Unless India Inc makes a paradigm shift to agile manufacturing technologies, which have become a norm in the developed countries and are fast catching up in China, the country's growth and competitive advantage will be lost in the coming years, warn experts.
Dr M P Chowdiah, founder director of the Agile Manufacturing Research and Development Center, Bangalore, said flexible and agile manufacturing processes helped Japanese and Korean companies invade the US and western European markets with state-of-the-art products and right pricing.
"Nearer home, the way the South Korean firms such as LG and Samsung have emerged front runners in the Indian electronics and white goods market is a writing on the wall to their domestic counterparts, including BPL, Videocon and Onida," he said.
Similarly, the entry of automobile giants such as Honda, Toyota, Hyundai, and Mitsubishis have virtually changed the rules of the game. "They are gradually making inroads into the Indian passenger car segments, thanks to the adoption of flexible and agile manufacturing technologies by their Indian subsidiaries," Chowdiah said.
Barring a few major ones in the manufacturing and automotive industries, majority of Indian companies continue to be conservative and are driven by traditional technologies, which make their cost of production higher than the competing products of even developing countries such as China, Malaysia, Brazil and Mexico.
"Apart from Maruti, two-wheeler manufacturers such as Bajaj and TVS have also emerged competitive players in the global market by keeping pace with the changing technologies," Chowdiah said.
Chowdiah said India Inc must integrate the information and communications technologies (ICT) with their manufacturing units to roll out cost-effective and customer-centric products that can rival MNC products in the domestic as well as international markets.
S S Iyengar, chairman and professor of computer services at the Louisiana State University, Los Angeles, said agile manufacturing is recommended to Indian companies as a business system, making them flexible to switch over from one component or product to another cost effectively.
"Agile manufacturing depends on the creation of huge amount of data and integration of multiple software in manufacturing right from planning, layout, finance, design, tooling, technical support, purchase and marketing," Iyengar said.
Though the IT-driven services sector has come of age and has began to contribute more to the country's GDP than the traditional manufacturing and agricultural sectors, worldwide the manufacturing sector continues to dominate the export market.
For instance, World Trade Organization (WTO) data show that the export of manufacturing goods from the developing countries constituted 66 per cent of the total merchandise exports in 1999 as against 54 per cent in 1990, with export of energy products (fuels) lagging behind at 14 per cent in 1999 and 20 per cent in 1990.
"While China exported manufactured goods valued at $195 billion in 1999, Indian was way behind at a mere $27 billion in the same year. Among the developing countries, even Mexico and Brazil were ahead of India, with export revenue of $137 billion and $48 billion respectively," said Chowdiah.
At the level of competitiveness among the 14 developing countries, India ranks at 11, with Singapore ranking first and only Pakistan ranking last. In the Asian region, the competitive level of Taiwan, Hong Kong, Malaysia, Korea, and Thailand is much ahead of India, he said.
