Sunil Kilaru, Director of Kalpin Enterprises Pvt. Ltd. (www.kalpin.in)
It’s not that easy for India to oust a global economical superpower like China in a sudden turn of events. Although India has its own downsides, but it also holds it own advantages in terms of labor costs as well. That’s where India and china holds all the potential to come along in mutual cooperation to dominate the global manufacturing markets as a whole in the coming times.
Moreover, the establishment of Samsung factory may come good to the electronics manufacturing in the same manner as Maruti did in the automobile industry in the early 1990s. Whole Industry felt the disruption in regards to Maruti’s collaboration with Suzuki but after Suzuki brought all the latest auto manufacturing techniques on board, the industry witnessed an upward growth at a tremendous rate eventually.
On the other hand, India’s manufacturing labor cost in 2015 stood at $1.72/hour in comparison to $37.96/hour for US. This rate was almost double in case of china. The governments brought certain manufacturing programme in order to move all the electronics manufacturing from semi-knocked down (SKD) to completely knocked down (CKD) kits. This would further push for more imports of semi-assembled parts and create more jobs as well in the process. Still we can say that only switching the SKD to CKD alone would not solve the big purpose. There is a need to push the level of manufacturing in India and same needs to be done whilst keeping the global aspect in the mind. Major firms are required to tap the global markets and government should support them by providing more incentives on export of electronics goods. This would create a more supportive business environment which would then attract more FDI into the country from global electronics component manufacturers and create more jobs in the process, exactly like what happened in auto manufacturing in the earlier times.
As of now, the total cost of road transportation in terms of 1tonne of freight over 1km stands at 2.28 and same goes to Rs 1.41by rail and Rs 1.19 for waterways.
While we understood that transportation via waterways would be a better idea, India can get benefitted by its extensive geography and commercial ports around and same would help big time in lowering down the overall logistics costs to a great extent. Moreover, an added incentive for exporting goods would work as an added advantage.
Published by Rahul Kh