the quality of products for competitiveness is also the challenge for the manufacturing companies. Customer Satisfaction India¶s population provides the very huge domestic market for manufacturers of consumer goods. religion and castes that may have their own agenda. Inadequate transport infrastructure is the challenge for the manufacturing industries. consumer is said the king of market. Political instability at different level of government may affect the policy decision and in turn may affect the overall environment for the industries. In the market driven economy of India. Political Factors India is the federation of 29 states and 6 union territories. Satisfaction of consumers through low cost and high quality products should be the goal of any manufacturing industry. Such an environment is not good for industries. India is the country where still more than 25 crore people live below poverty line. Some of Indian companies have started emerging at global level also and their experience would definitely benefit at the national level. If the challenges are properly taken care India has tremendous power to overcome all the difficulties and to become a global giant in the manufacturing sector. India¶s government is also helping with improving its service to the industry. In recent past. Conclusion There are challenges ahead. There are number of political parties. Communal violence. 7. The industries will have to be prepared to face these challenges in the future. Manufacturing sector needs to access the vast market possibilities available at the bottom of the income pyramid of the country. 8. too. but at the same time there are opportunities. violence due to regionalism and strikes and blockages due to different political demands are frequent events that take place in different parts of India. dominance of single party in different states as well as at the central level has diminished. It is necessary for a company to identify all these various factors and should consider it while planning their operations and implementing different projects. The coalition government at central level and government of regional parties at state level is going to be the political situation in the future India and companies will have to cop up with all type of governments. There is a tremendous variety in the culture and language of the people of different regions. Each of them has their own government and there is a one central government.

United Nations Industrial Development Organisation (UNIDO). IV Year Department of Mechanical Engineering. UNIDO. Surat Chapter at SVNIT. Sardar Vallabhbhai National Institute of Technology.awaited hoping that it would play a roll of catalyst in the rapid growth of manufacturing industry benefiting the county¶s overall economy. References: (1) Manufacturing: New Challenges. universities and skills. May. 2005 (5) Manufacturing in India: Opportunities. U. 2008 (2) Report on World Manufacturing Production. Surat Members of IIIE. 2011 (4) Indian Manufacturing Industry: Technology Status and Prospects. New Opportunities.Tech. 2007 Authors: CATEGORY: Students (1) Parmar Tejas Dilipbhai (2) Tinkoo Mathur (3) Raval Himanshu Narendrakumar B.. Challenges and Myths. Quarter I. UNIDO. KPMG. Department for innovation. Quarter II. . 2011 (3) Report on World Manufacturing Production. September.K.

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