Make in India

For manufacturing to succeed, we need to have clear policies. The vision must be outlined, the objectives framed. Unless this happens “Make in India” will end up being one amongst the 100 other campaigns we spend tax payer’s money and achieve nothing.  

I was one of those few lucky Indian’s who got the opportunity to study in one of the best universities in the world – The University of Sydney. While I was pursuing my Master’s, I had the opportunity to work for The United States Studies Centre. The job was challenging; it gave me great exposure to Senior Management and Risk Advisors of the Australian financial industry.

It was at a time when India was a growth story. I'm certain that many Indians at that time shared the CV of then Prime Minister, Dr. Manmohan Singh and spoke highly of him and felt proud of his achievements and academic credentials. I was surely one of them. I wanted to be a part of the growth story and more importantly sweat it out and help India progress using the skills and knowledge I had gained living abroad.

I come from a business family, we manufacture silk fashion fabrics – Georgette, Chiffon, Crepe, Satin, etc. We have a SME unit. The idea was to cater to the rising middle class, improve quality and increase production cost by investing in technology. The government had set up schemes such as TUFS and there were, weaver support initiatives run by the Central Silk Board.

I took charge of the business and looked into the production soon after my MBA and came to realize that we were heading towards acute shortage of skilled labour. The youth did not want to enter the industry because of the working environment and opportunities available in other sectors. I could fix the former, but not the latter. A skilled weaver in India can make around Rs. 15,000 per month working 11 hours a day, 6 days a week, where as, a watchman manning shops in an Indian mall or ATM makes Rs. 10,000 – Rs. 12,000 per month, without having to participate in any strenuous activity. This was something I could not compete with. Yes, one can attempt at brainwashing an individual and convince him that the job he's doing is noble and will continue to support his family, but who on earth wouldn’t want a job that is stress-free with a good pay and in an organized sector with a great environment. 

So, we re-located to the outskirts of the city, chose an area that had a weaving population, invested in technology and purchased high-tech machines. It took us six to eight months to make the desired fabrics. Why it took that long is another story, but it taught me about the factors one must consider before purchasing high value equipment.

For India, 2012 started on a bad note, first the 2g scam was unearthed followed by the coal scam. The same prime minister who we did not stop praising was questioned, his leadership skills, his authority, his integrity was questioned and rightly so. Amidst this was a business crisis, investors lost faith in India, the dollar jumped. Indians also began cutting down on purchase, what happened to the economy is known to all.

India is surely known for Silk, after China of course, but of all the silk fabrics manufactured in India, a whopping 80% is imported from China, primarily because of the better quality. Apart from importing raw material we also import finished fabrics, sometimes their selling price is below the cost of a fabric manufactured in India with Chinese yarn. There are two reasons for that, the simple one is, economics of scale, and the better one is, government charges higher duty on importing raw material over finished product. One of the argument for it is to protect the Indian sericulture industry, but however economical a product may be if it does not serve your utility you will not buy it, that’s why Indian power-loom industry does not buy local raw silk. 

So the Indian manufacturer continues to buy Chinese silk yarn at higher prices.

I forgot to mention, most weavers in Bangalore buy yarn from local traders who import it and determine the sale price based on the daily dollar exchange rate. While I was taking various courses and getting trained at the Central Silk board, I ran into a manager of an Export Oriented Unit, after conversing with him, I found out that 1kg of 3A grade silk yarn costs his company Rs. 2,300, and we were purchasing 2A grade at Rs. 3,000.

Thus, there are many structural issues with respect to manufacturing, in India. While the Prime Minister may travel the world and sell the dream that India wants to become the next manufacturing hub, do Indians, particularly the jobseekers want to work in a factory? Or would they prefer speeding across the city on a motorbike or a cab? Or just sit at a printer desk? Or man the stationary of a multi-national organisation? I do not know. What I do know is that manufacturing requires physical work, lots of it, and skill, which takes years to build.

PS: I wrote this blog after a heart-warming conversation with an employee, whom I was able to mould from a worker into a process leader. In December, last year, I parted ways from my family business, largely because of personal reasons. Having spent two years in one of the most traditional industries, I know the challenges and thus, I am sceptical as to whether “Make in India” will succeed without a clear vision and defined objectives.

Saurabh Seth