tag:blogger.com,1999:blog-4740849900073154554.post8455595263999637900..comments2023-08-25T17:30:36.937+05:30Comments on Business Musings: Make in IndiaRameshhttp://www.blogger.com/profile/11782192840421019943noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-4740849900073154554.post-23274189816607311312015-01-07T15:29:20.143+05:302015-01-07T15:29:20.143+05:30Thanks Sanjay. Even our generation was lucky only ...Thanks Sanjay. Even our generation was lucky only in the sense of the educated. For the many millions more who do not have education, there are still no jobs. This is the group which manufacturing has to tackle.Rameshhttps://www.blogger.com/profile/11782192840421019943noreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-77567951357231260902015-01-07T14:12:18.110+05:302015-01-07T14:12:18.110+05:30Welcome Back Ramesh. I hope that Modi revamps the...Welcome Back Ramesh. I hope that Modi revamps the manufacturing industry as book his place in history. Our generation was lucky that jobs were aplenty due to growth in BPO and IT. If our next generation has to get jobs the manufacturing has to grow. Sanjay Balachandranhttps://www.blogger.com/profile/07962362448349011124noreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-15184792840205102772015-01-05T08:59:06.946+05:302015-01-05T08:59:06.946+05:30Thanks Ravi and happy new year to you too.
A very...Thanks Ravi and happy new year to you too.<br /><br />A very incisive and thoughtful comment. Cost as a factor for manufacturing location is disappearing as a competitive advantage I believe, as labour costs fall to lower and lower proportion of total costs, because of automation, efficiency and customer access starting to become a bigger costs. Therefore mere cheap labour is no longer a winning hand. Scale, flexibility, infrastructure, etc become more important factors and this is why I think China is still the preferred manufacturing destination despite having lost the cost advantage sometime ago.<br /><br />As you rightly observe, import substitution is a naive idea (except perhaps for defence industry in India). Manufacturing must be for job creation and as you say the best market for it can be the large domestic market that is India.Rameshhttps://www.blogger.com/profile/11782192840421019943noreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-25894765802761863942015-01-04T21:13:14.197+05:302015-01-04T21:13:14.197+05:30Welcome back ramesh. Happy New Year.
There were s...Welcome back ramesh. Happy New Year.<br /><br />There were some interesting comments made in the Economist, I think, attributed to Arvind Subramanian - IIMA Alumnus, Economist and now Chief Economic Advisor to the GOI. He says that the average income level at which a country can consider itself reasonably industrialised has been dropping. In other words industrialisation is failing to raise income levels sufficiently. In the case of Japan and South Korea, which industrialised when supply chains were not as disaggregated and super-efficient as they are now, the country first made cheap goods for export, then assembled more complicated goods, learnt how to make them and then innovated. This is because the cost and other advantages that lead them to get some share of the world market in the first place were reasonably sticky. So the country could focus on the longer cycle of innovation in value added manufacturing. This requires investments in other areas of the domestic economy - a domestic ancillary industry, local education, local services, R&D etc. This allows incomes to rise while increasing the volume of manufactured export. At some point the cost advantage disappears and the low-end manufacture migrates leaving behind the higher end of manufacturing a mature economy. Subramanian feels India has missed this revolution. Given highly efficient supply chain management, the moment a unit cost of assembly for a part of a finished good rises relative to another country, the buyer will switch the manufacture. It will become difficult to replicate Japan and South Korea.<br /><br />I think Make in India is very much necessary and your policy prescriptions are all fine. I just think that the focus should be on encouraging the domestic market to drive local manufacturing capability. In the area of electronics this is already happening. So is the case in textiles for instance. Is there a chance that this can happen in other cases?<br /><br />This is not a case for "import substitution" - it distorts the economy. But a conducive environment for manufacturing is extremely necessary.<br />Ravi Rajagopalanhttps://www.blogger.com/profile/17321251570712041230noreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-22281777236905592942015-01-02T15:12:07.524+05:302015-01-02T15:12:07.524+05:30Thanks Exkalibur. New Year greetings to you too. I...Thanks Exkalibur. New Year greetings to you too. I agree simplification of laws i a big issue - in fact gives me idea for a post !<br /><br />The behaviour in the Rajya Sabha is unfortunately very typical of our MPs. When the BJP was in the opposition, they did exactly the same thing. When they do such nonsense, the sitting must simply be prolonged day and night until the job gets done. Shame on this unruly lot.Rameshhttps://www.blogger.com/profile/11782192840421019943noreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-88642701870331832252015-01-02T14:44:59.058+05:302015-01-02T14:44:59.058+05:30Hi Ramesh...
