Samsung Electronics’ India unit has announced a ‘made in India’ phone that will be exported to China—a welcome turnaround from the ubiquity of ‘made in China’ electronics in the Indian market. This comes as yet another addition to Indian engineering’s established success story—the share of engineering exports increased from 15% of total exports in 2000-01 to around 22% in 2011-12. But India’s engineering prowess has long been acknowledged—the fact that more than half of the Deming awards (high-profile awards for quality systems) have gone to India over the last decade is testament to this. In the telecom sector itself, Nokia’s India arm pioneered the torch feature and a longer battery life for electricity-deficient rural India and its Chennai plant—reportedly its largest—exports around 60% of its production each year.
But, apart from our prowess, there are greater forces at work that can place India at the top of the manufacturing heap. According to a CII-BCG report released in December, China’s wages have increased almost 15% per annum since 2009, compared to 1.8% for the US, 0.7% for the EU and, pertinently, 4% in India. This sharp rise in wages in China, coupled with a strengthening renminbi, is making manufacturing there less attractive than it once was—to India’s advantage. But, if we are to fully exploit this advantage, there is much to do within the country itself—the government approval process has to be sped up, labour laws made easier, R&D spending increased and infrastructure, especially electricity and transport, needs to be hugely upgraded.