Crucial Decades Ahead [June 2012]

June 19, 2012 12:46 pm

“Demographically the next 30 years is supposed to be considered the next golden period for India similar to the one that took place in China 20 years ago”- T K Ramesh, CEO, Micromatic Machine Tools
The eastward driftThe manufacturing sector, as far as the metal cutting business which includes automotives, auto ancillaries, general engineering, transportation, and space is concerned contributes a small percentage in terms of units and value from the business point of view and global perspective. According to TK Ramesh, CEO, Micromatic Machine Tools, “The recent trend reveals the metal cutting manufacturing moving eastwards and the countries into play are China, India, Vietnam, Indonesia and Malaysia. The reason being high cost of manpower in the western countries. A look at the emerging markets even in the two-wheeler or four-wheeler segment is again taking an eastward turn due to availability of manpower”.
The general perception is that the performance is currently down in comparison to what it was a year or year and a half ago. Mr. Ramesh feels, “This is a temporary phase and post the second half of this year, a positive outlook is expected. From an outlook and need point of view, the market looks extremely good”. Emphasising further he said, “Will India get its due share and how much of its due share we will be able to get will largely depend on our thoughts, infrastructure and policy”.
Slow movement a concern“The Indian industry is moving in the right direction as far as achieving manufacturing excellence is concerned”, comments Mr. Ramesh. “With the right kind of investment being made, the right kind of emphasis on quality systems, training systems happening across organised sector, corporate sector, medium and small scale sectors, proves that the direction is right. The only concern though is the pace which seems to be a little slow. We need to put more emphasis and invest more money, doubling the speed would really help”.
He further added, “Large investments, policy impetus is required. The government and policy makers such as CII and other relevant bodies should take things seriously. If the government can concentrate on speedy infrastructure and then include manpower also as a part of infrastructure, then things will really change”.Land reforms requiredAvailability of land and speculative nature of land as a resource is not at all being utilised. “Our land reforms is highly speculative, if somebody wants to double its capacity, he simply cannot afford to do it in the city where the company is, forget Mumbai or Bangalore even if he is in a place like Hosur, Kolhapur or Belgaum, the cost is going up”, said Mr. Ramesh. “The only choice left therefore is people need to move interiors which is totally because of the cost perspective. The minute one starts going interiors then there is no optimisation because there is land issue, there is agriculture that needs to be made into industry”.
The sector has to do a lot of non-productive, non-manufacturing or non-core oriented kind of work even to get things off the ground. This is one factor. Less manpower in the interiors is another worry. Another situation is people live in cities need to move to interiors for work purpose where infrastructure in terms of education for people, workman and supervisors is lacking. “The single largest bottleneck seems to be in our handling of policy of infrastructure, the government or the public private enterprise should really concentrate largely on infrastructure creation, education, which is not good enough. So these are areas that needs lot of attention, leave alone optimising, first of all the fundamental policy direction itself is where a relook is required”, added Mr. Ramesh.
Expectations from 12th five year planMr. Ramesh does not expect much from the government. According to him, “From the industrial and manufacturing perspective, it is still more oriented to socialist kind of public sectors. From the competitive manufacturing point of view, the government should withdraw itself from the service and automotive manufacturing sector”.
For infrastructure development, the government may look at public private partnerships to develop industrial towns. The government could also play a major role in exotic manufacturing, space research etc. Additionally, they should look at comprehensive growth oriented research packages and incentives, better inputs for industrial R & D”, suggests Mr. Ramesh.
100 million jobs – A Necessity“This has to happen otherwise there would be chaos” feels Mr. Ramesh. “Demographically the next 30 years is supposed to be considered the next golden period for India similar to the one that took place in China 20 years ago. India is going to be having the largest population in the age group of 22 to 42 because more than 65 per cent is going to be employable youth and lack of 100 million jobs will only spell complete chaos”.
According to Mr. Ramesh, “The manufacturing sector in the country purely drives on MSMEs. So they must certainly look at promoting and making good policies. They need to bring in inputs on financial management, incubate industry for MSME. It’s a very important thing. The government should also concentrate on incubating tax and financial models and some kind of a quasi government. Further nurture MSME with finance marketing, these kinds of supports are required and third is look at creating lot of big public private partnerships, skill development and implementation through industry bodies but the government should set up the frameworks, monitor the framework and allow it to run by these industries for these industries”.Micromatic leads in machine tools“We are largely a machine tool manufacturing company. As a group we are the largest in India, the ACE Micromatic Group. Last year we closed our order with 1100 crore of machine tools and actually delivered 4000 machines in the last financial year and 70 per cent of what we do is directly or indirectly into transportation of the automotive sector. We add 20,000 jobs in the Indian manufacturing sector every year”. He further added, “From our own capacity expansion plans or our own targeting plans, we are pretty hopeful and are going ahead with an optimistic approach and are looking at 15 – 20 per cent growth”.
ConclusionThere was an IT boom era. Today a lot of international studies reveal the country has an advantage for small car or two wheeler manufacturing. Proper focused infrastructure development is required and not doles or incentives.
China is well known as the manufacturing factory for the world. “We do have a business in China and we feel we can definitely be competitive with them in certain sectors but then we need to integrate more with the globe which again means infrastructure for people development, etc. We really need to think big for which government facilitation is needed and the core capacities need to be challenged. The issue does not end at manufacturing, the kind of logistics that needs to be put together after that is again missing. First there was IT revolution and if the government can look at good public private partnership in speedy development of infrastructure, I think manufacturing can really grow in leaps and bound”, concluded Mr. Ramesh.