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Some of Prime Minister Narendra Modi's supporters claim that his "Make in India" campaign has brought India to the verge of becoming a manufacturing behemoth 69 years after the nation's independence. Others claim India is already a manufacturing powerhouse. Let's examine these claims based on data.
Manufacturing Ranking:
While India now ranks 6th in the world in terms of total manufacturing output, it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016. Pakistan's manufacturing value added is ranked 146th by the same report.
Manufacturing Output:
India's 3% share of the world's total manufacturing output puts it at a distant sixth position behind China's 24%, United States' 17%, Japan's 16%, Germany's 7% and South Korea's 4%.
The UNIDO data shows that India's manufacturing value added (MVA) per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014. However, as percentage of GDP at constant 2005 prices in US$, India's MVA decreased from 15.10% in 2005 to 13.85% in 2014
UNIDO reports that Pakistan manufacturing value added (MVA) per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014. Its MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014.
India's manufacturing output declined 0.7% in April-June 2016-17 |
Make in India:
Prime Minister Narendra Modi has recognized how far behind India is in the manufacturing sector. His government's highly publicized "Make in India" is designed to Change that.
What does India, or for that matter any other developing country, need to boost its manufacturing output? Most experts agree on two essential pre-requisites for industrial development:
1. Energy and Infrastructure
2. Skilled Manpower
China's rapid industrialization over the last few decades has shown that the focus must be on the above two to achieve desired results. Has India learned from the Chinese experience? Let's examine this question.
Energy and Infrastructure Development:
"Infrastructure is the biggest hurdle to the ambitious Make in India program of the government," Standard and Poor Global Ratings Credit Analyst Abhishek Dangra told reporters on a conference call, according to India's Economic Times publication.
"The government is scaling up spending, but its heavy debt burden could derail its ambitions to improve public infrastructure," the Standard and Poor report said.
India suffers from huge energy deficit. Over 300 million of India’s 1.25 billion people live without electricity. Another 250 million get only spotty power from India’s aging grid, with availability limited to three or four hours a day, according to an MIT Energy Report. The lack of electricity affects rural and urban areas alike, limiting efforts to advance both living standards and the country’s manufacturing sector.
Skilled Manpower:
“India doesn’t have a labor shortage—it has a skilled labor shortage,” said Tom Captain, global aerospace and defense industry leader at Deloitte Touche Tohmatsu, according to a Wall Street Journal report.
The WSJ report said that over 80% of engineers in India are “unemployable,” according to Aspiring Minds, an Indian employability assessment firm that did a a study of 150,000 engineering students at 650 engineering colleges in the country.
NPR's Julie McCarthy reported recently that ten million Indians enter the workforce every year. But according to the Labour Bureau, eight labor-intensive sectors, including automobiles, created only 135,000 jobs last year, the lowest in seven years.
Impact on Agriculture:
Prime Minister Modi's focus on manufacturing is talking away resources and attention from India's farmers who are killing themselves at a rate of one every 30 minutes.
Majority of Indian farmers depend on rain to grow crops, making them highly vulnerable to changes in weather patterns. As a comparison, the percentage of irrigated agricultural land in Pakistan is twice that India.
More than half of India's labor force is engaged in agriculture. Value added per capita is among the lowest in the world. Pakistan's agriculture value added per capita is about twice India's. This is the main cause of high levels of poverty across India.
Chinese Experience:
China has shown that it is possible to make huge strides in manufacturing while at the same time achieve high productivity levels in agriculture.
On the manufacturing front, China has taken care of the basics like energy, infrastructure and skilled manpower development to achieve phenomenal growth.
As part of the China-Pakistan Economic Corridor (CPEC) development, Pakistanis are learning from the Chinese to replicate success in manufacturing.
The first phases of CPEC are focused on building power plants, gas pipelines, rail lines, roads and ports at a cost of $46 billion. At the same time, China and Pakistan are also focussing on skills training via vocational schools and Pakistan-China Education Corridor. These projects will lay the foundation necessary to ramp up manufacturing in Pakistan.
