India on its way to become manufacturing hub

India as WorldS Manufacturing Hub For long, Taiwan and mainland China consider been at the outsourcing manufacturing boom in Asia. So much so, that 80% of toys sold in the US argon made in China. But things are slowly working in favor of India. India is on its way to become a major contract manufacturing hub. in that respect is a huge opportunity In manufacturing waiting to be tapped. A overbold India Is transiting from a third world country position to a league of developed nations. It Is the worlds third-largest repository for foreign direct investment (FDA), after China and America. Goldman Sashs Report (Brazil, Russia,India, and China BRICE major players), projects India as a probable winner ahead of China and would overtake U. S. A. And China by 2025 in terms of Real GAP. India- Past & Present The asss, asss and ear asss There was dominance of commonplace Sector across manufacture. The market was mainly governed by sellers with limited competition. There existed closed Economy with negligible presence of multinationals. GAP growth was below 4% (Hindu rate of growth) and primarily agriculture mingyd. India post 1991 and counting 100% FDA in most heavenss has seen Pepsi, Coke, Shell, Ford, GM.Suzuki.. Toyota, Ames, Citibank, GE, Microsoft, Pfizer, Innovation, ASK, Merck operation in India (availability of world class products). A new India is transiting from a third world country status too league of developed nations. Current Scenario Indians manufacturing sector Is gaining momentum and has been ranked fourth In terms of textiles, one-tenth in leather and leather products etc. Government of India, to promote exports and make India a manufacturing hub, has taken various initiatives including the tuition of Special Economic Zones.Major international companies have already invested in India to name a few like Samsung, LAG, Suzuki, Soda Auto, Philips re among the some who have already invested and most of the global giants have stated the proces s to enter In India STRENGTH The country has become a manufacturing outsourcing destination because of cheap bray, talented and knowledgeable workforce, supportive governmental policies, improved timber control measures, world-class technology and consistent economic growth. The most promising sectors for India are auto components, pharmaceuticals, electronic hardware, apparel, foot ware, toys and specially chemicals.Cost of employing engineers essential to manufacturing services is en-third to twenty percent lower in India than in industrialized nations such as the UK and the US There is adequate availability of manpower and skills. WEAKNESS India is growing by leaps and bounds but there is a major problem of unemployment. There is an immediate extremity to generate 10 million Jobs per year. And above all, due to multi party rule, India need to accommodate political ideology with economic reality (stockpile, labor law reforms). Growth has been urban centric.Rigidity in labor laws is also contributing to higher detonating device intensive. Population increase of about 100 million in last 5 years, which has seen about 50 lion new Jobs, is more often than not in the unacknowledged sector. Transaction costs are high due to capacity constraints at ports resulting in delays. Opportunities India has become a growth destination for several global companies. Organizations are becoming increasingly warring on the efficiency and flexibility of their supply chains and not merely on their product features and quality.They have realized that creation technology driven and updated is the key to compete in the global market. Fastest growing sectors Automotive The Indian automobile sector currently generates revenues of $34 trillion a year Auto sector could grow to $145 jillion by 2016. India has gradually become a sourcing hub for auto companies worldwide. Among the companies outsourcing from India are General Motors, Ford, Daimler Chrysler, Handy, Fiat, Toyota, Delphi, Invariants, Visited, Cummins and Caterpillar.Healthcare & drugstore Indians Pharmacy market ranks 4th in the world in volume and 13th in domestic consumption value. Indian pharmacy market estimated at US$ 3. 8 billion ranks 12th in value terms and accounts for around 1% of the global market. Expected to grow at 12-14% p. A. , as against the global average of 6-8%. At the current pace of growth, IIS$ 2 billion industry by 2012. Construction The Indian construction industry grew by 5. 5 % to constitute a value of $35 billion in 2006. The sector will continue to grow at a CARR of 6. 5% to reach $38 billion by 20011 representing an increase of 35. % since 2004. India accounts for 4. 7% of the Asia- Pacific construction and engine room market. Retail Indian sell industry ranked second most attractive retail destination by AT Carney. The total domestic retail market is currently estimated to be over IIS$ 330 billion and is growing at a rate of 4-6 % in real terms. Organized s ector accounts for Just 2 % of he market (I. E. IIS$ 4 billion)- expected to grow four-fold to IIS$ 15 billion by 2012. There are 12 million retail outlets in India out of which 9 lack are in the organized sector.Computer hardware The rapid growth of software system exports has attracted thousands of people into the industry and has stimulated the lease for computers. Sales of personal computers rose by 20% in 2004-05, to MN. Import liberations and the entry of foreign manufacturers has transformed this industry, which, until flipper years ago, was tiny and dominated by a few Indian manufacturers. The ease of importing components as nurtured hundreds of unbranded assemblers, which command 62% of the market. Biotechnology enormous potential from large base of skilled technical personal and the lower costs.Number of biotechnology firms in India has increased exponentially over the years. Developing biotech based cure products takes 10-15 years and costs $ 500 million to $1 billio n. Similar product development cost in India is $ 250 million or even lower. Opportunity for new investments is estimated to be in the $ 1. 