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As economic activities gain momentum, <keyword id="2385401" type="General" weightage="20" keywordseo="industry-players" source="Orion">industry players</keyword> are turning optimistic about the performance of the <keyword id="6395867" type="General" weightage="20" keywordseo="manufacturing-sector" source="Orion">manufacturing sector</keyword>.<br /><br />The <keyword id="12077865" type="General" weightage="20" keywordseo="FICCI-Manufacturing-Survey" source="Orion">FICCI Manufacturing Survey</keyword> for July-September showed that after experiencing subdued Q1 (April-June 2021-22), the <keyword id="23268" type="General" weightage="20" keywordseo="Outlook" source="Orion">outlook</keyword> seems to have improved significantly in Q2.<br /><br />The percentage of respondents reporting higher production in second quarter of 2021-22 was much above the 50 per cent mark -- around 61 per cent. This was significantly higher than the similar percentage of last year's Q2 quarter (around 24 per cent).<br /><br />A <keyword id="6355001" type="General" weightage="20" keywordseo="FICCI" source="Orion">FICCI</keyword> statement also said that the assessment is also reflective in order books as 72 per cent of the respondents in July-September 2021-22 expected a higher number of orders in comparison to April-June 2021-22.<br /><br />However, the survey revealed that a high percentage of respondents are experiencing rising costs of doing business and production.<br /><br />The cost of production as a percentage of sales for manufacturers in the survey has increased for 80 per cent respondents in Q1 2021-22. This is considerably higher than that reported in Q4 2020-21, where 72 per cent respondents recorded an increase in their production costs.<br /><br />"Industry respondents have attributed the hike in productions costs primarily to high fixed costs, higher overhead costs for ensuring safety protocols, drastic reduction in volumes due to lockdown, lower capacity utilisation, high freight charges and other logistic costs, increased cost of raw materials, power cost and high interest rates," the statement said.<br /><br />The latest quarterly survey assessed the sentiments of manufacturers for Q2 (July-September 2021-22) for eleven major sectors namely automotive, capital goods, cement and ceramics, chemicals, fertilizers and pharmaceuticals, electronics and electricals, metal and metal products, paper products, textiles, textiles machinery, toys and miscellaneous.<br /><br />Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over 2.7 lakh crore.<br /><br />The survey showed that the overall capacity utilisation in manufacturing was 72 per cent in Q2 2021-22, which again reflects signs of recovery in manufacturing. The future investment outlook, however, remains that of cautious optimism, as 32 per cent respondents reported plans for capacity additions for the next six months.<br /><br />It also noted that the cost of doing business remains a cause for concern for the sector.<br /><br />High raw material prices, high cost of finance, uncertainty of demand, shortage of skilled labour and working capital, high logistics cost, low domestic and global demand, excess capacities due to high volume of cheap imports into India, unstable market, high power tariff, are some of the major constraints which are affecting expansion plans of the respondents, it said.<br /><br /><br /><strong>SEE ALSO:<br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/mobile/news/motorcycle-engine-vibrations-can-degrade-iphone-camera-performance/articleshow/86134711.cms">Motorcycle engine vibrations can 'degrade' iPhone camera performance</a><br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/space/news/perseverances-rock-sample-to-give-insight-into-mars-history/articleshow/86136571.cms">NASA Perseverance's rock sample to give insight into Mars' history</a></strong>

Outlook for manufacturing sector improves in second quarter, high cost of production causing worry, says FICCI survey

