Service Vs Manufacturing for mass job creation in India

subhamoy.das · Post by **subhamoy.das** » 04 Feb 2013 12:36

India needs about 10-15m new jobs every year. But how dow we achive this. There are two groups of people.

One group favours the US model of "doing what we are good at". This group believes that India should build on its proven IT and ITes industry and leave the manuacturing to that several countries who are good at it. In short they propose that India leap frogs from a agriculture based economy to a service based economy thus bypassing the idustrialization phase. After all that is how the IT industry leap frogged by fixng the Y2K bugs and we are no where involved in the building of these very legacy systems in the past.

The second group is apprehensive that India is leapfrogging into a knowledge/service based economy without having to transition via manufacturing. They feel that India cannot move beyond the current level of growth on service alone, that we will be dependent on others for our basis needs and a loss of learning curve and the lack of sevice being able to employ the 75% of the India work force who are not even in middle school.

So let the discussion begin.

subhamoy.das · Post by **subhamoy.das** » 04 Feb 2013 12:43

India depends on service sector heavily around 60% of its GDP and growth. It is also a significant employment generator. Service sector encompasses a variety like tourism, rail freight, logistics, hotel industry; healthcare, financial services like insurance and banking have been growing at 28% over the last 5 years, which is remarkably higher than the GDP growth of 7%.

subhamoy.das · Post by **subhamoy.das** » 04 Feb 2013 12:45

http://in.reuters.com/article/2012/10/0 ... 2H20121004

India's services sector grows at fastest pace in 7 months

member_20292 · Post by **member_20292** » 04 Feb 2013 12:58

IB4TL

vina · Post by **vina** » 04 Feb 2013 15:09

You need both! Will modify that. You need ALL jobs that are possible across all sectors. We have vast unemployed population.
1B4TL.

brat · Post by **brat** » 04 Feb 2013 15:54

IB4TL

paramu · Post by **paramu** » 05 Feb 2013 06:00

Ha ha ha... Whot is INDA?

IB4TL.

Arjun · Post by **Arjun** » 05 Feb 2013 08:54

1) I don't see a reason for an either / or situation of having to choose between manufacturing vs services. So not sure if that tenor is appropriate for this thread - unless you can point to a reason why such a choice for the government is required.

2) where this thread may make sense is for those who want to predict (like in an equity research report) the likely mix of services and manufacturing in India's GDP say couple of decades down the road.

On Point (2) I am broadly agreed with you that India is more likely to be like the US down the road, where Services overwhelmingly predominates as a percentage of GDP.

subhamoy.das · Post by **subhamoy.das** » 05 Feb 2013 15:12

Point 2 is the purpose of this thread. I also see that same road for INDIA.
I would like folks to post counter facts - rather than emotional stuff like "there is no easy way out etc.."

subhamoy.das · Post by **subhamoy.das** » 05 Feb 2013 15:15

India services PMI rises to one-year high in January: HSBC

http://www.indianexpress.com/news/india ... t/1069609/

subhamoy.das · Post by **subhamoy.das** » 05 Feb 2013 15:16

Indian service sector:
http://www.google.co.in/search?q=indian ... 24&bih=482

Atri · Post by **Atri** » 05 Feb 2013 18:29

subhamoy.das wrote:Indian service sector:
http://www.google.co.in/search?q=indian ... 24&bih=482

This is a good thread.. But you got to put in some meat here, buddy.. else, it is lost cause...

subhamoy.das · Post by **subhamoy.das** » 06 Feb 2013 13:55

Indian BPO sector outpaces IT services growth

http://economictimes.indiatimes.com/tec ... 359882.cms

Provides a trailer of the things to unfold in the coming decade in the INDIAN service offshoring sector. Basically the bottom leg of the business process - read manufacturing which is low skill and low pay - went to CHINA but the top half of that process - which is high skill and high pay - is coming to INDIA as we have the core expertise in it.

subhamoy.das · Post by **subhamoy.das** » 06 Feb 2013 14:06

To put indian manufacturing in the CONTEXT here is a link : http://www.ibef.org/artdisplay.aspx?cat ... t_id=31588

The Manufacturing industry of India is the backbone of the economy that strengthens employment, agriculture & the service sectors. The Indian manufacturing industry is an emerging sector and has all the qualities to further enhance the economic development of the country. As targeted by the National Manufacturing Competitiveness Council (NMCC), it is set to contribute 25 per cent to the GDP by 2025 compared to the current share of nearly 16 per cent. The sector contributed 66 per cent to the nation's exports in FY11 and has been strengthening at a CAGR of 20 per cent in the last five years.

