Innovation is key to manufacturing revival: Baba Kalyani, chairman Bharat Forge Group

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Baba-Kalyani

India needs to focus on innovation and not just production to succeed, says Baba Kalyani, chairman of Bharat Forge Group. The vision to increase the share of manufacturing in national GDP from 15% to 25% and create 100 million jobs in the next 10 years can be achieved by putting in place an enabling framework and implementation mechanisms, he tells ET.

Can you suggest ways to stimulate manufacturing in India?

The priority must be to create a strong domestic manufacturing base which will give an impetus to investment, employment and exports. Our strategy should be based on indigenisation and import substitution. The government must provide opportunities for domestic companies to participate in sectors in which the country continues to depend on imports. Ironically, in all these industries, there are several Indian companies with skills, capabilities and technologies to meet the country’s requirements. Some of our companies are world leaders in their respective businesses but unfortunately are denied a level-playing field to compete in our own market. On the other hand, foreign companies are using opportunities in India to strengthen their businesses and their country’s economies.

Should Indian manufacturing be benchmarked against global standards?

Over the past decade, a large number of Indian manufacturing companies have globalised their businesses. Some of them have emerged as global leaders because of which India has gained recognition as a global manufacturing power and a key player in the new knowledge age. The emphasis on innovation and technology in our companies has resulted in a few of them establishing global benchmarks in product design and development, manufacturing practices and human resource capabilities. However, there is no room for complacency.

Should Indian companies look at more exports and value addition?

Indian companies’ performance over the past year shows that the significant exporters are relatively less impacted by the domestic slowdown. From an operational perspective, exports challenge companies to design, develop, manufacture and supply products to discerning customers in global markets. This in turn motivates companies to scale up the value chain, which results in higher realisations.

What are the challenges to the sector’s revival?

There are challenges at the policy as well as operational level. From the policy perspective, we need to accelerate our efforts for indigenisation and import substitution. Companies, on the other hand, will have to contend with issues of operating in a fiercely competitive global economy fraught with uncertainty. The key lies in continuously enhancing competitiveness by judiciously investing in expanding markets, developing new products and technologies and in developing innovation and human resource capabilities which would provide the impetus for growth.

How has your group improved manufacturing efficiencies in the past three years?

We have developed our own ‘BFL Excellence System’ through which we drive business excellence initiatives. The focus is on greater people engagement, introduction of transparent performance management systems, improvement in operational efficiencies, engineering and design systems and continuous monitoring of customer satisfaction. We have leveraged our tieups with leading academic institutions to create a strong talent pipeline. Our efforts have resulted in creation of an over 7,000-strong global pool of skilled engineers and technicians. We have invested significantly in the manufacture of non-automotive equipment, systems, components and parts for applications in the aerospace, railways, marine, oil and gas, construction industries. This has enabled us to broad-base our business and de-risk our operations and provided us with the opportunity to build capabilities in new areas of manufacturing through which we can address opportunities in new markets and geographies.

Bharat Forge is moving some production from the US to India. Do you see many companies doing a similar thing?

India is still considered a preferred destination for many multinationals to manufacture cost competitive high-technology products for domestic consumption as well as for global demand.

Source : Lijee Philip – The Economic Times

Posted in Strategy.

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