<br />
India's manufacturing industry is likely to see a jump in hiring activities in the coming years as business sentiments have improved, as per HR professionals.<br />
 <br /> As per recent surveys, export orders are growing, while rising domestic demand is likely to further boost the growth rates for the <keyword id="6395867" type="UNKNOWN" weightage="100" keywordseo="manufacturing-sector">manufacturing sector</keyword>. The government, too, is seeking to boost the sector's growth and the target is to create 100 million jobs by 2022.<br />
 <br /> Industrial manufacturing major <keyword id="2396538" type="UNKNOWN" weightage="100" keywordseo="Aequs">Aequs</keyword>' Chairman and CEO Aravind Melligeri said, "As for most of the policies, successful implementation will depend on enabling legislation."<br />
 <br />
While the Union Budget 2014-15 had many positive signs for manufacturing, there was less than expected progress on tax and labour law reforms, he said. "In light of this, we are optimistic but guarded about the future," Melligeri added.<br />
 <br /> "At an entry level, there seems to be good supply of talent from the different technical institutions. This way, I feel we are ready to face the growing demands of the business. But there is a worrying void for good quality Managers who can be developed into Leaders," German conglomerate <keyword id="1719924" type="UNKNOWN" weightage="100" keywordseo="Freudenberg">Freudenberg</keyword>'s Regional Corporate Centre (India) HR head Srinivas Ghanagam said.<br />

Manufacturing Sector Gears Up For Hiring

Amid difficult economic climate, <a href="http://www.businessinsider.in/searchresult.cms?query=Indian+manufacturing+">India’s manufacturing sector</a> output slipped to a seven-month low of 51.2 in September, down from 52.3 in August.<br />
<br />
A Nikkei survey stated that the order flow turned sluggish in its Nikkei India Manufacturing <a href="http://www.businessinsider.in/Indian-PMI-Is-Exactly-As-Ugly-As-You-Would-Expect/articleshow/22223997.cms">PMI</a>, a composite monthly indicator of manufacturing performance.<br />
<br />
"Despite having been supported by sustained increases in new work, growth of Indian manufacturing production in September was weighed down by a difficult economic climate," Pollyanna De Lima, Economist at Markit and author of the report, said.<br />
<br /> Lima added that as per PMI data, the <keyword id="6395867" type="UNKNOWN" weightage="20" keywordseo="manufacturing-sector">manufacturing sector</keyword> looks set to provide a stronger contribution to <a href="http://www.businessinsider.in/searchresult.cms?query=GDP">GDP</a> than it did in the April-June quarter.<br />
<br />
PMI was weighed down over slower increases in new orders and output.<br />
<br />
"Slower increases in new business inflows have hindered firms' ability to recruit. The sector's labour market was squeezed in September as companies attempted to minimize operating costs," Lima said.<br />
<br />
Moreover, the report added that input costs eased for the second consecutive month and Indian manufacturers passed lower input costs on to clients.<br />
<br />
Meanwhile, <a href="http://www.businessinsider.in/searchresult.cms?query=rbi+governor+raghuram+rajan">RBI Governor Raghuram Rajan</a> announced a <a href="http://www.businessinsider.in/searchresult.cms?query=repo+rate">repo rate</a> cut of 50 basis points to boost the economy.<br />
<br />
The central bank also lowered its economic growth forecast for the current fiscal from 7.6% to 7.4%.<br />
<br />
<br />

Here comes India’s manufacturing output data and the news is not good

<p>Germany continues to be Germany.</p>
<p>While its neighbor France falls out of bed, the manufacturing sector in Germany continues to be ridiculously hot.</p>
<p>The index surged from 52.4 to 54.3. Manufacturing production levels saw their sharpest rise since May 2011.</p>
<p>Here's the summary of the report from <a href="http://www.markiteconomics.com/Survey/PressRelease.mvc/13f1cfefa2034863a31e87812f389789">Markit</a>:</p>
<p><div class="KonaFilter image-container display-table"><div><div class="image"><p class="source"><span><a href="http://www.markiteconomics.com/Survey/PressRelease.mvc/13f1cfefa2034863a31e87812f389789">Markit</a></span></p></div><p></p></div></div></p>

The German Manufacturing Sector Is On Fire

The health of the <a href="http://www.businessinsider.in/How-Make-in-India-has-improved-India-as-a-global-leader-inthe-manufacturing-sector/articleshow/56660559.cms">Indian manufacturing</a> sector has for quite some time been of extraordinary concern to the government. The expansive decline in manufacturing work since the start of the 21st century has stimulated specific authoritative interest. Throughout the years, Members have acquainted several bills expected with support <a href="http://www.businessinsider.in/Can-India-surpass-China-Japan-Germany-as-the-next-manufacturing-hotspot/articleshow/56623882.cms">domestic manufacturing</a> activity in different ways. The defenders of such measures much of the time contend that India is somehow falling behind different nations in manufacturing.