India ranks second in the world as per the 2010 Global Manufacturing Competitiveness Index (GMCI) prepared by the US Council on Competitiveness and Deloitte. As per the same source, India would maintain its second rank and continue to dominate the global manufacturing sector even after five years.

Total manufacturing exports in FY11 grew to US$ 168.0 billion from US$ 115.2 billion in FY10. The sector's exports grew at a CAGR of 19.6 per cent during FY03-11.

The top five sub-sectors of manufacturing are food products, basic metals, rubber and petrochemicals, chemicals, and electrical machinery. Together they account for over 66.0 per cent of total revenues in manufacturing.

subhamoy.das · Post by **subhamoy.das** » 06 Feb 2013 14:21

Some more information on the INDIAN manufacturing

The 11th edition of CII’s flagship event, for the Indian Manufacturing Sector, the Manufacturing Summit 2012, is scheduled for 17th & 18th December 2012, at Mumbai.

Over the past two decades, China''s manufacturing sector has proven to be a great growth story relying primarily on its strength in the manufacturing sector. Output across sectors like auto, steel, energy have witnessed jumps of 2-5X over the past decade alone in China. Indian manufacturing has grown by a slower amount at around 9% over the last decade. Over the last year, the growth has slowed down even more to less than 5%.

As China''s competitiveness declines – due to Yuan appreciation and wage inflation, and investment drops as a percentage of its GDP, there is a universal expectation that Chinese manufacturing''s growth is unlikely to continue unabated. There seems to be a clear opportunity for other countries like India to fill this void and become a manufacturing superpower to the world. Indian manufacturing has come of age in several areas. Select sectors such as auto components, gems and jewelry, have been globally recognized for adherence to global standards. Across mobile handsets, cars, engineering components, garments, global leaders have some of their largest factories in India. At the same time, in many other areas of manufacturing – heavy engineering, tooling, process equipment, aerospace, Indian industry is still grossly underdeveloped. The recent slowdown in manufacturing growth has raised further questions on the true potential in Indian manufacturing.

Given this situation, the theme for the Summit was "Re-igniting India''s Quest for Manufacturing Leadership".

The CII-BCG Report and the Leadership Survey were released at the Summit on 17 December 2012. While the Report talks about the rapidly changing global manufacturing landscape, and the emerging window of opportunity for India; the Survey which interviewed from 70 senior representatives of top Indian manufacturing companies, reflects the modest outlook for the sector, with over 75% respondents expecting the sector to grow at lesser than 7%.

subhamoy.das · Post by **subhamoy.das** » 06 Feb 2013 14:28

India's large service industry accounts for 57.2% of the country's GDP while the industrial and agricultural sectors contribute 28.6% and 14.6% respectively.[19] Agriculture is the predominant occupation in Rural India, accounting for about 52% of employment. The service sector makes up a further 34%, and industrial sector around 14%.[20] However, statistics from a 2009–10 government survey, which used a smaller sample size than earlier surveys, suggested that the share of agriculture in employment had dropped to 45.5%.[6]

Major industries include telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software and pharmaceuticals.[21] The labour force totals 500 million workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish.[21] In 2011–2012, India's top five trading partners are China, United Arab Emirates, United States, Saudi Arabia and Switzerland

alexis · Post by **alexis** » 06 Feb 2013 15:41

India needs both - is there anything to debate?

subhamoy.das · Post by **subhamoy.das** » 06 Feb 2013 16:52

The debate is, by the next decade, which one will be the over whelming portion of the economy and why? Some of us are betting that by next decade service will account for about 8T ( 70% of GDP ) of a 12T INDIAN GDP in PPP terms and manufacturing will be around 2.5T ( 20% of GDP ) and will be the corner stone of the INDIAN economy driving mass well paid jobs. The stakes are very high. If that happens then it will be an event that human kind has not witnessed before - a country leap forgging from a agri based low income ecomomy to a service driven knowledge based medium income economy by passing large scale manufacturing purely on the strength of a scientific mind and a driven mind. So let us keep tracking - like we did leapfrogging in LCA and the missile programme - and see if INDIA can leap frog in the economic area also.

