GST reform is very good for the manufacturing industry

Prestige is one of the leading domestic brands in the home appliances market. Mr Chandru Kalro, Managing Director, TTK Prestige Limited shares insights on various facets of Indian economy including major topics like GST, Make in India, manufacturing and FDI among others in an exclusive interaction with IBEF. Edited excerpts:

GST has been hailed as one of the major tax reform in India since independence. What are your thoughts on it?

I think the GST reform is very good for the manufacturing industry and the economy in general—it’s a huge attempt towards formalising a large part of the manufacturing sector and the economy. Only when the entire industry is brought into the formal economy fold can the benefits be accrued to everybody concerned. I believe we will see the benefits quickly once the system settles down. It is the elephant in the room for now, but nevertheless that elephant will be much more controllable once the entire system is adopted and understood by everybody concerned. After that, it’s going to be a good time for the Indian economy.

The ‘Make in India’ initiative has egged the Indian manufacturing sector forward, but can—and should—we be expecting more?

Yes, I do think so. The Make in India initiative is very good, but there are two aspects to it: ‘Make in India for India’ and ‘Make in India for the World’. I think the ‘for India’ aspect is more than accounted for. With regard to the ‘for the World’ aspect, India’s manufacturing will be competitive only when the scale of manufacturing goes up to a global level. For that to happen, India must be competitive in the global arena. There are a lot of reforms that need to get pushed through. The infrastructure is in place, but we’re still not as competitive as we can be. For example, we’re still not able to compete with China because their pricing is, in many ways, possible because of the support—for want of a better word—by the government. Their manufacturing companies get a lot of incentives that we don’t, but that is slowly changing. GST has just kicked in and it makes us a little more competitive as it opens the doors for credit, which we were not able to access easily before. The manufacturing industry will not need incentives forever, but it will need them for a period of time in order to achieve the scale needed so that India can compete with anyone in the world. The Make in India initiative continues to need that little push from the Government, which will hopefully continue.

China is moving from a manufacturing-based economy to a consumer-driven one. How well do you think is the Indian manufacturing sector positioned to take advantage of it?

Most certainly it can. China has had to deal with some inherent problems that have crept up over the past few years. Their labour costs are going up, and even though they are in a position to tweak their labour laws to the extent necessary, they have to augment their manufacturing with a tremendous amount of automation. This is the best time for Indian manufacturing to jump in as their costs will be going up dramatically. We have to act now so that we don’t lose our advantage to other economies such as Thailand or Vietnam, which are also growing very quickly in the manufacturing sector.

As the head of one of India’s leading manufacturing companies, do you think increased FDI can bring about a balance between growth and competitiveness in the sector? If so, what should India be doing to draw more FDI in manufacturing?

I believe there’s already enough capital within the country. In fact, the manufacturing industry’s capex (capital expenditure) will only rise as the Make in India initiative kicks in with full gusto. Indian corporates can bring capital to the table as necessary, and we are not in a position where we have to be dependent on foreign money coming in. The Government has also done a very good job to ensure that even SMEs in the manufacturing sector have access to the capital already available.

What would you say has been the role of innovation—something that TTK Prestige has excelled at—in the recent rise of Indian manufacturing in the global playing field?

The role of innovation will be quite substantial. Innovation in India is something that is already present everywhere we look around—right from the traditional jugaad (innovative life hacks) to some of the most progressive scientific and technology-based innovations. India is in a position where we can match any country in the world in terms of ‘innovation quotient’. The manufacturing industry needs just a little bit of support right now so that innovation can be harnessed at all levels.

TTK Prestige is already India’s largest kitchen appliance brand. What about the international front? Can we expect to see the brand make major inroads on international markets?

What we are doing right now is trying to service certain developed economies with products and technologies we have built. The focus at this point in time is largely on private label exports; we don’t have the capacity at this point for branded exports by ourselves. So, our focus has been on working with very large players in developed economies to see how we can service their products. These companies are moving away from China and towards creating an alternative base in India. Thanks to the way ‘brand India’ has been built by this Government, India is on the top of their minds as a potential sourcing base. This is a good time for manufacturers, and we are trying to take advantage of it.

What is your outlook on India manufacturing sector within the next 4-5 years? What is the key target that the sector should be looking to hit?

There are a couple of things that the India manufacturing sector has to keep a very close eye on: quality, and scale. And it has to do so competitively. So far, our eye for quality has been good enough to service the Indian market, which is a little more forgiving than international markets will be. The Indian manufacturing sector has to up their quality standards to a level that is different from where it is today. The process of manufacturing itself is upgrading—most of the industry is looking at digitising manufacturing, bringing in more cyber-physical systems, and moving forward to the age of ‘Industry 4.0’. That is something that the Indian manufacturing sector is taking up as a challenge and will guide the future of the industry.