Newspaper Article Review

Title of Article: Engg Goods Top Export List on Low Wage, Talent Name of Periodical: Economic times Date: 06/06/2011 Author: Smriti Seth & Gouri Agtey Athale

Apoorv Jhudeley 1021207 4 MBA L

Summary: The article stats that Nissan motors is starting up a plant at Chennai for the purpose of exporting cars to Europe, Middle East and Africa and on same date Tata motors started to export its Nano cars in Sri Lanka. Article highlights about how Indian Engg. Goods, machinery goods and automobile manufacturers are benefiting out of the improvement of quality and the reduced labour expenses. Presently industry is making it presence felt in world from emerging economies like the ones in Africa to sophisticated and quality conscious countries in Europe. Some economist believe, why many foreign manufactures entered the Indian markets is availability of highly skilled engineers, low cost labor, technical know-how, less investment, cheap machinery and raw materials, established quality systems and rewarding returns. Even the cost of production is reduced to about 25-30% as compared to overseas production. This pace of advancement and improved production not only paved way for foreign manufacturers but also provided enhanced ability to Indian car manufacturers for producing better models. Indian auto companies are highly cost competitive even at lower volumes due to appropriate levels of automation, low cost automation. Indian auto companies have achieved a high level of productivity by embracing japanese concepts and best practices like TQM, T P M. In fact cost productivity is our key differentiator viz-a-viz competition from other low cost economies. Indian automobile industry is also blooming because Indian auto companies have proven capability to supply on JIT basis out of warehouses situated near the customers. Most Indian companies have arrangements with major logistic providers for JIT supplies and adequate warehousing support and onsite engineering support. But at present industry needs to realize, that the current advantage is not merely due to better quality. It is also due to the fact that the international manufacturers are getting cheaper labour here. The moment the companies find a cheaper and more lucrative market with equally good quality, it wouldnt take them long to shift bases. Hence, the industry needs to ensure that they communicate the need of the industry regularly to the government so as to have the international manufacturers grounded in India. On the part of Government, it requires to boost up the industry with credit fulfillments as present conditions need for a lot of credit. As multinationals are coming came here hoping to grab some share of the rising car market but they find some of the other local edges which is helping them for their global operations which is also giving up boost to some other industries too side by side. Many industry people are having a common opinion to increase the share of India in world economy by 2 times within 7-8 years. But the major barrier, which can be faced by the Indian industry is to sustain the growth, over a long term period and tough completion can be from China, as it has a huge cost advantage in the low end goods. The Ministry of Commerce aims to increase engineering exports to 125bn USD by 2014. Industry requires the government to emphasize removing infrastructure bottlenecks for exports, reduce transaction costs which constitute 7-10% of export value and compensate exporters for the incidence of all central, state and local level taxes, duties and levies. If government supports the industry through these incentives, India can be a global leader in auto components by 2020.