Summary:
Both India and Pakistan want to emulate the success of China in the manufacturing sector. The Chinese experience has shown that development of energy, infrastructure and skilled labor are essential to achieve their manufacturing ambitions. The South Asians must move beyond hype to do the hard work necessary for it. Pakistan is working with China via CPEC to make progress toward becoming a manufacturing powerhouse.
Related Links:
Auto Industry in India and Pakistan
UN Industrial Development Report 2016
China-Pakistan Economic Corridor
#BMI Research puts #Pakistan in top "10 emerging markets". Key Growth Drivers: #Auto & #Textiles #Manufacturing Hub http://read.bi/29mmYQT
"Pakistan will develop as manufacturing hub over the coming years, with the textile and automotive sectors posting the fastest growth at the beginning of our forecast period. Domestic manufacturing investment will be boosted by the windfall from lower energy prices compared to the last decade, and improved domestic energy supply."
A new report from BMI Research has identified the "10 emerging markets of the future" — the countries that are set to become new drivers of economic growth over the next 10 years.
BMI estimates that these countries will cumulatively add $4.3 trillion to global GDP by 2025 — roughly the equivalent of Japan's current economy.
In general, manufacturing and construction are the sectors that will drive the economies. BMI reports that new manufacturing hubs are set to emerge in Bangladesh, Myanmar, and Pakistan, and that these countries will see particularly strong growth in exporting manufacturing industries. And construction growth is going to be widespread throughout all the countries — partly to facilitate increases in urban populations and partly to help develop themanufacturing sector.
On the other hand, extractive industries — like mining, oil, and gas — are going to play a far smaller role in driving growth than they have the past 15 years.
While it might provide bright spots for some countries, the report states, "the ubiquitous commodity-driven growth model that was derailed by the 2012-2015 collapse in commodity prices is not coming back."
#Pakistan: Planting economic seeds for a brighter tomorrow- #CPEC #FDI
http://www.khaleejtimes.com/international/pakistan/pakistan-plantin...
A few years ago a lot of international firms almost cringed at the idea of investing in Pakistan. Insecurity, instability and unfavourable business environment were the usual key words used to bail out of potential conversations. However, none of that holds true today. Pakistan has made commendable progress in restoring macroeconomic stability and is a rising star in south Asia, exuding confidence and optimism like never before.
Karachi, Pakistan's financial hub of 20 million, is flourishing with a spur in real estate boom and new, upmarket seaside restaurants and cafes. In major cities car sales are on the rise and shopping malls are sprouting to cater for an expanding middle class.
The revived health of the economy is evident from the vital statistics: the annual GDP growth rate for the fiscal 2015-16 that ended on June 30 stood at 4.7 per cent - its fastest pace in eight years. In 2014-15, Pakistan grew at 4.2 per cent, as per Pakistan Economic Survey report.
Inflation, the cornerstone of a healthy economy, has been tamed at around 3 per cent from the highs 20 per cent in 2008, as per the latest Economic Survey published by the Government of Pakistan.
The government's budget deficit too eased from 8 per cent to 5 per cent of the GDP, and the current account deficit is now at 1 per cent of the GDP. Tax revenues have doubled in the last three years, and remittances have reached a whopping $19.9 billion for the fiscal ending on June 2016. The foreign exchange reserves too are at an all-time high at over $21.4 billion, enough to finance over five months of country's import bills. Rightly so, the Pakistani rupee has maintained exchange rate stability during
the year.
The interest rates are at a 43-year low allowing strong credit expansion and helping companies in various industries, such as industrial, food, beverage, textile, electricity and construction.
Investment in infrastructure has seen a significant jump, primarily fuelled by initiatives undertaken as part of the massive China-Pakistan Economic Corridor (CPEC). The $46-billion commitment by China is expected to bolster Pakistan and turn it into a flourishing trade economy in a few years after completion.
Government initiatives
The first signs of improvement appeared in 2013 when Pakistan witnessed a peaceful transition of its civilian government for the first time in history. Since then the government has launched concerted programmes with the military to weed out extremism and terrorism from the soil of Pakistan and create an enabling environment. Zarb-e-Azb has immensely helped in this regard and a smooth implementation of the National Action Plan (NAP) too played an important role.
Concurrently, the government has also been working on the economic front by drafting prudent policies and implementing the same in time. In the last three years, financial coffers have been revived as the tax revenue doubled.
