India Manufacturing Talk

News and Views on Manufacturing in India

India Manufacturing Surges in August

A recent article in Automation World, freelance journalist Uday Lal Pai has put down some positive figures based on industrial output as of August 2009.  Manufacturing output is expected to be at 8% for the year ending March 2010 and Industrial Production (IIP) has grown 10.4% YOY as of August 2009 – the highest its been over the past 22 months.  Indian Government officials have been quick to claim that the worst might be over for the Indian economy based on these strong numbers.

“It (industrial growth) is a good sign and it is a process of recovery.  We are hoping that when the final figure for the second quarter (July-September)is available, there will perhaps be some higher growth.”


Opportunities for Manufacturing Still Abound

The global recession has all but wiped out the exuberance of the manufacturing industries.  Nothing new to report here.  News all over the web and print medias focus endlessly on the agony being faced by the common man these days but the fact is that the manufacturing industries have been reeling long before.   Spiraling interest rates, the strong/weak dollar rates and the oil price crisis all started a slow down process that was effectively finished off by the global economic meltdown.

Companies all over seem to be floating a figure anywhere between 30% – 50%  reduction in order intakes and corresponding metrics.   The industries worst hit by the recession are the automobile industries and their ancillaries.  This has resulted in a snowball effect that directly affected all verticals that act as suppliers to the industry – iron & steel, transport, raw materials,  etc.   Most plants were effectively closed for months of November and December with some activity reviving in January.


Interest Rates Torpedo Two Wheeler Mfg

India’s two wheeler industry consisting of the motor cycle, scooter and “scooterette” segments has been hit by the rise in interest rates as sales have plummeted in the last few months. Sales figures of Bajaj Auto and TVS slid against market leader Hero Honda which as a result of this downturn widened it’s gap with Bajaj Auto – its nearest competitor – by little over one lakh units per month. (One Lakh = 100,000)

Bucking the trend Hero Honda sales went up 4.31% for September 2007 with sales of 314,537 units against 301,577 units sold last year. In contrast Bajaj Auto’s sales slid by 23% in September – selling 232,496 units against 300,141 last year. TVS sales fell 29% against last year – selling 115,091 units.


Automotive by the Numbers

Putting a finger on the potential market for automotive is a heady mix of numbers. The overall demand for auto components is estimated to be in the $1.7 trillion range by the end of 2016. However looking for what part of that will eventually come to India is key for Indian manufacturing. The AMP has targeted $25 billion and even that is several orders of magnitude above what India is doing today which appears to be somewhere near $3 billion to $6 billion depending on sources and segment of industry.

Carlos Ghosn, CEO Nissan Motor Co.


Aersopace Heating Up

Aravind Melligeri, President & CEO of QuEST Machining and Manufacturing

According to Nasscom, global spending on engineering services was $750 billion in 2004, with aerospace accounting for 8%, and it could rise to $1.1 trillion by 2020. The total offshore engineering spend is expected to grow to $150-$225 billion by 2020 and India, with its talent pool and experience in engineering services, could pick up 25% of that.

We believe there is an opportunity of close to $1 billion per year of exports to be achieved by 2012. The aerospace industry is growing at 30% – 40% per year.


Watch those Multipliers

Ah those multipliers! I’ve been seeing so many out there that I’ve decided to keep track. Hopefully with time and sufficient data we could get a better understanding of the multiplier for the automobile industry. An employment multiplier typically refers to the number of jobs created in support per job in the industry. Current estimates of the multiplier in the automobile industry range from 15 to 7.

Here is a list of references that I have found so far …


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