Red tape slows Indian manufacturing: Expert

NEW DELHI, INDIA: Policies are implemented faster in China compared to India, says a Japanese expert, who says bureaucratic hurdles and the slow pace of infrastructure development are the biggest deterrents for Indian manufacturing.

Shoji Shiba, a professor at Tsukuba University near Tokyo, said due to the nature of the government model in China, policies were implemented faster there.

“The only difference between China and India is that they (China) have a regime which passes legislations and policies quicker than in India,” Shiba, an honorary professor at the Indian Institute of Technology (IIT) Kanpur, told IANS.

He held manufacturing-oriented workshops in association with the Confederation of Indian Industry (CII).

According to Shiba, the problem with progress in infrastructure was not caused by the Indian government, which is bound by democratic practices, but by bureaucratic hurdles which occur during policy implementation.

“In China, policy is implemented fast. They are result oriented and not process oriented. Your government and industry are process oriented,” Shiba said.

At the same time, Shiba said being 'process oriented' is far better in the long term.

“Being process oriented is good for manufacturing, as manufacturing is a repetition of the same process of making something again and again,” he explained.

The UN Industrial Development Organization (UNIDO) says growth in the Indian manufacturing sector for the quarter ended March 31, 2011 was 5.1 per cent, lower than the world average of 6.5 per cent and only a third of China.

Shiba said infrastructure was critical for manufacturing sector growth.

“Without infrastructure like electricity, roads, land development and other things you can't have manufacturing,” he added.

Shiba's views were corroborated by Japanese Ambassador Akitaka Saiki, who said infrastructure development was key, even to attract foreign investment in India.

“Infrastructure is a very important area for attracting investments. Industries require infrastructure, so do other economic activities,” Saiki told IANS on the sidelines of the industry event.

According to him, Japanese investors and the government would like to see better infrastructure facilities in India.

“As a result of the Comprehensive Economic Partnership Agreement (CEPA), which comes into force on Aug 1, we expect to double our trade and investments. But infrastructure is important for that to happen,” Saiki said.

Shiba also believes the electronics sector will spur India's manufacturing growth.

Describing electronics as a sunrise sector for Indian manufacturing, he said investments and perks in the field would yield expansive growth and employment opportunities.

“This (electronics) is an area which will see huge manufacturing growth. It would provide the boost that manufacturing needs in India,” Shiba told IANS.

According to Shiba, while other sectors like automobiles may be on a high as of now, in the coming period electronics manufacturing, including that of semi-conductors, would be one of the growth drivers for the sector.

“Automobile manufacturing is growing. But far more growth would now be generated from electronics manufacturing. It will also provide huge employment,” he said.

The Indian government's IT task force has said the demand of electronics product is going to be expansive in the coming decade. Electronics worth $400 billion would be consumed by India by 2020, if the current rate of consumption continues, said in a report.

The production of electronic hardware in the country, says the report, is likely to grow to $104 billion by 2020.

Currently, international estimates place the electronics manufacturing industry as the largest in the world, pegged at $1.75 trillion and expected to touch $2 trillion by 2014.