5 to $ 2 billion range. Food processing India One of the largest food producers of the world. Output of the organized segment IIS$ 34,827 million. Marine and Spices together change more than 70% of export earnings. Investment requirement is around IIS$ 15 billion.The Indian scientific and research talent a knowledge source that flock be tapped for advantage. Steel India produced 31. Mm tones of crude steel in 2004-05, making it one of the ten largest steel producers in the world. Landscapes demand from China as wholesome as strong domestic demand, particularly by consumer -durables and automotive manufacturers and the construction sector are the key drivers of production growth. Around 40% of output is produced in integrated steel plants the remaining comes from mint-plants, of which over 180 exist, almost all in the private sector.Light E ngineering The size of Indian Light Engineering industry is estimated at US $ 7 billion. In India, the light engineering industry has a diverse industrial base with significant unrecognized market. The exports from the light engineering industry in India mainly consists of structured steel products motorcycles, cycles and auto components machine tools fans, filters and pumps and metal machine tool parts. The products veered under the engineering industry are largely used as input to the capital goods industry. Textiles Textiles account for around one -fifth of total export earnings.Because the government discriminated for decades against integrated textile mills, with the aim of helping cottage handloom, most mills closed down. Production in the textile industry is based on a decentralized system with continuing small-scale reservation for many items. The industry has a natural competitive advantage in terms of a strong and large multi-fiber base, abundant cheap skilled labor and pr esence cross the entire value chain of the industry ranging from spinning and weaving to the final manufacture of garments. Threat India faces competition from other developing countries, particularly China.Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world. Presence of Quota system leads to rigidity in Export Demand. International labor and Environmental Laws do not strike trade-off between demand and supply. Power crises and the virtuous growth cycling manufacturing sector needs immediate attention. Large informal sector, poor irking condition and low wages pose equal threat to the growth of economy in India. cellular inclusion of social (Labor) issues in trade dialogues generally found in exports (e. G. Child labor). High corruption and inadequate environmental safety norms affect sustainability. INDIANS PROSPECTS The nations who are competitive with India are facing some or the other predicaments. Brazil is uncomfortable with force inflows and so has given its manufacturing base. Its reluctance was evident in the imposition of a 2 per cent transaction tax on capital flows. Russia is a basket case and unless oil recovers to tuning heights, internal demand is unlikely to resurface any time soon hence, it has very little potential to attract firms to set up shop.China is not a trusted partner investors have learnt that China makes it easy to get in but difficult to operate. The lack of protection of hard-earned PR is a major issue in China. Restrictions on borrowing from local banks for working capital can also work as a disadvantage. Reason for optimism of the world towards Indian market Large intellectual capital base Annual additions to the stock of science and engineering graduates Demand side Expanding domestic market Total number of households to increase from 188. 2 million in 2001-02 to 221. cardinal by 2009-10 Benefits to Indian people due to the changing industrial scenario Enterprises In Wealth Creation Government In Revenue And Employment Employees In learning And Increase In Standard Of Living Customers Value For Money (Choice, Affordability And Speed) From an Indian industry perspective, the emerging situation may drive three trends. Within the future(a) year or two, India should witness growth in demand and hence capacity in manufacturing. The driver will be higher internal demand and, in a short while, the needs of customers overseas.In three or five years, India will have to develop contract manufacturing skills. A supplier must be able to make the components he or she is good at, source components and parts, assemble and test to deliver directly to the manufacturer. This cannot happen in China as the dependableness of many firms, except those that have moved with their partners form Singapore or Malaysia, is suspect. In the long term, Indian manufacturers will have to develop and build, design and development partnerships. Many entrepreneurs are consider ing investments in small power plants to beat the lack of electricity.