The government is now contouring plans to develop Pakistan into a manufacturing hub. It aims to diversify, grow at a consistently fast pace for the next 10 years, and emerge as the top 10 emerging markets from Asia and Africa. As of now, textile and automotive sectors are showing great potential and the fastest rate of growth.
The government has also managed to complete 11th successful reviews with the International Monetary Fund (IMF), which has further strengthened the confidence of international investors and has placed Pakistan on their radar screen as future investment destination.
Dirty laundry: Welspun tangle highlights #India's #quality challenge. #MakeInIndia #Modi http://reut.rs/2bLju9n via @Reuters
Questions over the exact provenance of bedsheets sold by Welspun India to America's middle classes have not only wiped $740 million off the firm's market value, but also revived one of Indian manufacturing's enduring headaches: quality.
India's government, desperate to accelerate growth and create more jobs, has backed a "Make in India" manufacturing push. India already makes everything from car parts to t-shirts, but is trying to move up the chain to make higher-end products, like Apple's iPhone.
One major hurdle, however, has been product quality, often blighted by low salaries, poor training and sketchy suppliers. As India manufactures more, cheap is not always cheerful.
Quality assurance experts in India and beyond, however, said damage from the Welspun case could be contained - if the authorities and businesses move quickly to put in place stringent quality assurance standards.
"The government and the companies should themselves put in place better quality control standards to ensure India's image is protected," said a certifier at the Indian arm of a Europe-based textile certification company.
The $108 billion textile industry accounts for a tenth of India's manufacturing production, 5 percent of GDP and 13 percent of export earnings, according to government data. It is the country's second-largest employer after agriculture.
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It's not clear what led to the problem. Welspun, whose share price nearly halved this week, has said it would do an external audit of its supply chain.
Other Indian manufacturers distanced themselves from Welspun, but many fretted over the broader impact as the country tries to bet on quality, not just cheap workers, where it faces constant competition from regional rivals.
"It's high time exporters improve the quality of their products," said S.C. Ralhan, president of the Federation of Indian Export Organisations, set up by the government and industry to promote exports. He said the group would take up the issue of quality with its members.
Arvind Sinha, national president of the Textile Association of India, said India's image as a manufacturing destination for textiles could be tarnished.
"This is another blot on the Indian exports resume," said an analyst at a local brokerage, who asked not to be named as it would violate his firm's policies. "The Welspun fiasco could have ripple effects and force companies to scout for options in other regions in Asia that have unscathed records."
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DRUGS AND NOODLES
India has been here before.
Its $15 billion pharmaceutical industry, a global supplier of cheaper generic medicines, has been dogged by quality concerns, with health regulators in the United States, Britain and Europe barring some plants from producing drugs for their markets because of inadequate standards.
Highlighting weak official checks and under-resourced testing facilities, Nestle India had to pull its popular Maggi instant noodles off the shelves last year after local regulators found some samples contained unsafe levels of lead. Subsequent tests at government-accredited laboratories showed the noodles were safe for consumption.
Chinese-backed coal excavation and power plants will displace thousands of people and deplete groundwater in Thar, a region ravaged by drought.
The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species. Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. Twenty five percent of people live within the proposed coal development area. They thought they would benefit, but that has not been the case.
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It was only in 2015 that work began on the fields, when the Thar coal project was included as part of a string of energy and infrastructure deals signed under the USD 46 billion China-Pakistan Economic Corridor. These agreements included eight coal-fired power plants and a 3,000-kilometre network of roads, railways and pipelines to transport oil and gas from Gwadar Port on the Arabian sea to Kashgar, in the northwestern Chinese province of Xinjiang.
In December 2015, China approved a USD 1.2 billion investment for surface mining of Thar coal and the establishment of 660 MW power projects. The deposits are divided into 12 blocks, each containing 2 billion tonnes of coal. In the first phase the Sindh provincial government has allocated block II to Sindh Engro Coal Mining Company (SECMC) to excavate 1.57 billion tonnes of coal and build a 660 megawatt power plant. The plant is expected to send power to the Pakistani national grid by June 2019 and will later be expanded to produce 1,320 MW of power.