subhamoy.das · Post by **subhamoy.das** » 07 Feb 2013 12:04

7
Hero MotoCorp's workers seek Rs 1 lakh per month salary.

http://economictimes.indiatimes.com/new ... 378548.cms

If this becomes a trailor of the things to come then a factory worker is going to cost about 5 times more than a similar level service worker in the IT/BPO space. This level of wage will certainly not enable the manufacturing to produce mass jobs instead it will force them to employ fewer and fewere jobs/hands and go more for automation to remain cost competitive. A pointer why factories will not produce mass jobs for India as automibile is one of the core manufacturing sub-sectors and if that cannot create mass jobs then ?

subhamoy.das · Post by **subhamoy.das** » 08 Feb 2013 18:15

http://economictimes.indiatimes.com/fea ... 383113.cms

This could be a pointer to the fact that the path to economic development is determined by the culture of the country which means that Indian's are culturally more inclined to excel in service rather than factories.

member_20292 · Post by **member_20292** » 09 Feb 2013 00:42

Nice soliloquy babuji

subhamoy.das · Post by **subhamoy.das** » 09 Feb 2013 10:01

as Tagore said - "jodi tor dak sune keo na ase to ekla chalo re.....".

subhamoy.das · Post by **subhamoy.das** » 12 Feb 2013 11:41

Nielsen increases TCS contract size to $2.5 billion

http://economictimes.indiatimes.com/tec ... 456973.cms

Business service off shoring is a huge un-tapped part of the service industry in INDIA and will take the lead in the coming days, over IT, to propel us to a service based GDP and manufacuturing will keep a distant second fiddle to support the service and also export some surplus.

subhamoy.das · Post by **subhamoy.das** » 12 Feb 2013 20:03

http://economictimes.indiatimes.com/sli ... 462148.cms

Manufacturing is labor intensive tough job and not for us INDIANs... We rather sit in a cosy office and let our brain power run amock rather than down in that drain with heavy equipment and all. Thank god the CHINESE are here...

wrdos · Post by **wrdos** » 13 Feb 2013 12:13

Great pictures! Thank you so much for sharing these. I am really moved. From the faces and the dirty hands of those young engineers from Shanghai, I see the future of China.

subhamoy.das wrote:http://economictimes.indiatimes.com/sli ... 462148.cms

Manufacturing is labor intensive tough job and not for us INDIANs... We rather sit in a cosy office and let our brain power run amock rather than down in that drain with heavy equipment and all. Thank god the CHINESE are here...

ArmenT · Post by **ArmenT** » 13 Feb 2013 13:40

subhamoy.das wrote:http://economictimes.indiatimes.com/sli ... 462148.cms

Manufacturing is labor intensive tough job and not for us INDIANs... We rather sit in a cosy office and let our brain power run amock rather than down in that drain with heavy equipment and all.

That's a real shame. What happened to all that "dignity of labor" movement then? Why are Indians afraid to get their hands dirty? Without getting hands dirty, one only remains a "theoretical expert" and all that brain power is for show only.

I thank Gawd every day that my Dad taught me and my siblings to be independent and hands on....

Suraj · Post by **Suraj** » 13 Feb 2013 14:52

subhamoy.das wrote:http://economictimes.indiatimes.com/sli ... 462148.cms

Manufacturing is labor intensive tough job and not for us INDIANs... We rather sit in a cosy office and let our brain power run amock rather than down in that drain with heavy equipment and all. Thank god the CHINESE are here...

I agree with Armen T . These young Chinese men have a lot to teach us. I hope we learn from their project management skills and diligence to work through Chinese New Year to help build New Delhi's infrastructure.

subhamoy.das · Post by **subhamoy.das** » 13 Feb 2013 17:41

While every job has its dignity but it also has its place in the job eco system which is measured,sadly, by its intellectual/educational/mind power content and has a asking rate in money. And yes, nice movig words about help. There is no help here. INDIA is the customer and CHINA is the vendor. Make no mistake about that.

How come we donot see Japanese or US workers down there? How come we donot see such workers in Indian service delivery centres. How come we donot see Indian wokers in under ground holes in CHINA? Would we see CHINESE workers in holes in a african nation? The way I read this photo is that the manufacturing power house is vending to the sevice power house which has deep pockets and the vendor i so despeate that it can go any length to satisfy the customer like skipping lunar holidays and opening up source code for inspection.