A very happy new year.. Blog looks gr...Hi Ramesh...<br />A very happy new year.. Blog looks great in its new form and as usual a very clear post.. <br />I would probably add a simplification of business laws - Inc Tax & Customs as well along with the GST point..<br />Lack of strength in the rajya sabha is hurting the govt in implementing some of these and as usual the opp takes up the most insignificant points (espcially on "saffron" issues) to cause a ruckus and derail anything that the current govt wants to do.. <br /><br />Exkalibur666Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-4828199345012103592015-01-02T13:08:27.466+05:302015-01-02T13:08:27.466+05:30Very happy new year Shy and thanks for the kind co...Very happy new year Shy and thanks for the kind comment. Yes, Ramamritham has a lot to answer for, in the state of affairs of manufacturing. It is too much to expect him to change spots or be decisive - he can only be "managed" as Jaitley is trying to do.Rameshhttps://www.blogger.com/profile/11782192840421019943noreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-23492125344256946212015-01-02T12:48:22.660+05:302015-01-02T12:48:22.660+05:30Hey!!! A very happy new year!! simple yet sparklin...Hey!!! A very happy new year!! simple yet sparkling with clarity - for a layperson !! always look forward to your posts -most of them anyway!! :) Agree it will be manufacturing that will move youth away from being employed as goons,jihadis,myriad other useless things if they were gainfully employed! when focused on their own economic growth..it is always shown that crime rate also dips down....so I truly wish the commie bureaucrats who are the true bottlenecks ,who have been used to decades of non decisiveness,non performance actually step up... or the Modi govt just changes those buggers!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-83308077347090469062015-01-01T16:42:23.729+05:302015-01-01T16:42:23.729+05:30Thanks for your wishes Sandhya. Wishing you a grea...Thanks for your wishes Sandhya. Wishing you a great 2015 as well and may you rain posts as well :)<br /><br />Yes, real estate is a hotbed of criminality, corruption and a get rich scam. However that problem is largely in urban real estate. In rural India, where manufacturing will largely be located, it isn't that bad, although the mere whiff of an industry coming, the usual goons drive up prices and corner land.<br /><br />My problem with tax incentives is that it simply is a subsidy for the rich. Taxes in India are not that high - they are comparable with most countries. So let factories get set up based on market forces for products rather than on artificial incentives. Look at what happened when incentives were offered in Himachal, Uttaranchal, etc etc.Rameshhttps://www.blogger.com/profile/11782192840421019943noreply@blogger.comtag:blogger.com,1999:blog-4740849900073154554.post-17186102148370866092015-01-01T16:06:15.147+05:302015-01-01T16:06:15.147+05:30i am the first to comment this new year :-) Ye Ye ...i am the first to comment this new year :-) Ye Ye !!<br /><br />to start with Ramesh - wish you a very happy new year <br /><br />I agree that the processses need to be debottlenecked, there has to be better infrastructure and simpler land acquisition (I dont know if many people can forget Singur) and the havoc of ramarathinams have to be solved (who have successfully made a major giant like Nokia bite dust and move significant manufacturing out of India), but i also feel that tax incentives are something that are a significant motivation. The absolute cost of manufacturing is still the key and taxes are still a significant share of the costs. the second is to curb the artificial inflation on real estate. Real estate in India gallopping at a 15% inflation every year - not because of demand supply but because these are just simply jacked up. Real estate in India, is very much like the oil boom. and a lot of the money that it has created is going to fund criminal activities of many politicians, so as worse as oil money behind terrorism. and finally, pro-actively skilling the labour. walk into an anganwadi and see what kids learn, most of the time, it is a tick off to move a person from uneducated to educated. is there real education - i really doubt. i think, the kid would rather be better off, learning employable skills rather than unemployable curriculam. <br /><br />b.t.w hope this year keeps raining more and more such posts on us and wishing you a fulfilling year ahead. <br /><br />Sandhya Sriramnoreply@blogger.com