Manufacturers in dire need of help
It wasn’t very surprising on Raksha Bandhan to see the streets flooded with rakhis made in China; after all, between January and June 2013, India’s imports from China were a mind-boggling $24.70 billion, whereas exports to China were a mere $5.42 billion.
What is so difficult about making rakhis here? All ideation takes place here, and production is in China only because there is capacitiy there. Why can’t we have the same facilities in this country?
The answer to this is important as it would prise open the conundrum of what’s wrong with India’s manufacturing sector. For instance, if India has to balance its trade with China, it has to export goods worth $18 billion. Where will this come from when India’s manufacturing sector is a pygmy compared to China’s. Commerce minister Anand Sharma, who met his Chinese counterpart in Brunei recently, sought Chinese investment in the National Manufacturing Investment Zones. It is said China showed special interest in infrastructure, power and capital goods manufacturing. It will be good if China goes ahead with this because it is capable of building on a scale that is needed for exports. The Chinese already dominate India’s power equipment sector, driving heavy industries minister Praful Patel to demand that equipment for mega power plants should be sourced from domestic producers. User industries swear by Chinese products as these are cheaper and are delivered on time, something for which Indian manufacturers cannot be depended upon. They are up in arms against Mr Patel’s demand, and Mr Sharma will have to sort this out with Mr Patel.
The government is doing cartwheels trying to tackle the import problem by resorting to half-hearted measures like imposing import duty on plasma TVs brought in by air passengers. While this will help domestic TV makers, the more prudent and farsighted step that must be taken simultaneously is to increase manufacturing of the items that are being imported. Various ministers, including the one in charge of medium and small scale industries, should sit with leading industry associations in this sector, that forms the backbone of exports and manufacturing, and ascertain how to meet the demands of our aspirational classes, who find imported goods better than domestic products.
It is not that Indian businessmen don’t have money or don’t want to invest. There is plenty of money but few places to invest, with so many projects not taking off or getting delayed for want of various permissions.
So while the housewife invests in gold, one of India’s top industrialists, Kumar Mangalam Birla, head of the Birla group, is reportedly planning a $1 billion investment in the chemical business in the United States, where it is much easier to do business.
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