Power to service.

SBajwa · Post by **SBajwa** » 14 Feb 2013 02:11

Manufacturing is labor intensive tough job and not for us INDIANs... We rather sit in a cosy office and let our brain power run amock rather than down in that drain with heavy equipment and all.

When I see a poor average family of five (husband wife and kids) toiling on one of the roads I see

1. Unskilled Workers.
2. Education has not reached the lowest of the low.

Indians are as healthy and hard working as anybody (check indians working in manufacturing units in UK, Canada, USA, Australia and Europe).

So!! if you want to increase manufacturing you need to spend more time in

1. School at 9th-12th grade level to teach children different vocations (plumbing, electricity, etc)
2. Instead of engineering schools offered by Government more private school (subsidized for poor)
3. Get the manufacturing firms to educate the young for basic manufacturing skills.

Everywhere I see in India even the so called skilled workers (plumbers, electricians, masons, painters, etc) are no where the skill level of the world. An average educated high school person can figure out and do much better job than Indian "skilled" pool available in market. So I am guessing that the work force that is available for an average manufacturing sector (pencils, pens, shoes, shirts, bicycles) is about the same.

For example a simple high school electrician here in USA is better educated, professional and skilled in practical things than a qualified engineer (from RECs). They might demand much more money $80/hour but they get the job professionally done (as oppose to you doing yourself which is about the same level as Indian unskilled workforce available in market). so!! We need more practical education in schools! day to day skills for at least 50% of the population that will not get into any high tech jobs nor is going to become doctors, etc.

1. How to effectively communicate (verbal, electronic and print).
2. How to solve physical manufacturing problems using simple tools and/or using manuals.
and so forth.

Theo_Fidel · Post by **Theo_Fidel** » 14 Feb 2013 06:29

Our more educated workers work very very hard and IME don't lack in work ethic. And I'm not trying to be a desh bakt jingo here....

We are comparing apples and oranges here. Chinese workers who have a good 12+ education and technical school and years of construction experience vs unskilled Ramdas who is likely 5th standard fail. This is not a fair comparison. In the Gulf educated Indian workers are easily the hardest working and most productive around. Even the Chinese companies hire them in hordes. I would like to point out that for their 'diligence' these Chinese folks are getting paid $100,000 effective annual salary while those poor chaprasis around them struggle to make $1,000 annually. Again not really a fair comparison is it. While we are at it we should remember the normal work schedule for the uneducated laboring on that same metro. Typically it is 12 hours on 12 hours off everyday, including Sundays & Saturdays with 2 weeks vacation every 8 weeks. No breaks for deepavalli, new year, christmas, ID, etc. Even the Chinese will struggle to match this.

The problem has always been our 5 standard fail destitute class. For a long time this was 80%+ of our population, but now it has probably dropped to 40% or so. The real problem I see is that folks who should not be working on world class quality stuff are hired with no consideration for qualification or ability. Think of how wrong headed it is to hire 8,000 uneducated and unskilled workers from mostly NI to try and build a world class airport like say Chennai Airport. There is another 25,000 or so working on the Chennai metro. How are you going to get world class quality. This is the main problem with so much that we do in India, folks are hired not by the reputation of their work quality but because they are cheap and showed up at the office. Things are put together shoddily because the folks who got in there ended up mostly unskilled. The attitude that the 5 fail should be shuffled off to manufacturing, how can this be....

Education will help, but we as a group need to demand better quality and be willing to pay for it as well. The attitude too often in India is don't pay folks too much because it will, 'encourage them'. But this is the exact opposite of what needs to be done. We need to encourage our better workers by paying them more and tipping them better. As society we should glorify quality work and a good life for workers with good pay.

As my dad says, you pay peanuts, you get monkeys....
apologies to those offended.

SriKumar · Post by **SriKumar** » 14 Feb 2013 08:17

subhamoy.das wrote: - "jodi tor dak sune keo na ase to ekla chalo re.....". from Tagore

amay proshno kore neel dhrubo tara
aar koto kaal tumi robo dishahaara robo disha haara
(with apologies to Hemant Kumar)

subhamoy.das · Post by **subhamoy.das** » 14 Feb 2013 19:57

good song but wrong context. instead of the song please post hard data showing that manufacturing in India is gaining over service as a % of GDP. till that time the song applies to u my friend...

