Emerging trends in indian marketing b.v.raghunandan
Rejuvenating indian manufacturing industries b.v.raghunandan
1. Rejuvenating Indian Manufacturing Base and
Lessons from Chinese Miracle
-B.V.Raghunandan, SVS College, Bantwal
Post Graduate Department of Commerce
University College, Mangalore
March 14, 2013
2. India and China: Similar History and
Different Journeys
• India was liberated from British Rule in 1947
and People’s Republic of China was founded in
1949
• India became a Republic with the idea of
Socialistic Pattern of Society and China
became a single party communist state
• India adopted mixed economy and China
adopted state ownership of everything including
land
3. Political Leadership
• Nehru caused
the Public
Sector
• Mao gave
importance to
agriculture,
and Defence
• 1962
Humiliation in
War
4. Indian Industry: Initial Stage
• Growth of Public Sector
• Family Owned Business comprising Private Sector
• License Raj and a Land of Shortages
• Bureaucracy and its Suspicious and Vindictive Attitude Towards
Private Business
• Politicised Co-operative Sector
• Many Instances of Black Economic History
• Sluggish Exports, Growing imports and Deficit Economy
5. Chinese Industry: Initial Stage
• Economy of Deprivation & Self Sufficient
• Conservation of Resources
• Huge Amount Spent on Defence
• Piling Up Nuclear Arsenal including Hydrogen
Bombs
• Industrial Production was less than the Bare
Minimum
• Totally Regulated and Centrally Planned
Economy
• Became a Superpower
6. Indian Fiasco
• Slow Growth Rate
• Inefficient Public Sector
• Corrupt Government
• Killing Tax Rates
• Black Money
• Energy Crisis
• Lack of Investible Funds
• 1968-a Shameful Year
• 1990-Another Shameful Year
• Industrial Policy was Defective
• Only Traditional Exports
7. Defective Industrial Policy
• High Tax Rates
• No License for Expansion
• Powerful MRTP Act &
Commission
• Traditional Family Owned
Business dominated the
industrial scene
• Poor Infrastructure
• Delay in Completion of
Power Projects
• Generation &
Transmission-Govt
Monopoly
8. Game Changers
• Remittance from 1976 from Gulf NRIs
• Government could Liberalise Import Policy
• Industrial Raw Materials became available more
• Growth of Reliance Industries
• Capital Market becoming a Household Investment
• EPZs and Tax Holidays
• Housing Finance by HDFC
• Rajiv Gandhi’s First Dose of Liberalisation in 1984
9. Chinese Game Changers
• Death of Mao Ze Dong in
1976
• He left China as a unitarian
monolith of single party
communist ruled
• Mass Poverty and
Deprivation
• Conserved Resources
• Only Country in the world
without exports and imports
• The biggest Red Army in the
world
• A Thermo-nuclear Power
10. Rise of a Socialistic Market Economy
• Deng Xiao Ping became the
Chief Economic Advisor
• Proposed a Market
Economy
• More Industrialisation
• Invitation of Foreign
Investment to a Limited
Extent
• Pirate Economy
• Building up Database
• 1980s saw Gorbachev in
USSR and Deng in China
• Became angels of Market
Liberalisation
11. Rajiv Gandhi’s Liberalisation
• In automobiles,
telecommunication,
education
• Liberalising
Licensing Policies
• Tax Rates were
brought down
• Encouragement for
Exports
• Sam Pitroda was the
Advisor
12. Debacle of 1990s
• Foreign Exchange Reserves dipped to a
low of 7 days’ import requirements
• RBI pledged its gold reserves with Bank of
England
• Tax Revenue was low
• Industrial Growth became sluggish
• Wheels of Fortune turned against India
• Blame was on the first dose of
liberalisation
13. Liberalisation 1991
• Lower Tax Rates
• Easier Licensing Policy
• Diluting PSU Monopoly
• Disinvestment
• Banking Sector Reforms
• Capital Market Reforms
• SEBI and other Regulatory
Bodies
• Forex Management
• Media Reforms
• Opening up
Telecommunications
• Opening up Insurance
Sector
14. Policy Dithering
• Self-Cancellation Policies
• Bureaucratic Mindset
• Lack of Firmness
• Lack of Unity of Command
• Lack of Ministerial Stability
• Still suspicion on Industries
• Lack of Planning and all Management
Strategies
15. Policy Variations
• China has Clear Cut Policies
• India changes Policies very often
• China believes in Manufacturing whereas India is betting on
Service Industries
• China invested in hardware industries, whereas India was
preoccupied with software Industries
• China believes in penetrating every market in every foreign
country-India gets preoccupied with a few sectors
• Trade Surplus and Trade Deficit
• Cheaper Yuan and Tendency to Make Indian Rupee Costlier
• Growth Vs Inflation-Rates of Interest
• Cost Wonder and High Cost Economy
• Monitoring Project Execution
• Investing in Infrastructure
16. India’s Agenda
• Further Encouragement to Export Industries
with a Guarantee of Non-Withdrawal
• Further Reduction of Taxation on the same
Footing as IT Industry
• Encouraging Research in Industries where
Chinese Products are Flooding Indian Market
• 24x7 power supply to industries-dedicated
terminals
• Government Assuming the Role of Managing
Industrial Pollution through outsourcing