India is one of the foremost nations that produce a lot of goods that are
exported to countries internationally across borders. This mode of
business has been enabled due to the majority of the MSMEs that are
operating within the country. These MSMEs pave the way for more
number of businesses to register and come under the purview of the
MSME sector and start functioning. India’s manufacturing industry is
under duress. There are a multitude of critical factors behind the
scenario that have created issues for the survival of the MSME sector.
The manufacturing sector consists of establishments that are involved
in the mechanical, physical or chemical transformations of materials,
substances or components to make them into new and finished
products. The establishments in this sector are often called as plants,
factories or mills and use power-driven machines and materials-
handling equipment. This sector also includes establishments that
produce handmade products that are produced either in the workers’
homes or in premises where the products made and sold in the same
place like in bakeries, candy stores and costume tailors. Manufacturing
industry may process materials or may contract with other
establishments to process their materials for them. Both these types of
included in this sector.
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The manufacturing sector in India has evolved through many different
stages from the times of the Initial era of Industrialization and
liberalization to the current level of global competitiveness. In 2017,
the manufacturing sector contributed only about 16% of India’s GDP.
Manufacturing sector’s share in the GDP has not grown at all, though
between 2004 and 2012, employment growth in this sector was
considerable. However, the total manufacturing employment has
reduced significantly between 2011 and 2016 by 10 million in just four
years, especially in the labor-intensive manufacturing sectors like food
processing, tobacco, textiles, apparel, leather, wood and furniture.
Due to the slow period of growth in the Global economy in the last few
quarters, many economists all across the country as well as from the
outside have been giving warning signs of a major global financial
meltdown. There is a serious issue of rising costs due to inflation that is
widespread in the economy and higher borrowing costs. Businesses
need capital to survive and function on a day to day basis. The Indian
manufacturing industry is also slowing signs of duress in this time
period.
Manufacturing companies in India are recognizing the critical issues at
hand and are collectively figuring out solutions that are both beneficial
to the businesses as well as the end consumers. India’s gross domestic
product grew at 6.3% in the July-September period, less than half of the
preceding quarter’s 13.5%. But it is a sharp fall in the manufacturing
sector, which contributes nearly 16% to India’s GDP, that has raised
alarm bells. There is a huge pressure on the profit margins of the
corporate enterprises due to elevated costs and lower exports weighed
on production and the next major concern is a deep and long slowdown
in the local economy. These are some of the primary woes that the
MSMEs and other business units are tackling at hand with an optimistic
force.
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The manufacturing activity by the manufacturing sector companies in
India are at an all time low. The Central government of India pushed
majority of the Indian enterprises to manufacturing everything on their
own and to become less and less reliant on China and other nations
that are raw material rich and also have advanced means of production.
The South Asian nation is poised to attract a large share of foreign
investments, particularly in the electronics sector, and policies in the
next few years should be geared toward that objective, Goldman Sachs
Group said in a recent note. The production of goods by the
manufacturing sector in Indian economy has been lagging by quite a
factor for now. It is very important at such times of crisis to effectively
produce goods that are in demand and also market them in such a way
so that they have an overall positive impact on the economy. The
factory activities have been disappointing in the recent times. The
manufacturing companies In India must take a note of these issues that
are pertaining in the economy and thus make calculated decisions from
their end.
The level of consumption remains almost K shaped and we can thus say
that the growth cycle has almost pivoted for a while here. Many reports
have also shown that the rural wage growth has also stalled for a while
now and the level of consumer confidence is at an all time low right
now. It is very important for the Manufacturing companies in India to
focus on these issues at hand and find immediate solutions to tackle or
risk losing their customers and businesses. A broad based economic
slowdown is underway. The future forecasts for the economy also seems
to be very concerning compared to the past rates of performance by
the Indian manufacturing Industry.
The businesses from the Manufacturing sector of the Indian economy
must be well aware of these economic prospects and must act
according to the current macro headwinds within the economy. If the
businesses of the Indian manufacturing sector are prepared well in
advance it would really help when the economy actually has to face a
long downturn.
It is of paramount importance for all the business units to get them
selves registered with the MSME portal so that when there is maximum
concern of survival, the policies that have been designed by the
Ministry of the MSME can be called out for. It is imperative for all the
business operators to have efficient risk management on their side
early on so that MSME participants have enough time to make sure
they are well prepared for emergency scenarios. It is also very much
advisable to stack a lot of inventory for those of the businesses from
the manufacturing sector as it will really help them in the coming
future.