MANUFACTURING COMMITTEE

Chairman: Mr. Sanjay Koul
Chairman & Managing Director
Timken India Limited

 

Secretariat: Ms. Valerie Swope
Program Coordinator
Email: valerie@amchamindia.com

 

Sector Overview

 

The manufacturing sector is vital for the India’s economic progress. Recently the government has realized the importance of this sector and has taken number of proactive steps for the growth of the industry. U.S. companies have been present for a long time in India. From automotive to chemical manufacturing, U.S. companies have made their presence in the Indian market. Players like General motors, Ford, GE, Dow Chemical, Honeywell International, Agilent Technologies, Caterpillar, and Baxter are just some of the names.

 

There are several significant challenges faced by companies manufacturing in India. The current labour laws regime has huge cost, exploding unorganized employment, lower organized manufacturing. These laws have been focussing on job preservation rather than job creation and hence resulted in low-productivity and sub-scale unorganized sector. Any competitive manufacturing industry needs excellent infrastructure facilities. Indian manufacturing is losing the competitive advantage due to poor infrastructure as it is putting an additional cost. It also affects efficient supply chain management which is one of the most critical factors in business. For example, the longer and the more complicated the transportation network is, the more difficult it is to have an efficient supply chain. Whereas the preoccupation in other geographies is with speeding up the supply chain and limiting inventory, in India the major concern is buffering inventory.

 

The different regulations in different states slow down the supply chain considerably. To move goods from the south to the north, you have to stop at every state border to be inspected, and appallingly enough it can take a week to go from north to south. The different tax structures in different states make things very complicated, and thus create significant inefficiencies for businesses. On top of a convoluted system, there is corruption to the point where it can have a significant financial impact. Frequent changes in the tax regime have introduced uncertainty in operational planning.

 

 

KPMG Automotive Report – The Indian Automotive Industry – Evolving Dynamics