Mr. Roques, the companies within an industry will not agree collectively in any competitive, large and fragmented industry. Multinationals will come to India individually but the trickle will become a flood when they see other multinationals succeeding. Let me use our electronics industry as an example.
We have been manufacturing Printed Circuit Boards (SCLpcb.com) in India for over 20 years. We are seeing less reliance on government driven telecom orders and more on private sector driven automotive electronics, cell phones, consumer electronics, LED lighting etc. Huge potential for growth already so we are adding CNC machines from Switzerland. Indian Aviation and defence electronics add to the potential. As our scale and technology improve, our exports increase. Foreign manufacturers hoping to also take advantage of the large growing Indian market and hoping to diversify supply chains also come to India. This virtuous cycle is what the McKinsey article was highlighting.
As others have pointed out the damper on this is poor infrastructure (roads, customs and especially power), expensive loans (17%), antiquated labor and laws, etc. The service sector relies less on this. Workarounds like diesel generators are what we are all forced to do. I am from the US so believe me when I say that it takes a lot of work to overcome the myriad of obstacles. But it is doable and the opportunities are enormous.
One thing that the Indian technology sector is lacking compared to China is a killer instinct. To have confidence to kill the competition and surge ahead.
The main reason why the software industry has flourished is that in the software industry though you have to put in more hours every day you have the flexibility about which time of the day you will put those hours. The software engineers are used to have their own work schedules, facility for work from home and all those kind of flexibilities. So this is an asynchromous activity
high tech manufacturing on the other hand requires you to follow strict day-to-day time schedules- for supplies-for production for deliveries. There is not a momemnt to relax. It has to be a well orchestrated operation on the shop floor with all the particpants present at the same time working in a synchronous manner.
So for high tech manufacturing to succeed in India everything from the infrastructure to people's work habits have to have a sea change.
The automobile manufactruing in India has got a moderate success and I am sure with a little government push similar success can be replicated in Electronics manufactruing.
@Himan: I've read in several reports that tariffs and/or taxes create a problem for foreign investments, but I'm not sure on the particulars. Any major development effort such as high-tech usually looks for the local government's support. Look at how China suceeded and how much the government there contributed.
Bolaji, from what i read and hear; the problem lies in the system. The goverment needs a large scale reform for manufacturing to flourish. Apart from that the strict labor rules (for blue collar jobs) and lack of good infrastructure are the major problems.
"In fact, India is the only nation that can go punch-for-punch with China in offering the huge workforce global manufacturers need"
Right Bolaji. The high educational/literacy rate and a large pool of skilled manpower can drive the nation to a manufacturing hub. The only thing is government has to create necessary infrastructure and a direct FDI single window system. I feels that if government is taking initiatives, most of the companies may be willing for investment in manufacturing sector.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.