India’s Manufacturing Sector

WSJ writes about how Bharat Forge’s growth has been a proxy for the growing Indian manufacturing sector:

Can India become a hot spot for auto-parts manufacturing?

Until recently that idea seemed far-fetched. After all, the country isn’t known for either world-class manufacturing know-how or cost competitiveness. But one company, Bharat Forge Ltd., is starting to change that.

The auto-parts maker is jump-starting its operations — and the country’s auto-parts industry — with a novel approach for India: applying the brainpower and skill of the country’s more than two million engineers to the manufacturing sector.

By improving the quality of its parts through better design while restructuring its finances to keep labor costs in check, Bharat Forge is able to go after global customers who would not have taken it seriously just a few years ago. It’s fast becoming a supplier to auto makers like Ford Motor Co., General Motors Corp. and Toyota Motor Corp., which have to cut their own expenses amid an increasingly competitive market by obtaining cheaper parts abroad.’

Bharat Forge “stands out as an example of restructuring,” says Ashish Gupta, an analyst with CLSA Asia-Pacific Markets in Bombay. “They are simultaneously improving the range and the quality of their products and cutting costs to improve the economics of their business.”

with a focus back on auto parts, Bharat Forge has set out to modernize the way it does business, which has, in turn, allowed it to venture into markets abroad. Key to this approach has been making better use of India’s abundance of skilled but low-cost engineers to improve products.

“It was all based on leveraging the high-quality human capital that is India’s main competitive advantage,” says Mr. Kalyani.

Bharat Forge has merged “blue-collar workers and our white-collar workers and [has] everyone working on the floor of the plant,” says Mr. Kalyani. “We also put more high-quality [workers] on the shop floor.” Having designers and production people work together has allowed the company to improve both the speed and the quality of production, he adds.

Perhaps, the secret to taking on China in manufacturing is to combine intellectual capital with human capital in the workforce – and India has plenty of both.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.