Indian engineering industry suddenly finds itself in a happy position

If a man makes a better mouse-trap, the world will make a beaten path to his door, even if he builds his house in the woods. Is that the reason why so many businessmen and bankers and engineers from places as far afield as Manchester and Kuala Lumpur are coming to India? This has been an unusually crowded season for foreign business visitors, with a hotel in New Delhi having to put up as many as eight delegations in a single week, all of them intent on seeing Indians wares, including, no doubt, better mouse-traps.Like trade, industry also apparently moves in cycles and there is mounting evidence that, after a long period of near-stagnation things are looking up for the engineering industry. This may have something to do with the fact that the industrialised countries are passing through a recession and with the chaotic ups and downs - mostly ups - in prices all over the world, the Indian engineering industry suddenly finds itself in the happy position of having reasonably good technology, excellent engineers, modern managers and a native genius for adaptation that can absorb the latest technology from the West and utilised it in a slightly modified, but highly appropriated form, in the design of, say, a sugar centrifugal set.During the last 20-odd years. India has been an unusually busy workshop handling all kinds of technologies and, in the process, developed a sixth sense for what is appropriate and what is not, and also, more important, what sells and what does not.This is, however, only partially reflected in the industry's performance. A country that can design and construct its own nuclear power station should command a highly visible economic and technical presence in the world, but it does not. The output of the engineering industry in 1979-80 is placed at slightly over Rs 11,000 crore which is about a third of total industrial output.Exports that year were around Rs 700 crore which is a drop in the ocean of world exports. There are signs that production as well as exports are picking up but the industry is still way behind its target of a round figure of Rs 1,000 crore which, however, it may reach, all being well, in another year's time. This may be a small figure in world terms but compared to what it was in 1961 - just Rs 6 crore - it is a major triumph.Export Push: It is surprising that an industry which started virtually from scratch in the early '50s should be so fanatically export-oriented. In 1960, the industry produced 28,400 commercial vehicles and not a single one was exported. In 1977-78, the production went up by more than 40 per cent to 41,000 vehicles out of which 4,000 were exported.In the case of diesel engines, the success story is even more striking. Out of a production of 55,500 engines in 1960, only 1,900 were exported. Last year, production went up to 140,000 of which nearly a third (45,000) were sold abroad. At this rate in a couple of year's time, India will be exporting more diesel engines than its entire output 20 years ago."We have indigenously developed appropriated technology to suit the export markets," says Ram Shahaney, chairman and managing director of Ashok Leyland which has developed steady export markets for its vehicles in Sri Lanka and Mauritius, and expects sizeable orders from African countries."Our vehicles may not be as sophisticated as those made in Europe and the US in terms of driver's comfort and other facilities but they compare favourably in terms of durability and economy of operations. Our prices also are competitive."The point about market compatibility is also made by P.K. Nanda, chairman and managing director of Metal Box, who will soon join the multinational company's main board in London. "We make can seamers with a speed of 60 to 120 cans a minute which are more suitable for developing countries with cheaper labour costs than seamers with speeds of 200 cans per minute going up to 1,000.But we make machines for sophisticated markets also. For example, our metal battery jacket body maker which operates at over 250 units per minute has the output and sophistication level required by highly developed markets. And we export these machines also."Both Ashok Leyland and Metal Box are multinationals and have a natural advantage over others where technology infusions are concerned. Does that make them dependent on their parent companies'? Vinod Lalchand Doshi, who looks after the mechanical engineering side of the Walchand Hirachand group, says that the talk of self-sufficiency in technology is not only meaningless but can be suicidal."We must continuously import high technology, for in engineering, technology moves very fast and has a high rate of obsolescence. We must also adopt and do original work, but to shut our doors to imports would be isolating ourselves completely from the mainstream of international technology. And that, for a country like India, would just never do." (see box).Technology Gap: One reason for the low profile of the Indian engineering industry abroad is that there are few Indian consumer products to be seen in European or American markets. Most of our exports are either capital goods - now increasingly through project exports - or intermediate goods like pipes which are not in daily use and have therefore poor consumer visibility.The Japanese, on the other hand, took a different route. They started with consumer goods - cameras, radios and TV sets etc - moved on to durable goods like automobiles and have only recently moved into the capital goods market in a big way.But the Japanese took their technology from the West and continue to do so. In a New Year message to his staff, Yohei Mimura, president of Mitsubishi Corporation of Japan warned his countrymen last month: "Japan has developed outstanding technological capability for producing merchandise, as our automobiles and electrical equipment shows. However, in basic technology and in the ability to develop innovative technology. Japan has still not reached the world's top level. In this respect, there is still a big gap between Japan and other advanced nations. Directly and indirectly, Japan is still the beneficiary of the development capabilities of advanced nations." If this is how Japan looks at its technology problem, India must think twice, if not a hundred times, before shutting its doors to new technology, just because the source is foreign, or, as in most cases, from a multinational company.Perhaps even more than project exports which now account for 40 per cent of total engineering exports, it is necessary to firmly establish the identity of Indian products, both capital goods and consumer durables, in competitive markets abroad. For it is only a matter of time, may be a decade or so, before Indian companies are faced with competition from industrial countries, and then their attitude towards India may not be so benevolent.Japan, after all, borrowed technology from the West, prefected it and is now competing with US and European companies in their home ground. There is already considerable evidence that Europe, if not the US, already sees India as a potential competitor, for India has something that Europe doesn't - relatively cheap and willing labour, abundant raw materials - plus something more - a growing market of unlimited potential. Rahul Bajaj, whose company Bajaj Auto, is the second largest manufacturer of scooters in the world, had this in mind when he warned a top-drawer audience of industrialists and bankers recently in New Delhi, "We may now be talking of cooperation in third country projects, but don't forget, you will soon be competing with us for a slice of the world markets, if not tomorrow, then die day after." And given the necessary stimulus and incentives, it may be sooner than they think - or fear.Published By: AtMigration Published On: Nov 26, 2013 14:52 IST--- ENDS ---

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Indian engineering industry suddenly finds itself in a happy position

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