Input costs hitting India’s performance, says Ficci

Font Size

Print

Feedback

Email

Discuss

Related Articles

India's climate stand rogressive: ExpertsGovt reviewing export-oriented sectors: DGFTDubai crisis: Don’t worry, says PranabWill Geneva render trade and climate justice

New Delhi, March 6: The high cost of inputs and utilities in India compared to other Asian countries coupled with high finance and transaction costs are responsible for a depressed productivity and poor performance of India in the global markets, according to Federation of Indian Chambers of Commerce and Industry (Ficci) analysis.

The analysis compares the costs of raw materials and utilities (infrastructure) across 15 important manufacturing segments in India with these costs in other Asian countries like China, Malaysia and Korea.

The Ficci analysis reveals that on an average, the share of input materials and utilities (infrastructure) in total output value was as high as 81.3% in India as against 75.5% in China, 68.7% in Malaysia and only 58.5% in Korea.

The 15 manufacturing sectors are: food products, leather & fur products, textiles, wood products, metal products, industrial chemicals, non-ferrous metals, plastic products, rubber products, transport equipment, electrical machinery, non-electrical machinery, iron & steel, glass and printing & publishing.

Ficci has suggested improving productivity of the laggard segments in Indian manufacturing through the cluster approach in 82 identified areas in 23 industries spread across 31 states and Union territories.

"This would go a long way in addressing the problem of low per worker output which currently more than offsets any advantage the manufacturing sector derives out of labour cost advantages vis-a-vis major Asian economies," the analysis points out.

It has advocated a balanced growth approach for accelerating growth of large manufacturing clusters across all sectors and states is essential to give a significant boost to the sector.

The Ficci analysis calls for benchmarking the industries with low labour productivity in laggard states to the highest labour productivity levels currently achieved in leading states.

The Ficci analysis identified 47 major manufactured products whose share in the global markets has improved significantly between 1980 and 2000. The share of these products in India’s total merchandise exports has gone up from 40.3% in 1980, to 50.9% in 1990 and further to 57.4% in 2000.