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India:

set to become world's manufacturing hub in 5-10 years

India, with its world-class production facilities and a rapidly changing business environment, could become a manufacturing powerhouse within five to 10 years, according to a study conducted by The Boston Consulting Group and the online journal of Wharton, Knowledge@Wharton.

While the advent of the information technology revolution and business process outsourcing turned the service sector in India red hot, poor infrastructure, bureaucratic red tape and restrictive labour laws have for long kept the country's manufacturing sector at the back, say the study by the consultants group and the noted US business school.

The vast emerging markets, relative low labour costs and the availability of skills at cheaper rates have combined to make India a more attractive manufacturing destination as well, says the report, titled "What's Next for India: Beyond the Back Office.

Things are changing rapidly as more and more multinationals set up manufacturing operations in India, the report notes.

Ford, Hyundai and Suzuki all have made India their export base. They also source a major part of auto components within the country. While major electrical and electronic manufacturers like ABB, Schneider, Honeywell and Siemens have set up production facilities for domestic and export markets, mobile handset makers like LG, Motorola and Nokia are either making handsets in India or have plans to start production base in the country.

Meanwhile, many Indian firms have restructured their manufacturing operations and implemented world-class practices as the markets opened and competition increased. Indian companies, in fact, have built globally competitive manufacturing facilities in industries like pharmaceuticals, auto components, cars and motorcycles.

India's success is due mainly to its competitiveness in relatively high-end manufacturing and the huge engineering and scientific talent its universities churn out every year. It is only a matter of time that India converts its engineering prowess into manufacturing capabilities.

The potential is huge considering that India is in the midst of the most ambitious infrastructure upgrade in its history – better roads, ports, power and airports, which alone could sustain an eight per cent annual GDP growth in the country.

On top of it, India's failed power sector reforms and the successful telecom services could bring competitive investment opportunities in India.

Beyond the back office and the emerging manufacturing revolution there are superstars that lift India to a new value chain where knowledge, specialised expertise, judgment and discretion are the tools.

http://www.domain-b.com/scripts/recommend/recommend.aspFounded in 1963, The Boston Consulting Group with 61 offices in 36 countries helps companies, industries and markets achieve competitive advantage. Knowledge@Wharton is an online knowledge source set up by The Wharton School of the University of Pennsylvania.

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