For last 70 yrs, our ecosystem has been adverse to competitive manufacturing: RC Bhagava

In order to become globally competitive, manufacturing has to be private sector driven.

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Mission #Atmanirbhar means we become more competitive and grow manufacturing, says Chairman, Maruti Suzuki

What is your view on the Indian manufacturing sector? With the exception of auto, pharma, some gems and jewellery and barring one or two niche engineering companies, Indian manufacturing sector in a sense has been in the doldrums?
It is a fairly complicated issue because it requires various changes to be made in the way the government and the political system looks at manufacturing, how the bureaucracy deals with the sector and the growth of the industry. Also changes in how the entrepreneurs and industry managements go about their business is required because over the last 60-70 years, we have built a whole ecosystem which is actually quite adverse to competitive manufacturing.

We have put the spotlight on Atmanirbhar Bharat as the way to revive the India story. What will it take for the country to achieve this?
Some people interpret the Atmanirbhar Mission to mean that you shut yourself from the rest of the world and thus become totally self reliant. That is a total misunderstanding of what the prime minister has said. It actually means that we should improve our manufacturing and manufacture a lot of products here which we do not do today. That will require us to become more competitive and grow manufacturing which is what we were talking about a little while back.


Now to do that, the whole manufacturing industry in India has to come at a different plane from what it has been operating at these last 70 years. To start with, it is quite evident that if the manufacturing industry is going to grow and become globally competitive, it has to be private sector driven and the public sector in all these years has never been able to achieve the purpose of either growing the industry or generating resources which it could put back into growth of the industry or developing technology or reaching as Pandit Nehru had said the commanding heights of the economy.

The public sector in a lot of cases -- be it infrastructure or inputs for other industries -- is actually one of the causes of higher cost of production in India.

Auto is a very complex sector because it involves multiple products, multiple assembly lines. Maruti has followed best practices or following the practice of zero inventory. Your margins have been constant, one of the best in the industry. If Indian auto industry can do it, what others need to do to is replicate those manufacturing practices. Do you agree?
There are a whole lot of things which we have to do to make this happen. The primary objective of the company between management and all employees has to be at all time to look at ways of reducing cost, reducing waste, improving productivity and finding ways to improve efficiency at any stage of the operations.

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And this is an ongoing programme which is 24x7x365. Year after year, everybody’s focus in the company is how to improve what you are doing. In order to make this happen, the employees have to consider themselves as a part of the organisation. They must think that it is in their interest for the company to be more cost efficient.

If the company grows, opportunities for all employees increase, their career opportunities will open up because of expansion. If the company makes more profit, it can also give more and more benefits and a better quality of life to employees which is exactly what has happened in Maruti and therefore all employees, including workers in Maruti work as partners in the company and not as employees. They consider themselves partners in the company.

The management itself has kept its expenses very frugal. If you compare the management expenses in Maruti with similar kind of management expenses in much-much smaller companies, you will find that Maruti is a much lower cost company.

A lot of companies can emulate Maruti as you highlighted but Atmanirbhar is not just being self reliant, but also being globally competitive. If there are three or four areas that we can immediately act on and which are actionable ideas, can you share what that would be? What should the government immediately focus on?
We have to import so much for our industry as many things are not made locally. Ultimately, if there was a good business opportunity, then somebody would have invested in that opportunity or if industry itself felt that they needed to make more locally, then imports would not have happened. It has not happened for a couple of reasons. First, in India, industries have been very small and remained at a low range of manufacturing over the years as these have kept pace with GDP growth. We still remain 14% to 16% of the GDP which we were several decades ago. GDP and manufacturing has grown at the same rate. But investors, especially foreign investors, have not believed this low rate of growth.
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We have been telling them to come and invest in India because we had a huge market and there is a huge potential for growth here. But they do not come as they do not see that growth happening. So that is one.

The demand for products has grown too slowly. We need to look at that again, the cost of manufacturing is much higher than what they should be.
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So what are the challenges we should be prepared for? This is going to be a long and bumpy road ahead. Atmanirbharta means that you are rebooting a lot of industries. Some need infrastructure, some need skills, some need government policy intervention and some need all?
Everybody in the country and that means all political parties must accept that today making India a highly competitive manufacturing nation is an absolute national priority. This objective should not be subject to political wrangling and political point scoring and everybody must cooperate.

Number two, this has to be driven by the private sector. Everything which is required to make industry competitive including changes in our laws, changes in the way we price imports, changes in the way infrastructure is managed, the way the labour is organised, have to be done. We are going about labour in a wrong way which is not productive at all and that needs to be recognised.

Thirdly, industrialists themselves have to change their behaviour pattern so that they can earn the trust of not only the political system and the bureaucrats but of the people at large. Today, in general, people do not have too much trust in industrialists. Of course, there are exceptions. There are exceptional people in the industry who are outstanding in terms of their integrity and contribution to the nation. But as a whole, I think industrialists are not considered trustworthy by the people. That needs to change.

We need to understand that labour is a very important component for achieving productivity and they have to believe that they are partners in the company and work for the company’s good, that it is in their real interest to help in the growth and prosperity of their companies.
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