Woes of Indian Manufacturing Sector

It has been found through research that Indian Manufacturing Sector is performing about 15% below its potential. I think this figure should be much higher in terms of potential not being utilised. A few aspects come to my observation with minimal reading and the narrow observation limits available to me.

The first aspect is that technology has hardly developed in India. If I go by the figure shared by the Deputy Controller of Patents in India (during a training), out of about 2,000,000 patents registered in India, only 60,000 patents have been registered by Indians. This may point to the fact that Indians do not believe in registering patents. However, on the surface it is also clear that not too many path-breaking products have been developed in India. India seems happy to be importing technology from the western countries and applying them to Indian conditions. The tragedy has been that Indians do not even tailor these imported technologies to be suitable for the Indian environment. This results in improper application of whatever technology is available to us and thus provides for no improvement in the manufacturing sector.

Where technology has been built for India by other countries like Russia or Germany, etc, Indians have not passed on the needed knowledge and skills to the next generations of workers so that those technologies could be exploited effective for high production. The evidence can be seen in the Steel Plants built at Durgapur or Bhilai or Rourkela which are performing at sub-optimal levels. It is easy to blame the bureaucracy for this lack lustre situation. However, it is also a fact that we experienced in our working career that modern Indians do not part with knowledge in fear of loosing their importance in the work involved.

While it is a fact that education and education system is a concern in India, it is also a fact that where India has invested in educating the best of Indians, these Indians have not served the country. There are scores of Indians who have developed fantastic systems around the world working as a part of other economies. These graduates from premium institutions like IIT and IIM cannot be blamed for this exodus for 2 reasons. The first reason is that India structured its economic growth in the direction of developing India as a Service Hub. From this perspective, the Indian Government has promoted export of Man Power more than any other commodity in India. This trend continues in the most recent years where giants like Infosys are giving incentives to their best performers by giving them the opportunity to continue working in the western world. The second reason is that India lacks the infrastructure which can provide for comfortable living for its best brains. This could have been mitigated if the Indian Government could have devised a preferential treatment for the best brains within the limits of the available infrastructure.

Another important aspect is that most Indian companies focused purely on the service aspect of business. We have experienced that our company was most happy when any of us got sold to a project abroad. The companies could make more than 50 times the amount it would give to these people for each such assignment. This was shown as IT sector in India doing fantastic business. The reality was that we developed system abroad and gave away all the Intellectual Property Rights for these products. When teams came back to India with the needed knowledge and experience, they were provided no funds or opportunity for building products for those industries. Products for these industries in India were imported from abroad. These people were again sold to some other project to work as coolies to develop yet another system. If the manufacturing sector in India needs improving, it is very important to stop such practice. It is first of all important to promote Indians by providing needed funds and facilities to develop systems and technologies in India for India. Once these are ready, India will automatically find products to be exported besides seeing an improved manufacturing sector while will attract foreign buyers and investors.

The third aspect is that Indian education system creates “Jack of All Trades”. I found definite evidence of this while I was working in Thailand. We had little knowledge of many things; while the Thais has substantial knowledge of a few things. Even though we worked as a single team, it was clear that the Thais were more productive in spite of us Indians building the framework on which they developed their systems. I think it is very vital to focus people on certain aspects of technology so that they can gain mastery of the subject through experience.

Again, with the focus on being the service hub of the world, India is now creating a set of coolies who only have the ability to look up computer screens and read out results to the customers. Though the BPO segment may be producing foreign exchange, it will surely kill the manufacturing sector in the long run. Even if India needs focusing on this business, India could develop needed technologies for optimising such operations. Instead, the only optimisation method available seems to be to recruit people with lesser and lesser education levels to do this job so that cost could be further curtailed.


Image from Google Images
Image from Google Images

One comment

  1. I had an interesting experience during one of the visits to the KFC outlet in RT Nagar. The person told me that their machine for making the Crispy Chicken was out of order. He told me that the machine was imported from USA. He further explained that the machine frequently broke down during the summer; while it functioned efficiently during the winter.

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