Globalization of Indian Manufacturing Sector

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The initiation and development of globalization of the Indian manufacturing sector took place simultaneously in the 1990s. The widespread acceptance and development of globalization of the Indian manufacturing sector effected astronomical growth of this industry.

The introduction and the subsequent development of globalization of the Indian manufacturing sector respectively helped India to shed its age old tag of being 'an agriculture based country'. The main growth driver of the Indian manufacturing sector are Information Technology and hardware, telecommunication hardware, automobile, pharmaceutical, biotechnology, infrastructure, electronic, electrical, textiles, etc. The effect of globalization of Indian manufacturing industry is reflected in the GDP's share of Indian manufacturing sector which has grown considerably over the years.

The share of Indian manufacturing industry towards India GDP has grown from 25.38% in 1991 to 27% in 2004. Further, the contribution of the Indian manufacturing sector to the Indian export sector has increased from 52% in 1970 to 59% in 1980 and 71% in 1990 and 77% in 2000-01. Furthermore, the Indian manufacturing exports accounted for a little over 5% (in 1990) of the value of output of the Indian manufacturing sector but today it is close to 10%.

India exports manufactured products worth about US$ 50 billion and a recent study on Indian manufacturing industry has forecast an annual growth of 17% by the end of the year 2015. In other words at this rate of increase the quantum of India's manufacturing exports will cross the US$ 300 billion mark by the end of the financial year 2015. Most of this business would be in the domain of auto components, pharmaceutical, apparel, specialty chemicals, and electrical and electronic equipment sectors. The Indian sectors which grew tremendously as a result of globalization of the Indian manufacturing sector are as follows -

  • Capital goods
  • Engineering goods
  • Chemicals
  • Petroleum
  • Chemicals & fertilizers
  • Packaging
  • Consumer non-durables
  • Electronics
  • IT Hardware & peripherals
  • Gems & jewelry
  • Leather & leather products
  • Mining
  • Steel & non-ferrous metals
  • Textiles & apparels
  • Water equipment
The positive effect of the globalization of the Indian manufacturing sector can be corroborated from the following facts -

  • The Indian industrial growth exceeded 10%
  • Manufacturing growth rate exceeded 12 %
  • Manufacturing of consumer durables and non-durables have also recorded upswings
  • Telecommunication sector with inflows of US$ 405 million has registered the maximum growth of 950%
  • Merchandise exports recorded strong growth
  • The automotive industry achieved a growth rate of over 20% in 2006-07
  • The biotechnology industry witnessed another good year in 2006-07 and registering more than 40% of growth
  • The US$ 47 billion Indian textile industry is expected to grow to US$ 115 billion by the year 2012
  • The US$6.4 billion Indian retail industry is expected to grow over 20% annually to US$ 23 billion by 2010
  • The robust pharmaceutical market in India ranks 4th worldwide and is expected to cross business worth Rs 1,00,000 crore in
  • formulations and bulk drug production by 2010
Although, the process of globalization of the Indian manufacturing sector have contributed immensely for the overall development of the Indian economy but it still suffers from some bottlenecks, like the following -

  • Use of primitive technology or under utilization of technology
  • Poor infrastructure
  • Over staffed operations
  • Expensive financing and bureaucracy
India is slowly shedding its image from being an agriculture based country to a manufacturing based country and thus the above-mentioned bottlenecks should be immediately arrested and eradicated to ensure further growth of this industry. To ensure elimination of the above-mentioned aberrations form the Indian manufacturing sector the government of India must focus on areas like improving the urban infrastructure, ensuring fair competition and access to markets, reduction of import duties, quality improvements in vocational and higher education, increased investment in R&D and support of SMEs.

The manufacturing industry is the backbone of any economy since it helps in the overall growth of productivity, employment, and it also strengthens agriculture and service sectors. The astronomical growth in worldwide distribution systems and Information Technology, coupled with opening of trade barriers, has led to stupendous growth of global manufacturing networks, designed to take advantage of low-waged yet efficient Indian work force. The globalization of the Indian manufacturing sector has brought down the percentage of Indians living below poverty line from 40% to 25%. The Indian manufacturing sector is successfully competing in the global marketplace and registering high growth on year-on-year basis since the 1990s.

Last updated on 3/18/2011

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