These amazing facts
about India’s manufacturing sector show India could soon beat the US, but is
still far away from catching up to China<b></b>

It was a disappointing Union Budget for manufacturers in India. Before FM Jaitley stepped on the floor of Lok Sabha, expectations were high, even experts and pundits were talking about India as the next hotspot after China.<br />
<br />
The question here is, “What could have been an ideal budget for the manufacturing segment?”

This should have been the ideal budget for the manufacturing sector in India

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Reuters</span></p></div><p></p></div></div>The eurozone's manufacturing sector is finally on a charge after several years of broad stagnation, and surged ahead in September, <a href="https://www.markiteconomics.com/Survey/PressRelease.mvc/0d9d82878a7949c0878b67d1170f4b39">according to the latest data from IHS Markit released on Monday.</a></p><p>Markit's manufacturing PMI for the eurozone grew from 51.7 in August to 52.6 in September, matching the earlier flash estimate.</p><p>The purchasing managers index (PMI) figures from Markit are given as a number between 0 and 100.</p><p>Anything above 50 signals growth, while anything below means a contraction in activity - so the higher the better.</p><p>Within Europe, the continent's major economies were the big drivers of the growth, with Germany and France both hitting multi-month highs, and Italy climbing to a two-month high.</p><p>Here are the breakout readings provided by Markit:</p><ul><li><strong>Spain manufacturing - 52.3, previous 51</strong></li><li><strong>Italy manufacturing - 51, previous 49.8</strong></li><li><strong>France manufacturing - 49.7, previous 49.5</strong></li><li><strong>Germany manufacturing - 54.3, previous 53.6</strong></li><li><strong>Greece manufacturing - 49.2, previous 50.4</strong></li></ul><p>And here is the single currency area-wide chart:</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>IHS Markit</span></p></div><p></p></div></div></p><p>Speaking about the results, IHS Markit's chief business economist Chris Williamson said (emphasis ours):</p><p>"The key message from the September survey is that the euro area's manufacturing economy continues to expand at an encouragingly solid pace. The PMI points to production rising at a steady 2% annual pace in the third quarter, with momentum picking up in September.</p><p>"Production gains are being driven by welcome signs of improving demand from both within the region and from wider export markets.</p><p>"For a region beleaguered by still-high overall unemployment, the fact that the upturn is generating more jobs is especially good news. The latest rise in factory payroll numbers was one of the best seen over the past four years."</p><p style="padding-left: 30px;"> </p><p>At 9:30 a.m. BST (4:30 a.m. ET) Markit will release the latest set of confirmed <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> manufacturing data since the vote to leave the European Union, which are expected to show a slight slowing from August's numbers which saw a huge bounce in the UK's manufacturing sector after a huge drop in the immediate aftermath of the Brexit vote.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/world-powerful-leaders-ian-bremmer-eurasia-putin-jinping-merkel-pope-francis-2016-2">These are the world's most powerful leaders</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="RyYWVhMTE6mjoKcWsAWzZpmAG4UxzWf9" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Europe's manufacturing sector is charging ahead