A state-owned Chinese company, the China Machinery & Engineering Corporation, is providing the machinery and technical support for the excavation of coal and building and running the power plant. The local company will provide human resources, management and be responsible for the distribution of power. SECMC say the project has created 200 technical jobs and 1,600 menial positions. But locals have been protesting that the company has not even given them the menial jobs. Around 300 Chinese, including the engineers, miners and experts are also working on the site.
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The Chinese team have started excavating the first pit. In the first phase SECMC will relocate five villages, which are located in block II, including Thario Halepoto village.
SECMC has started paying villagers for their homes and agricultural land. SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, claims that his company will do all they can to help the villagers.
“We will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” he told thethirdpole.net
He said that the company is paying villagers above market prices for their land – PKR 185,000 (USD 1,900) per acre. However locals say this price does not take into account its high environmental value and they do not want to be relocated to the new towns, the exact location of which is yet to be decided.
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A SECMC official said that the company will plant 10 trees for every tree cut. So far the company has planted 12,000 trees in an 18 acre area called the Green Park and more trees will be planted in next two years.
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SECMC’s Shaikh rejected such claims saying his company would only use 1,400 acres for two reservoirs to store the water extracted during excavation. “It will be natural underground saline water, not toxic or poisonous in any way and it will not affect any village,” he claimed.
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http://thewire.in/62053/pakistans-coal-expansion-brings-misery-to-v...
https://vimeo.com/179874726
UNIDO in Pakistan
http://dailytimes.com.pk/opinion/10-Nov-16/unido-in-pakistan
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The salient achievements in the past can be seen in various sectors. It is particularly worth mentioning UNIDO’s efforts in building Pakistan’s trade capacity, and how that enabled many sectors to meet global market requirements. This was a multidimensional and intensive task. For example, UNIDO helped with the establishment of a comprehensive food safety system, starting with the passage of Pakistan Food Safety Bill developed by UNIDO over more than three years in cooperation with more than eight ministries. In the process, UNIDO helped 40 laboratories get accreditation, and more than 120 food inspectors and master trainers gain internationally recognised qualifications.
Setting up the first laboratory of its kind in the region for dioxin-testing is yet another good example, and facilitating the resumption of fish exports to the EU market after a seven-year ban is another. Thanks to UNIDO, mango farmers of Multan have now received sufficient training so that they can export their products directly to high-end markets, such as Walmart in the United Kingdom. Similarly, the certification of CE Marking was a gateway for accessing the EU market for various industrial products like surgical instruments, electric fans and cutlery, which will go a long way in boosting exports by capturing a niche in the global market.
In a country like Pakistan where there is a dearth of encouragement of innovation at the state level, UNIDO has been a flag-bearer supporting youth who have innovative ideas, especially in clean technology, and enabling them to access and compete at global arenas like Silicon Valley, USA.
Back in the 1980s, UNIDO started addressing the prevailing environmental issues in Pakistan by establishing the first combined effluent treatment plant at Kasur, a city in Punjab. The plant helped minimise the pollution generated by tanneries that were dumping production waste in adjoining water bodies.
Some personal success stories can also be highlighted. Asra, a young lady from Lahore, was shocked to hear her name announced by the jurist at the National Cleantech Award Ceremony, which was held in Pakistan last year. Asra was the only woman among the five winners who were selected from more than 450 contestants. Her idea was to create a hybrid technology to power bicycles by using the energy generated and stored while pedalling. The idea was further polished and developed with help from UNIDO’s Cleantech Project.
Similarly, Faisal, a young engineer, won the runner-up in the competition of the 2015 Cleantech Global Prize held in Silicon Valley. His novel idea was for a gasifier that runs on agricultural wastes and is mounted on the tractor that it drives.
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Last but not least, UNIDO has given a lot of emphasis to gender mainstreaming. One example is the story of Fakhra, a women hailing from Rawalpindi, who saw her family left helpless when her husband got acutely sick and lost his source of livelihood. She undertook training in fashion design under a UNIDO project entitled “Women’s Entrepreneurship Development.” She subsequently has become a successful businesswoman, running an enterprise that hires more than 10 women.
