Prime minister says 'Make it in India'

Recently TOI  was all about 'Measure to facilitate ease of biz, boost manufacturing'. It is mind boggling to see the various proposals on the anvil. It said 'The aim is to reconcile the interest of labor with the ease of doing business'.

 This takes me back to 50+ years in time. I had just learnt productivity techniques from ILO experts.  And our  gurus had advised us that it would not be easy to implement but hoped we could do so later on . But Productivity should be our mantra and work study the method.

 They were right, there was resistance for time study.  My boss suggested that I do time studies on the sly. I demurred as we were taught to build trust  by being open. This lack of trust created situations which were bizarre.

 Most companies resorted to hiring temporary labor, who obviously worked harder. The temps would be given a break periodically so that they had no claims for permanency.  Assemblers went missing after three weeks and came back after a week's break. This ploy was more about sticking to head count norms dictated by our MNC head office. So we hid heads from being counted by hiring casual labor.

Later the labor department (or was it the union?) forced companies to make these temps permanent. Obviously productivity went low but we bribed them with OT to meet our targets. I remember one union guy advising me to plan in such a way his men had as much OT as possible. Limits were set for OT but none cared! The more OT you gave more popular you were.

 Not that Union leaders were any better and I read that the situation is the same.  Leaders were given offices and I never saw them working. Compare this to a company I visited in the USA. The president of the union was on a machine like the rest. Men came to talk to him but that did not reduce his output. Possibly things changed over time in the USA as well. The reason the country went outsourcing.

Another pertinent example of union and management relations was from a dutch company. They had sent a team to study our factory workings before they chose to have a joint venture with us. When I discovered that one of the team was a union official, I expressed my surprise. He said 'we have learnt not to bloody each others nose!' Anyway it is all history.

In my last job in India, the Union agreed for productivity norms. In real terms they were working for just two to three hours a day! So when we told them that they had to produce a lot more, they sought  an escape route and renegotiated a gradual increase in productivity. A so-called win-win situation!

I have been out of touch with Indian manufacturing scene since long.  I am told things have changed for the better. It was a nightmare while I was working in India. Now I can vouch that cars are made better and so are the many electrical white goods. 

But also read that Nokia and another company moved out of Tamil Nadu as the government was not very helpful. And today's TOI covers the sad state of ITI in Bangalore, one of the better run public sector companies initially.

No wonder the papers said: Cheers from India Inc and Jeers from the Unions. It is an uphill task.The scene has been murky for the real and honest labor, with the management, barring few, exploiting them and later the politicians muscling in and making it murkier! 

Any way a start has been made and hope the disappointments our generation faced are a thing of the past.  

Here are the new mantras:
New-Look ITI's to churn out skilled workers. We have 11500 ITI's with 16 lakh seats. Only 10% of the work force has formal or informal technical training. South Korea has 96%, Japan 8o% and Germany 75%.  Apprentices under going training 2.82 lakhs against 4.9 lakh seats. Similar schemes in Germany 30 lakhs, China 2000 lakhs and Japan 100 lakhs.

Obviously this scheme needs a partnership between Industry and Government. Especially in setting syllabus for the various skills. I read that the PM has appointed brand ambassadors to rejuvenate the dormant ITI's.

Measures will work only if States join in: The paper talks about inspectors, 1800 in all and part of the central labor commissioner, who will visit factories on randomly generated targets. It is hoped that this will end the arbitrary raids, bribery and harassment. ( Hope so!)  The rest of the factories are under the state purview, who regulate the bulk  about 8000 industries. 

There are many more challenges. We need to compete with China who are years ahead in 'Made in China'.  For instance china produces a little more than 50% of world's total production steel. Nice to know India is the 4th largest producer of steel at about 5% of world production, behind Japan and USA. We could have been easily the second largest if not the first, but we are content to export raw materials. That too illegally!

It is not just rhetoric that brings in manufacturers to this country. For me it was really upsetting that India which could have surely gone ahead with their skills and industry culture missed the opportunity. As I was mulling about it and feeling bad, I saw the Sunday edition of  The Hindu covering the realities of  'Make in India' in detail.




Here are a few quotes from The Hindu:
Markets across India are flooded with Chinese products, which are grim reminders of how Made-in-China has come to dominate our lives. (The claim made is that our quality is superior!). But Tata Motor's Jaguar Land Rover opened its first plant in China. India did well for 5 years from 2005 but lost steam thereafter....India is importing almost all products from China...it is estimated that 99% of Bangalore silk saris are made with Chinese yarn. (shocking!) . We import $51 Billion and export only $15 Billion to China. Our manufacturing output has dropped by 0.7 % in 2013-14. There is more to digest, but the good news is that costs are going up in China and we could grab the low end of the market as China moves up to hi-tech manufacture. (Some consolation that a few companies such as Godrej, Bosch, Havells and Micromax are coming back to India! But it hurts as we could have been the hi-tech manufacturer for the world instead of China!)

In India, it is not the democracy but the lack of accountability for bureaucrats or politicians on the economy. 
The article 'Beijing Lessons for Delji?'  speaks about the obvious lead China has taken. It says 10 years to catch up. I hope so! 
It is intriguing that the experts from Stanford The Hindu approached say 'private sector matters too!' and I gather they are not impressed by Indian managements, especially the family owned industries which are 'worse managed...'
There are the usual grumbles about 'ease of doing business' and 'rules for labor market flexibility'..There is a discussion on the Beijing style and its unsuitability for India!

They speak about mass persuasion and that is where Narendra Modi's style proves useful, at least for now! All he needs to do is to convert troublesome unions as partners in growth along with private sector which in turn will become pro-India instead of Pro-investor returns in the short term! 

The Hindu speaks about the wrong signals the Nokia sends by closing down its operations! That tax disputes have put a big question mark over 'make in India' pitch.

I am not worried about the private sector, they will find solutions to their targets and priorities, but was concerned about the burgeoning  population and the need to create jobs.

I tried to see the employment situation in India and the chart below confused me. I thought that we had more unemployment, but the chart says it is below 10% except youth unemployment. But it also shows unemployed persons are  more than employed persons. I am just putting it here while I attempt understand this.
India LabourLastPreviousHighestLowesthUnit
Unemployment Rate5.206.309.405.20Percent[+]
Employed Persons28999.0028708.0028999.0017491.00Thousand[+]
Unemployed Persons39963.0039974.0041750.0024861.00Thousand[+]
Population1233.001217.001233.00359.00Million[+]
Retirement Age Women60.0060.0060.0060.00[+]
Retirement Age Men60.0060.0060.0060.00[+]
Labor Force Participation Rate50.9052.9052.9050.90Percent[+]
Wages4.835.075.473.12INR[+]
Wages In Manufacturing6.256.556.973.92INR[+]
Youth Unemployment Rate18.1018.1018.10Percent

Comments

N N Sachitanand said…
So many, many things have gone wrong for our manufacturing sector but I would pinpoint
two major factors : (1) the 1956 industrial policy resolution of the Congress at Avadi which
placed the public sector at the commanding heights of the economy and (2) politicisation
of the trade union movement in India.

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