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Dave Thompson/Getty Images</span></p><p class="caption">Chancellor George Osborne during a factory visit earlier this year.</p></div><p></p></div></div>The EEF, a lobby group for <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> engineering and manufacturing, on Monday <a href="http://www.eef.org.uk/about-eef/media-news-and-insights/media-releases/2015/sep/manufacturing-growth-forecast-halved-as-rollercoaster-of-risks-takes-its-toll">more than halved its growth forecasts for Britain's manufacturing sector this year</a>, from 1.5% to 0.7%.</p><p>The group blamed what it sees as a "rollercoaster of risk", saying: "Bright spots provided by domestic consumer demand and construction activity are not enough to hold the shadow of global factors at bay."</p><p>The big problems are <a href="http://uk.businessinsider.com/afp-china-cuts-2014-gdp-growth-from-74-to-73-govt-2015-9">China's cooling economy</a> and <a href="http://uk.businessinsider.com/chinese-stocks-got-destroyed-today-september-1-2015-9">recent stock market turmoil</a>, <a href="http://uk.businessinsider.com/afp-tsipras-asks-greeks-for-outright-majority-in-september-vote-2015-8">Greece's debt crisis</a>, and uncertainty in Europe, <a href="http://uk.businessinsider.com/mario-draghis-september-ecb-press-conference-2015-9">with the ECB cutting its growth forecasts on Friday</a>.</p><p>All three are either directly weakening demand or indirectly hitting it by reducing business' willingness to take risks right now.</p><p>UK manufacturers' output shrank by 2% in the second quarter, the worst performance since 2009. Exports are also at a 6-year low.</p><p>As a result, the EEF is cutting forecasts in its quarterly EEF/DLA Piper Manufacturing Outlook survey.</p><p>Lee Hopely, the EEF's chief economists, <a href="http://www.eef.org.uk/about-eef/media-news-and-insights/media-releases/2015/sep/manufacturing-growth-forecast-halved-as-rollercoaster-of-risks-takes-its-toll">says in a statement</a>: "We've seen the future of the Eurozone on the line once again, turbulence and uncertainty over China and Greece and, of course, oil and gas are still a concern. Against this backdrop it's no surprise that confidence is faltering and UK manufacturers are feeling less optimistic about their growth prospects for next year. </p><p>"However, it's important to note that confidence has dipped rather than nose-dived and if the global drag lets up anytime soon then UK manufacturing should very swiftly get back into its previous stride."</p><p>Britain isn't the only one downbeat on manufacturing right now - <a href="http://uk.businessinsider.com/european-manufacturing-pmi-for-august-italy-spain-germany-2015-9">France's manufacturing sector is in crisis</a>, <a href="http://www.businessinsider.com/china-released-data-on-slowing-economy-2015-8">China's is sector is shrinking</a>, and <a href="http://uk.businessinsider.com/markit-manufacturing-pmi-august-2015-8">the US is also in trouble</a>.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/make-stronger-coffee-butter-bulletproof-2015-8">The one thing you can add to coffee for even more energy in the morning</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="AzaHR0azqiCrAFeAtElHGrY0gtxdQM__" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Britain's manufacturing sector is in serious trouble

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>REUTERS/Toby Melville</span></p><p class="caption">A man dressed in British union flag clothing promotes a souvenir shop in Piccadilly Circus in central London April 19, 2011.</p></div><p></p></div></div>Growth in the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword>'s manufacturing sector jumped in January, beating the expectations of economists.</p><p><a href="https://www.markiteconomics.com/Survey/PressRelease.mvc/5b4e345e978d439e8d8ce3753dcf1135">That's according to Markit's purchasing managers' index (PMI),</a> which came in with a score of 52.9. That's a jump of 0.8 on December's figures, which beats forecasts put out by analysts by 1.1 points.</p><p>The PMI offers a snapshot of a sector for the month that's just finished, well before any official economic data is released. It's based on a poll of businesses, which tell Markit whether they're seeing more or fewer orders, employing people or laying them off, and a number of other similar questions.</p><p>As long as the figure is over 50, there's growth - and the jump is good news for UK manufacturing, which has been struggling a little in recent months. 52.9 in the PMI represents the best performance of the manufacturing sector in three months, thanks to growth in domestic orders.</p><p>In a statement, Markit said: "Manufacturing production increased again during January, reflecting improved inflows of new work from the domestic market."</p><p>Here's the chart:</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Markit</span></p></div><p></p></div></div></p><p>Rob Dobson, a senior economist at Markit said:</p><p style="padding-left: 30px;">The UK manufacturing sector registered an uptick in its rate of expansion at the start of 2016, shrugging off a number of potential headwinds, ranging from global financial market volatility to localised flooding in the North of the country.</p><p style="padding-left: 30px;">The domestic market remains the key growth driver. In contrast, the trend in new export orders continues to disappoint, falling back into reverse gear in January. Even after recent easing in the exchange rate, a number of manufacturers are still finding that the strength of the pound against the euro is impacting order inflows.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/1rebel-gym-exercise-business-work-out-2016-1">London's new 'anti-gym' chain 1Rebel features music curated by top DJs and free beer</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="F0MmVoMDE66my--CrZeJIoW9Jdm82Es-" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Britain's manufacturing sector soared in January

