Indra’s Drishtikona (Viewpoint)

Will it be India’s century?

Posted : November 4, 2004 at 6:09 am [IST]

Large talent pool: Indian institutes of management, medicine and engineering churn around 250,000 graduates every year. Overall India produces over 400,000 engineers per year , a close second to China’s 490,000. This is almost 25 times of Thailand’s 17,000. Additionally India produces 850,000 graduates every year and over 70,000 diploma holders.
English language has provided a competitive advantage. Low cost structure and time differences are other advantages.

India with China has one of the largest labour pools. Because of the sheer number and the gap between the supply and demand, the wage rates increase will be limited for over next 20 years. However, Indians will not like to remain with low cost of labour only. When domestic demands are scarce, they can migrate to any country for better livelihood. Recently reported offer by Uganda and Kenya to import Indian farmers from Andhra Pradesh to cultivate dry land that local Africans are unable to harvest, is an example of possibility and advantage of the available large young manpower. India can export its nurses, teachers, archeologists, masons and carpenters, models, beauticians, I don’t know what all.

High potential demand: India has a larger proportion of the population mix under the age of 15 as compared to major developed and developing countries. India’s own market in several sectors is only second in size only to China’s.
As per NCAER, the household mix is also changing. The number of middle class is increasing fast. By FY07, the consuming class will form around 46% of the country’s total households as compared to around 17% in FY95. Both these fundamental factors, in itself could lead to the emergence of a huge consumer base for the various products and services.

Emerging player in the commodity markets: India is already be ‘noticed’ in the global commodity markets for steel, aluminium and other metals, But its own huge source of raw materials. India is the third largest producer of cotton, accounting for 3% of world output. India has 5% of world iron ore deposits, whereas produces only 3% of world steel. It has 4% of bauxite deposits, but produces only 3% of the world’s aluminium. Tisco and Hindalco, both have capabilities to get into the first five big metal companies of the world, so are the Tata Motors and Mahindra and Mahindra in automobile.

Capital goods and tools: India has the basic capability to design and manufacture machinery, equipment, and tools that can help India to go competitive..

Huge number of quality private entrepreneurs: As of 2001-02, there were 1.05 crore units of SSIs in the country, of which 13.8 lakh units were registered. This shows the strength of the entrepreneurship of the people of the country. The private sector is very strong and of world class that is now expanding its wing worldwide by acquisitions and green field projects. Both public and private companies after many years are now investing abroad. The list is long. It includes ONGC, VSNL, IOC from public sector units and Tata Motors, TISCO, Tata Tea, reliance, Bharat Forge from private sector.

World class manufacturing management practices and managerial excellence: Indian companies have learnt the best of the practices from UK, USA and Japan. The number of companies following manufacturing cells practices, six sigma operations, and practices required for obtaining ISO, Din quality standards, Deming and TPM awards of Japan are considerably high. Auto components manufacturers are meeting world class quality standards. India has 75 FDA- approved plants in India that is the highest outside the US.

Competitive strength: India is well-positioned to emerge as one of the top two exporters among LCC (Low Cost Countries) in nine sectors- aluminium, apparel, auto components, iron and steel, jewellery, leather, pharmaceuticals, power transmission and distribution equipment, and specialty chemicals

India can also establish a top 3-5 position in many sectors such as textiles, computer hardware, consumer electronics, domestic appliances, fabricated metal products, industrial and medical electronic equipment, machinery, other basic metals, telecom equipment, motor vehicle assembly, engine and turbines, basic chemicals, paper and related products, petroleum and coal products, footwear, plastic products, and storage media, and may be in some more items of manufacture. .

Crude oil India now find place amongst the fastest growing consumers of crude oil.
As per the ‘BP Statistical Review of World Energy (June 2004)’, the consumption growth of crude oil in India is among the fastest in the world. More importantly, the share of India’s consumption in world consumption has increased from 1.8% in 1990 to 3.1% in 2003. Along with China India is having the second highest growth in oil consumption. While China’s oil consumption grew by 162% between 1990 -2003, Indian growth was 100.3% against overall world’s growth of 17.9%.

Indian Diaspora: Indian NRIs are doing marvelously well in universities, industries and organizations abroad wherever they are as entrepreneurs, as researchers, as professors or managers. Recent story of LN Mittal becoming the largest producer of steel in world is one such example.

Tourism and Hospitality sector: Both the sectors have remained totally untapped. The potential of tourism sector is huge. With innovative approach of government and involvement of private sector, tourism can become a major industry employing millions of its young people in different services. India can easily attract 20-30 million foreign tourists a year.

And some indicators: The presence of 24 smaller sized Indian companies among the top 100 in the latest Forbes’ list of ‘Asia’a Rising Companies’ shows the morning of a god day. In the list India is second only to the UK and way ahead of Germany, Japan, China, Italy and France.

India will be a prominent player in the global economy. However, many things are to be improved. Infrastructure of roads, ports, power, telecom must become world class. Man made administrative hurdles and red tapes must go. Labour productivity must be allowed to grow near world level. All that will be necessary for a country moving towards strong and sustainable growth to get a palce in super power club and a nation that becomes recognized and respected globally.

This century could indeed be India’s!

- Indra

Category: Industry/Management |