Manufacturing in India

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February 13, 2006

India's manufacturing sector grew at an average annual rate of 6 per cent per year in the fourteen years between 1990-91 and 2003-04, which was higher than the 5.8 per cent growth achieved by overall industry and the 5.7 per cent GDP growth during the same period. The sector recorded a growth of 11.4 per cent in 2005, while the overall industrial sector also recorded a double-digit GDP growth of 10.3 per cent. Further, Indian manufactured products are now gaining acceptance in world markets. India already exports about US$ 50 billion a year in manufactured goods and this is increasing at the rate of 20 per cent a year.

A study by the Confederation of Indian Industry (CII) and McKinsey & Co. on manufacturing sector in India estimates that Indian manufacturing export has the potential to touch US$ 300 billion by 2015, growing at an annual rate of 17 per cent as against the historic growth of 11 per cent. Of this, nearly US$ 70 billion to US$ 90 billion could be captured from just four sectors — apparel, auto components, specialty chemicals and electrical and electronic products.

India’s expertise in skill-intensive manufacturing sectors such as auto components, pharmaceuticals and textiles gives it an edge over other low-wage producers. While many other Asian countries can provide relatively low skilled labour force at a minimal wage level, the introduction of high technologies into manufacturing makes it necessary to source from a country that can provide high tech, skilled labour force – and this is where India scores.

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