Change India: How the country can turn into mfg hub

Prime Minister Modi’s mantra is making India sell everywhere. But the Indian manufacturing story has been up against several crucial hurdles. The government for several years has tried to enhance manufacturing to Gross Domestic Product (GDP) ratio to about 25 percent but hasn’t been able to achieve that. The United Progressive Alliance (UPA) failed. So the big question now is will the National Democratic Alliance (NDA) government deliver.There are already positive noises about this government kick starting manufacturing sector and boosting investment cycle. But the question still remains on what more needs to be done at this point in time to ensure that that dream and that target is finally realised. To answer that question CNBC-TV18 called upon Anil Rai Gupta, Joint MD, Havells, Ajay Dua, the former Secretary of the Department of Industrial Policy and Promotion, and Bharat Salhotra of Alstom India.However, before the esteemed guests voice their opinions, following are some views corporate India on what they think about the state of the manufacturing sector.

Also read: Change India: Experts analyse ways to tackle food inflation D Shivakumar, Chariman & CEO, Pepsico IndiaFrom the funds which has been created for Rs 10,000 crore how do we ensure that we create an ecosystem of small companies with large companies as opposed to small companies fighting large companies. Small does not fight large but small when in combination with large can develop an ecosystem which can be significantly better. Those are the kind of things that we really need to look at when we want to encourage the whole concept of industry in this country.B Thiagarajan, ED, Blue StarThere are not many manufacturing clusters within the country. Say, the one destination has been Gujarat, Maharashtra, Tamil Nadu, NCR and part of Haryana. So the important thing is to generate many more manufacturing clusters. In this context the land acquisition is an important element that where you will be able to make available land at affordable prices.Gopal Mahadevan, CFO, Ashok LeylandWe expect that the volumes for the M&HCV industry should grow from the second half of the year. This is based upon the direction that the government is setting for the economy and if we believe that the economy is going to grow about 5 to 5.5 percent then we should possibly see a growth in the M&HCV segment in the second half by at least 10 percent.Below is the transcript of Anil Rai Gupta, Ajay Dua and Bharat Salhotra’s interview with CNBC-TV18's Shereen Bhan.Q: There is a lot of enthusiasm with which the government is trying to push forward on manufacturing, but let us just do a status check as far as what is happening on the manufacturing side. The share of manufacturing in GDP has been declining specifically over the past two years. It is now down to just about 15 percent from the high of 19 percent that we saw in the mid 2000s. Land acquisition; we just heard one of our guests talk about labour, labour reforms continues to be a contentious issue. To your mind this business of making India sell everywhere, how close are we to be able to achieve that?Gupta: If you see the last 20 years since 1991 there have been times when Indian entrepreneurship has shown good signals that they can come up, they can show their strength in the global economy. It is only in the last three or four years if you see particularly that there is a sentiment which is so down that people feel that there is not conducive environment all around us to build manufacturing capacity.There has been a lot of build up, there is lot of positive environment amongst the manufacturing industry that things will shape up. The government has shown intent at least in the initial one to three months that they have been in power and that intent is good enough to say, yes, it will take some time, all the reforms will take time to show results but that intent needed to be there and this intent, yes, people say that we want to grow from 14 percent to 25 percent. But that will take time. Magic doesn’t happen in one day.Q: Let us just look at the data, the quantum of stalled projects in India is worth a USD 125 billion today. Now the government is talking about removing bottlenecks, they are talking about putting in place a platform, an eBiz platform which should take care of all clearances and approvals and so on so forth; the deadline is March 2015. By end of this calendar apparently a lot of the approvals that we need to get will be on a single window platform. Do you think that enough has being done at least in the first 100 days to ensure that the momentum that manufacturing requires, the confidence, the business confidence that manufacturing requires, at least that has returned?Dua: We have seen in this country as was just mentioning a 14 percent annual rate of growth in manufacturing in the year 2007-2008. Between 2005 and 2008 average growth of manufacturing was 10 percent. We need to see if we could average 10 percent for three to four years and what has changed since then that we have come down to -0.7 percent which is the data for the last year. What has changed since then, the biggest change to my mind is lack of confidence of investors in the scheme of things or the Indian environment. It is partly because of governance, it is partly because things were not changing fast enough, people thought that things will improve, power shortage in India, infrastructure constraint, labour laws acting as a constraint and even land acquisition operating under 1894 Act.