<div><em>The CII-BCG survey highlights the declining attractiveness of China as a manufacturing base due to labour and Yuan challenges, reports<strong> CH Unnikrishnan</strong></em><br><br>A latest survey conducted jointly by Confederation of India Industries (CII) and Boston Consulting Group to assess progress of the government's 'make-in-India' thrust and other industry reforms among the leaders of Indian manufacturing industry found that only 20 per cent of the executives surveyed feel that there has been an improvement in 'ease of doing business'. While 42 per cent of the executives feel that the government's manufacturing drive has been effective, 21 per cent felt otherwise. </div><div> </div><div>The survey, which was conducted for developing key themes for report titled as 'Future of Indian Manufacturing: Bridging the Gap' released by CII on Thursday also compares states on their quality of manufacturing ecosystem and global trends.</div><div> </div><div>The report takes stock of the recent progress of the manufacturing sector and the Make-in-India initiative, an year down the launch. The outlook is broadly positive given the growth in IIP as well as clear uptick in the manufacturing FDI. The overall IIP grew 3.2 per cent in the first quarter and 14 of the 22 sub-sectors showed positive growth. </div><div> </div><div>"The overall buzz around make-in-India focus has been positive and many large ticket announcements have been made," the report said. </div><div> </div><div>The CII-BCG report highlights the declining attractiveness of China as a manufacturing base due to labour and Yuan challenges, and emergence of new destinations such as Ethiopia and Vietnam which are becoming competitive. In addition, the report notes that the adoption of advanced manufacturing technologies is disrupting the advantages of low labour cost. </div><div> </div><div>According to an analysis by CII-BCG, the cost of industrial robots will decrease by an estimated 20% by 2022, while their performance has been increasing at 5% per year. These developments point to a clear imperative for the Indian industry to focus on innovation. The survey responses also corroborate this focus as 75 per cent of the respondents indicated innovation as focus of their technology investments.</div><div> </div><div>Looking at the state level progress in the industry reforms, the report said that several states are now upping their game to attract manufacturing investments. But, the report calls for continuing action by the state and the central government on reforms, simplification and infrastructure build-out in addition to industry responsibility to invest in creating long term capabilities and shun the urge to adopt "jugaad" methods.</div><div> </div><div>"Strength of services sector combined with the strength of manufacturing is the future. To reach our full potential though, we need close co-operation among a vast number of agencies especially between people involved in complex system of manufacturing. We have to understand all connections and complexities of its working," said Jamshyd N Godrej, chairman and managing director of Godrej & Boyce Mfg Co Ltd and chairman CII Manufacturing Summit, while releasing the report. </div><div> </div><div>"We have some of the finest manufacturing companies based in India doing exemplary quality production. But the question is how do we build on those strengths and improve upon areas that need improvement," he added. </div><div> </div><div> According to BCG senior partner and managing director Arindam Bhattacharya, make in India initiative couldn't have been launched at a better time as global manufacturing is in turmoil with the low cost model of last 2 decades coming under pressure, China's competitiveness is eroding. Brazil, which was seen as one of the most competitive 10 years ago is becoming a high cost country. </div><div> </div><div>"In contrast India's relative competitiveness has remained constant. This turmoil provides a unique opportunity to become a top 3 manufacturing player in the world, becoming a top 5 country manufacturing exporting nation from current 15th position," Bhattacharya said.</div><div> </div><div>Make in India has changed the mindsets - both inside and outside the country. Accelerated implementation of reforms being implemented in the fundamental build blocks of Ease of doing business, power/coal, infrastructure build-out, labour laws, taxation could ensure that this is not another missed window of opportunity for India, added Bhattacharya.</div>
