The document discusses the history of manufacturing in India and China since independence, comparing their different journeys. It notes that while both started similarly, China adopted policies that strongly supported industrialization and manufacturing through state ownership and central planning, becoming a superpower. In contrast, India's policies were more mixed and defective, prioritizing public sector growth over private industry and facing many challenges that slowed its development. Later reforms in both countries changed their trajectories, with China embracing market reforms under Deng Xiaoping and India liberalizing more under Rajiv Gandhi and in 1991, though it still struggles with policy inconsistencies compared to China's clear policies.
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