SBajwa · Post by **SBajwa** » 15 Feb 2013 05:48

It will be great idea if once an uneducated person (labor, mason, plumber, electrician, painter, etc) has some experience in his/her speciality they get further education/training in how to hone/improve their skills.

our labor force is unskilled because they keep jumping from different types of work trying to make ends meet.

VKumar · Post by **VKumar** » 15 Feb 2013 23:18

In my small & humble experience with industry in India, manufacturing can take off only when the labour laws are drastically amended, when the unions become equally responsible for the employees duties as well as his rights, when the labour officers raj is stopped, when the politicians start seeing beyond their own personal re-election. When is all this every likely? Every employer is under threat, whther he employs a few persons or a few thousand, NOTWITHSTANDING what the employer is paying/spending on staff. Almost all the employers I have known have regarded their employees as extensions of their family and done their best. Yet all are dissatisfied with the threat which employees and labor laws can pose.

on the other hand, services has grown because most of the smaller services are unknown/underground and labor officers/unions are unable to get at them or are ignorant of them

India's growth is being held back by the politician/babu/goonda/big businessman nexus. this set exists only to perpetuate themselves and cares little for national progress.

There is a HUGE, HUGE opportunity in manufacturing that is slowly, very slowly coming up and is already making an astonishing mark in exports. But I will not name this sector, only will say that if it continues at this rate it will change the rural landscape for the better in a few years!

subhamoy.das · Post by **subhamoy.das** » 16 Feb 2013 14:16

http://indiabudget.nic.in/budget2011-20 ... hap-10.pdf

A very good read on the INDIAN service sector

subhamoy.das · Post by **subhamoy.das** » 16 Feb 2013 14:31

Some interesting data points :

manufacturing accounts for 18% of total jobs and about 20% of gdp
service accounts for 25% of total jobs and about 60% of gdp

India's share of service in gdp increased along with germany, italy, canada and russia in last 10years. Chinese,US,Japan remained unchanged. Japan and US having 70%+ of share and CHINA at 39%.

construction is included in service sector.

service gdp growth has average around 10% since 2005 , much above the whole gdp growth, proving its resilience. Today INDIA has worlds third largest service gdp of about 2.4T (PPP) while that of US is 9T, China 4T and Japan 2T. While both US and CHINA has a stagnating service GDP for last decade in contrast, I would say that by coming decade INDIA will surely become worlds second largest service GDP, just after US and we would have leap frogged, without any double left in the minds of the old school boys, by passing manufacturing, to a medium income nation.

INDIA is a land of leap froggers and we do things out of the beaten track relying on a beautiful mind and be driven. Software is a prime example. We have a 100b IT industry yet cannot make our own computers - all major brands are MNC. Aerospace is another example where we have a LCAs/host of missiles/launch vehicles/satellites in contrast we have very little to show in the name of electronic manufacturing.

Waiting for the day when INDIA will have a 5T service gdp and we will also be a middle income nation at that time. The date will be 2022 or earlier.

VKumar · Post by **VKumar** » 16 Feb 2013 15:33

India leap frogs in those sectors where government is 'absent', like in software services in the first 15 years.

This is happening in TUITION CLASSES, DRESS DESIGNING, DIAMOND CUTTING & POLISHING and will also happen in a manufacturing industry that I know about.

India's biggest hurdle is our own government - government servants at all levels, politicians at all levels - these are the persons who desire 'status quo' and resist change, without any care for the Nation. They only want to perpetuate themselves.

subhamoy.das · Post by **subhamoy.das** » 16 Feb 2013 21:43

Balance must be maintained between services and manufacturing sector: Azim Premji

http://economictimes.indiatimes.com/new ... 531435.cms

subhamoy.das · Post by **subhamoy.das** » 16 Feb 2013 21:45

Manufacturing sector can grow at 14% by adopting automation, says NMCC Member Secretary

http://economictimes.indiatimes.com/new ... 531445.cms

subhamoy.das · Post by **subhamoy.das** » 16 Feb 2013 21:47

Share of manufacturing in total employment low: Pranab Mukherjee

http://economictimes.indiatimes.com/new ... 516709.cms