The Hindu Business Line : Panel report to help boost competitiveness of industry

THE National Manufacturing Competitiveness Council (NMCC) does not intend to make "a report which will remain in archive but to suggest practical measures to help the Government also to implement" them for improving the competitiveness and efficiency of domestic manufacturing sector.

Disclosing this to Business Line here in an interview, the Chairman of the NMCC, Mr V. Krishnamurthy, said one of the underlying assumptions of globalisation is to make the overall economy competitive and efficient on several counts.

At the enterprise level, this is achieved through size, technology absorption and total factor productivity.

Second, he said, the sector as a whole might require some common testing and processing facilities entailing a lot of investment, which the particular enterprise might not be able to do but it has to be done partly by the Government and partly by the industry association.

Third, he said, is what the Government should do in providing the right type of infrastructure and fourth is taxation, as both direct and indirect taxes might make the end products quite expensive.

"By keeping these products more expensive, what happens is that even domestic demand has not grown over a period of time. I am a firm believer that unless the domestic base itself is high, it is very difficult to make ourselves competitive internationally," Mr Krishnamurthy remarked.

He said one of the first things before the council to see that why domestic demand has not yet increased. "It is only because our prices are comparatively higher and they are not able to afford these or they are not getting the value for money.

"Even that also takes you on how to keep the cost down, how to make the enterprise cost-competitive, not to talk of how to improve the quality to international standards and this runs across the board from food processing to capital goods industry - every industry requires to be examined," he said.

The idea is to how to provide better employment opportunities to people coming out of the rural areas and agro-based operations and the only place they could be trained and accommodated is in manufacturing activity.

Small-scale industry and traditional industry and even the advanced industry might get scrapped, but in any case along the long term, the manufacturing operations have to be increased and this is possible only if it is competitive, he said.

"The council will study and suggest measures that may be directed to the Government and even to individual enterprises to make them more efficient and identify the common factors. It can also use its influence with the Government to provide the necessary additional support for industry to become competitive," Mr Krishnamurty said.

The various Government Ministries as also industry associations have wealth of details on the subject "and our effort is to collect and collate all these information rather than rediscover them".

He said that the US and the UK have found competition council very useful instrument as their economies have considerably benefited by it.

As such, he said, the proposed Indian version need not confine itself to manufacturing but could extend to all economic activity to make the Indian economy competitive.

Asked about any parallel suggestions the council could make to keep the economic reforms on course, he said that its work would also be to identify areas in which extensive investment is required, both domestic and foreign and also the areas in which investment is to be freely encouraged.

He said that while services sector has done well, beyond a point services sector would not grow unless there is a strong manufacturing base.

He said that since competitiveness needs to emanate from all sectors - large and small, private and public, the council's suggestions would cover the public sector undertakings too.

"You can't wish away the PSUs. They are going to play an active and a significant role in unlocking the manufacturing potentials and bring it on par to global levels."