The gist is that UNIDO’s portfolio is diverse and dynamic in multiple areas. These achievements also clearly depict the inclusive and sustainable industrial development spirit, and are very much in line with the government’s “Vision-2025” for Pakistan. The guiding principle for UNIDO’s concrete role in the future lies in promoting Sustainable Development Goal (SDG) 9 (industry, innovation and infrastructure), and contributing to other SDGs.
Does India manufacture everything it needs? Here's the answer:
1. India's manufacturing value added per capita is about the same as Pakistan's. it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016. Pakistan's manufacturing value added is ranked 146th by the same report.
http://www.riazhaq.com/2016/08/indias-70th-independence-day-is-make...
2. India runs huge trade deficits year after year because it imports bulk of of manufactured products it needs from China and elsewhere.
http://www.riazhaq.com/2010/05/soaring-chinese-imports-worry-india....
Here's an excerpt of a piece by Indian entrepreneur Jaithirth Rao published by Indian Express:
"Uday Kotak said a few months back, in the course of an interview, that he was amazed that in his new office in Mumbai, not one of the furniture or fixture items were made in India. My friend Rahul Bhasin conducted a similar exercise in his office in Delhi and discovered pretty much the same thing. The carpet is from China, the furniture is from Malaysia, the light fixtures are from China, the glass partition is from all places, Jebel Ali in the Middle East and so on. Kotak went on to add that even Ganesha statues are no longer made in India. They are imported from China."
http://indianexpress.com/article/opinion/columns/how-they-killed-ou...
After Verizon Deal, Yahoo to Become ‘Altaba’ and Marissa Mayer to Step Down From Board
https://www.nytimes.com/2017/01/09/business/dealbook/yahoo-would-be...
Still, Altaba (Yahoo's new name) is certainly an unusual name — and it also happens to be close to “Al-Taba,” apparently a manufacturer of scissors based in Pakistan.
http://www.al-taba.com/
Al-Taba Corporation established in 1980 is one of the largest private manufacturers and exporter of vast rang of Instruments. We specialized in Manufacturing Quality Medical Surgical Scissors and Beauty Scissors. It comprises of an integrated manufacturing facility, employing skilled craftsmen to produce broad range of professional Instruments. Its manufacturing process is running on automatic machines under the supervision of experts scissors technicians.
The fate of Yahoo’s $4.8 billion sale of its internet business to Verizon Communications may be uncertain. But in case it goes through, Yahoo has plans for what will remain.
In a regulatory filing, the company said on Monday that when that deal closed, it would rename itself “Altaba.”
Moreover, more than half of the company’s current board members — including Marissa Mayer, its chief executive — would step down.
Why Altaba?
It is essentially a play on the single biggest asset that would remain of Yahoo if and when the deal with Verizon closes: a 15 percent stake in the Chinese e-commerce giant Alibaba. Altaba would also own a 35.5 percent stake in Yahoo Japan. (A Yahoo spokeswoman declined to comment.)
Still, Altaba is certainly an unusual name — and it also happens to be close to “Al-Taba,” apparently a manufacturer of scissors based in Pakistan.
The company said in its regulatory filing that the directors who would remain after the name change would be Jeffrey Smith, the activist investor who helped prod change at the company; Tor Braham and Catherine J. Friedman, former investment bankers; Eric Brandt, a former chief financial officer of the chip maker Broadcom; and Thomas McInerney, a former chief financial officer of the media company IAC.
Among the directors stepping down would be Ms. Mayer; Yahoo’s chairman, Maynard Webb; and David Filo, a Yahoo founder. Mr. Webb would become chairman emeritus of the newly renamed Altaba.
Of course, all those changes depend on whether Yahoo can actually close on the sale of its primary internet businesses to Verizon, given the disclosure of two hacking episodes, the second of which affected more than a billion user accounts.
Verizon executives have said publicly that they are weighing their options, including potentially paying less than the agreed-upon $4.8 billion. Marni Walden, Verizon’s president of product innovation and new businesses, said last week of the transaction’s fate, “I can’t sit here today and say with confidence one way or another because we still don’t know.”
But Tim Armstrong, the chief executive of AOL, which is owned by Verizon, told CNBC that he was optimistic.
“I remain hopeful the deal will close, and I think we’ll see what the outcomes are of the Yahoo investigations in the meantime,” he said.
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