Agriculture & Manufacturing getting Hot again
Everybody knows that Services is competing with Manufacturing and Agriculture in the Indian economy today to be the engine of its growth.
Customer and Backoffice Services has been the major chunk of the outsourcing industry that has created a new wave of opportunities for Indian graduates. It has also fetched billions in foreign exchange in a considerably short period of time. There is talk among the economists on whether Services is due to replace Manufacturing as the engine of growth for the Indian economy. This is a pertinent question today.
While there are lots of reassurances that the outsourcing wave will only get stronger with time as more companies realize its benefits and jump into the bandwagon, there are also many stories of caution advising about the temperamental nature of the outsourcing industry and that companies do not have any real interest in investing in India other than the cost benefits, which may not last.
In this light, it will be interesting to see how the new hotspot in world economics, India, is trying to push Agriculture and Manufacturing again to the front. Agriculture is the occupation of over 60% of Indian workforce, but the insignificance given to this important sphere is appalling. The ills of Indian Agriculture according to Narendar Nagpal and Krishan Daga of Deutsche Bank India are: small fragmented holdings, limited use of modern technology, continued dependence on rainfall, declining public investment, poor availability of credit, and archaic laws.
Now, the Govt. is responsible for most of these ills; there is a very perceptible inertia in terms of bringing about change. However, this complaint may not hold true any longer. The Govt. has roped in a new set of model laws to bring about greater private sector participation and to encourage agribusiness. As the private sector enters agribusiness, it is expected to tap into the potential advantages of India in terms of horticulture and food processing.
Changes in technology are also reportedly happening as farmers are able to check market prices in real-time and thereby avoid being fooled by middlemen. All these changes are expected to bring about a spurt in the growth of the rural economy, the most important implication of which “in the long term will be the cleaning up of the existing supply chain and intermediary networks. This will enable food prices to decline but simultaneously allow farmers to improve their economics by capturing a larger chunk of the pie.”
Moving on to Manufacturing, heavy industry may be taking the spotlight once again. It was Nehru who pushed manufacturing immediately after independence - the move was part success-part failure due to the lack of understanding of India’s strenghts and weaknesses.
However, now, Chennai seems to be emerging as the hotspot for heavy industries in India. Ford, Hyundai, Nokia and Saint Gobain have already set up their manufacturing units here, and BMW and potentially Intel and Ford are set to follow. There was a time when anything that had the label “Made in India” was made fun of, and rightly. But now, when almost everything has the label “Made in China”, it is only natural that some of the weight shift to the mushrooming manufacturing sector in India.
Indian companies have started securing international certificates from American and Japanese certification agencies. Whether it be Eco-friendliness, Quality assurance, or International standards, Indian companies have started applying for and securing many of them.
In particular, it seems that Detroit is worried about the developments in India where all the car-manufacturing may soon shift to. Automobile parts sourced from India are cheap and of international standard, so the big companies are not complaining, but actively looking to invest in those areas in India.
There you go, when Services was just set to steal the show, Manufacturing is making a re-appearance and Agriculture is struggling to find its feet once again. And where are you, juvenile Pharma-Biotech?
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[...] For a background, take a peek at an earlier article on Agriculture, Manufacturing and Services in India. And to get a comprehensive picture read this report from Rediff. [...]