INDIAN ECONOMY-2010 INDUSTRY

Manufacturing

India has emerged as one of the world's top ten countries in industrial production as per UNIDO's new report titled 'Yearbook of Industrial Statistics 2010'. India surpassed Canada, Brazil and Mexico in 2009 to reach the 9th position from the 12th position it held in 2008.

The Index of Industrial Production (IIP) quick estimates data for April 2010 shows a growth of 19.4 per cent in the manufacturing sector as compared to April 2009. The cumulative growth during April-March 2009-10 over the corresponding period of 2008-09 is 10.9 per cent, according to data by the Ministry of Statistics and Programme Implementation.

Moreover, as per data released by the Ministry, manufacturing sector posted a 16.3 per cent growth in January-March 2010.

Growth Trends

The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, recorded a 27 month high in May 2010 to 59 from 57.2 in April 2010. A figure above 50 means activity is expanding.

"The Indian economy is hardly pausing for breath," said Frederic Neumann, co-head of Asian Economics Research, HSBC. "Output growth remains at a robust pace and new orders continue to pour in. This is benefiting the job market as more and more firms are hiring," he added.

The new orders index increased to 63.7 in May from 61.9 in April 2010, on the back of strong domestic demand, according to the PMI report. It was the 14th consecutive month when new orders expanded.

Exports from special economic zones (SEZs) grew by over 122 per cent to US$ 49.5 billion in 2009-10 as compared to 2008-09. IT, IT hardware, petroleum, engineering, leather and garments are the leading exports from SEZs.

• BorgWarner Inc, a US based auto component and systems manufacturing company with presence in 18 countries, has established its Indian manufacturing facility at Sipcot industrial park at Sriperambadur near Chennai at a cost of US$ 6.6 million

• US-based electronic manufacturing services company, Sanmina-SCI has opened a new manufacturing facility in March 2010, at Oragadam, Tamil Nadu at an investment of US$ 55.5 million

• Larsen & Toubro (L&T) and Howden Global have signed a US$ 22.2 million joint venture (JV) for setting up an industrial facility to design, engineer, manufacture and supply axial fans and air pre-heaters to Indian thermal power plants ranging between 100 mega watt (MW) to 1200 MW. The manufacturing unit will be setup in Hazira, Gujarat, and its operations are expected to commence in 2011

• Vadodara headquartered Kemrock Industries and Exports Ltd, a leading manufacturer of reinforced polymer (FRP) composites in India, plans to invest US$ 300-400 million over the next four to five years for company's new initiatives

• Surat-based Nakoda Ltd, a fully drawn yarn segment manufacturer has signed an asset purchase agreement with South Korean polyester fibre manufacturing firm, Kyunghan Industry Company Ltd for acquisition of their entire manufacturing facilities at Kyunghan. Nakoda Ltd, will invest US$ 40 million through its subsidiary Indo Korean Petrochem Ltd, for acquisition of the South Korean manufacturing plant

• Indian Immunologicals Ltd (IIL), a subsidiary of National Dairy Development Board, will launch four vaccines in the next one year and will invest US$ 32.18 million to set up a new manufacturing facility in Hyderabad that will produce both animal and human vaccines

• JK Tyre & Industries will invest US$ 198.7 million to set up a new radial tyre manufacturing facility near Chennai that will have a total production capacity of 2.9 million units per annum. The plant will be completed by 2012

India is fast emerging as a global manufacturing hub with a large number of companies shifting their manufacturing base to the country. Moreover, India has the largest number of companies, outside of Japan, that have been recognised for excellence in quality. As many as 21 companies have received the Deming Excellence awards; 153 companies have achieved Total Productive Maintenance (TPM) Excellence Award for their total productivity management practices by the Japan Institute of Plant Maintenance (JIPM) committee. Moreover, according to Mr A Raja, Union Minister for Communication and Information Technology, the government is aiming to make India a global manufacturing hub for telecom by facilitating various policies. • Japanese automobile major, Yamaha, is planning to make India a hub for manufacturing its premium and deluxe bikes for overseas markets. The company's Indian unit supplied 66,904 bikes in fiscal 2010 to Yamaha's global operation compared with 38,639 units in 2008-2009, an increase of 73 per cent. • According to a report by RNCOS, "Global Vaccine Market Forecast to 2012" published in February 2010, the vaccine market in India is forecasted to grow at a CAGR of around 23 per cent from 2009-10 to 2011-12. India has emerged as a new hub for vaccine manufacturers from across the world. • VE Commercial Vehicles (VECV) is investing US$ 61.9 million in its Pithampur plant for the production and final assembly of Volvo's new global medium-duty engine platform. The expanded facility will act as a global manufacturing hub for Volvo group's requirements. • Nokia's manufacturing facility at Sriperumbudur near Chennai crossed production volumes of 350 million handsets in April 2010. Nokia is now exporting to North America, Europe, Middle East, Asia, Australia and New Zealand, according to company statement. Government Initiatives The government has issued the new Consolidated Foreign Direct Investment (FDI) policy document, which has come into effect from April 1, 2010. Moreover, as per a press release by the Ministry of Commerce and Industry, the government is working on launching a National Manufacturing Policy by the end of 2010 and has already circulated a discussion paper, inviting comments from all stakeholders in this regard. According to Mr Anand Sharma, Union Minister for Commerce, the government is also planning to establish National Manufacturing and Investment Zones (NMIZs) to push the manufacturing share in gross domestic price (GDP). The proposed National Manufacturing Policy for these NMIZs would act as the key enablers in driving the growth of the sector in India, as per the press release. Main objectives of NMIZs are: • To promote investments in the manufacturing sector and make the country a hub for both domestic and international markets • To increase the sectoral share of manufacturing in GDP to 25 per cent by 2022 • To double the current employment level in the sector; and • To enhance global competitiveness of the sector