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Manufacturing the only way forward to create jobs: CII chief

Wednesday, 28 November 2012 - 4:48pm IST | Place: Bangalore | Agency: dna

L Krishnan, chairman, CII Karnataka and MD of TaeguTec, talks to Supriya Ghorpade on the current scenario of manufacturing industry - the country’s largest employers.

In the build up to the flagship event of the manufacturing sector, the CII Karnataka Annual Manufacturing Conference to be held in the city on November 28 and 29, L Krishnan, chairman, CII Karnataka and MD of TaeguTec, talks to Supriya Ghorpade on the current scenario of manufacturing industry - the country’s largest employers.

The manufacturing sector is the largest employer in India. Yet the salaries don’t match up compared to other industries. How do you attract talent?

This was our dilemma some years back. We had a problem when the service industry started out, that is when we had a dearth of people. The gap between the services and manufacturing sectors was large.

The industry had to internally go through a compensation restructuring exercise, particularly to retain talent in marketing, design and development and R&D. Manufacturing industry had no other option but to adjust the compensation to be competitive with services sector, when the manpower both industries are looking for overlap.

Today if you compare the pay packet of a fresher engineer employed at a top manufacturing company with someone working for a leading services company, our employees take home a much higher salary.

What is your take on the manufacturing labour reforms. Our labour laws have not been revised in recent times.

Yes, our labour laws are concurrent. A large amount needs to be changed at the central level. But since this is a politically sensitive issue, governments have not done much. The central and state governments need to work together in consensus and bring about some changes in law, otherwise it will be a challenge for the sector in India to grow in the future.

However, the government is creating National Manufacturing Zones across the country. They are also proposing to have reformed labour laws, which will make us more competitive with the western countries.

Many companies set up units in India to take advantage of lower costs. Do we still have a cost arbitrage compared to more developed countries?
We have lost that arbitrage. The manufacturing export goods here is very low; it is based on the over cost of manufacturing rather than any labour cost arbitrage.

Companies are coming here because of the large captive domestic market that continues to grow at an impressive rate. In fact, it is predicted that by 2025 the industry will grow four to five times, creating an additional 90 million jobs. Manufacturing is the only way forward to create employment in this country.

What are CII’s initiatives in the state to boost the sector?

We are driving the agenda of our members and industry and actively engaged with the government, conveying to them the various components that need to be fixed for the industry to grow.

For instance, in Karnataka, manufacturing of auto parts, jewellery, apparel, aerospace and food processing are areas where we have the right strength to grow. We are urging the government to come up with encouraging policies for these industries and provide an incentive, thereby enabling an environment in the state that attracts investment.

Could you share some emerging global trends for the industry?

The scales of manufacturing are becoming larger while product life cycles are shortening. The productivity levels too are high, and to compete on a global level and become world class, we definitely need to improve our productivity levels.

What does the future of the industry here look like?

The advantage we have here is the existence of large scale market and continued industry growth. There is also the availability of huge bank of technical manpower for engineering activities.

However, to take make full use of this, we desperately need to upgrade our infrastructure such as roads, power, and manpower.
If done right, India is positioned to grow healthily over the next 20 years.

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