The Hindu : Tamil Nadu / Chennai News : Indian industry should learn from China’s economic growth: experts

Online edition of India's National Newspaper
Saturday, Sep 29, 2007
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Tamil Nadu

Tamil Nadu - Chennai

Indian industry should learn from China’s economic growth: experts

Special Correspondent

Madras Chamber of Commerce and Industry holds meet on ‘Engaging China’

— Photo: S.R. Raghunathan

In discussion: (From left) M.M. Murugappan, Chairman, Carborundum Universal, Arun Bewoor, president, MCCI, S.C. Bhargava, executive vice-president, Larsen and Toubro Limited, Sridhar Venkiteswaran, executive director, Avalon Consulting and Srinivasan K.Swamy, vice-president, MCCI, at a seminar on ‘Engaging China’ in Chennai on Friday. 0

CHENNAI: Indian industry needs to engage with and learn from the example of China’s rapid economic growth if Indian businesses are to remain competitive on a global scale, say industry experts.

While the Indian economy had made significant advancements in the last 15 years, Indian industry still needs to explore new ideas and learn from the Chinese economic model to increase efficiency and stay competitive, said Arun Bewoor, president, Madras Chamber of Commerce and Industry (MCCI). In order to get this message out to Indian enterprises, the MCCI — which represents 75 per cent of total industrial investment in the State — organised a seminar on ‘Engaging China’ here on Friday.

Superior infrastructure, low labour costs and as many as 75 different taxation subsidies for industries had facilitated China’s growth, according to Sridhar Venkiteswaran, executive director, Avalon consulting. China’s manufacturing exports had increased from US$ 8.7 billion in 1980 to US$ 713 billion in 2005, he said. “Often, the rationalisations we hear for China’s growth and competitiveness are the cheap quality of their products,” Mr. Venkiteswaran said. “However, we have enough evidence to suggest that the quality is acceptable, and that Indian companies have actually been forced to go back to their drawing boards to make themselves more competitive to stay alive.”

S.C. Bhargava, executive vice president, Larsen & Toubro, said that Indian industry and economic policy particularly had to learn from China’s superior infrastructure. “This is one area where we fail miserably,” Mr. Bhargava said. “In India, our mindset is to have aeroplanes taking off before we decide we need to have airports. In China, it is the other way around.”

China’s infrastructure

Mr. Bhargava added that the sheer scale of China’s infrastructure had made it difficult for Indian companies to compete, especially in engineering sectors.

China consumes as much as 54 per cent of the world’s concrete and 36 per cent of the world’s steel.

“However, we still have some opportunities in manufacturing activities, coal gasification, sourcing of raw materials and component goods,” he noted.

While the Indian industry and the State policy could benefit from the Chinese development paradigm, there were a number of concerns Indian businesses looking to engage with their Chinese counterparts faced, Mr. Bhargava said. These were largely with regard to loosely controlled intellectual property rights and changes in tax laws expected in January 2008, which would increase operating costs for foreign companies.

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