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0BXZZW84VAU&amp;SMLS=1&amp;RW=1440&amp;RH=718#/SearchResult&amp;VBID=2C0BXZZW84X28&amp;SMLS=1&amp;RW=1440&amp;RH=718&amp;PN=5">REUTERS/Charles Platiau</a></span></p><p class="caption">French President Francois Hollande waits for a guest at the Elysee Palace in Paris, France, December 2, 2015.</p></div><p></p></div></div>It's flash PMI day in Europe, meaning we get a snapshot of growth in the Eurozone's two powerhouses - France and Germany.</p><p>We're getting preliminary readings for growth of the service sector, manufacturing, and overall economy of both in January. Each PMI reading is given as a figure between 0 and 100 - anything above 50 signals growth, while below means contraction.</p><p>France is up first, here's what we've got:</p><ul><li><strong>Manufacturing: </strong>50 - well below economists forecasts of 51.3 and down from 51.4 in December;</li><li><strong>Services:</strong> 50.6 - above expectations of 50.2 and an acceleration from December's figure of 49.8;</li><li><strong>Overall economy:</strong> 50.5 - an acceleration from 50.1 last month.</li></ul><p>While the overall picture is not bad, the huge collapse in manufacturing will be a worry to President Francois Hollande. The President <a href="http://www.bbc.co.uk/news/business-35343611">this week declared a state of economic emergency</a>, pledging to spend €2 billion to tackle France's stubbornly high unemployment.</p><p>Germany's flash PMIs are due at 8.30 a.m. GMT (3.30 a.m. ET). We'll update this post with them once they're in, keep checking back.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/inventors-killed-by-inventions-titanic-marie-curie-hang-glide-2016-1">7 inventors who were killed by their own inventions</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="VsMGYwMDE6fvg6irQt8i2KueCbxtIwrO" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

France's manufacturing sector is nosediving

<p><div class="image-container float_right" style="width:400px"><div class="image"></div><p class="source"><a href="http://www.flickr.com/photos/77611914@N00/2632237060/">Flick/SpAvAAi</a></p><p class="caption">Mahjong</p></div><keyword id="1334" type="COUNTRY" weightage="60" keywordseo="China">China</keyword>'s National Bureau of Statistics just published its April manufacturing <keyword id="104215" type="ORGANIZATION" weightage="60" keywordseo="PMI">PMI</keyword> report.</p>
<p>The headline number fell to 50.6 from 50.9 in March.</p>
<p>Economists were looking for a reading of 50.7.</p>
<p>Any reading above 50 signals expansion.</p>
<p>Here's a break down of the March and April reports:</p>
<p> </p>
<table border="0">
<tbody>
<tr>
<td> </td>
<td><strong>  March 2013   <br /></strong></td>
<td><strong> April 2013</strong> </td>
</tr>
<tr>
<td><strong>PMI      </strong>                    </td>
<td style="text-align: center;"><strong>50.9</strong></td>
<td style="text-align: center;"><strong><span style="color: #ff0000;">50.6</span></strong></td>
</tr>
<tr>
<td>Output</td>
<td style="text-align: center;">52.7</td>
<td style="text-align: center;"><span style="color: #ff0000;">52.6</span></td>
</tr>
<tr>
<td>New orders</td>
<td style="text-align: center;">52.3</td>
<td style="text-align: center;"><span style="color: #ff0000;">51.7</span></td>
</tr>
<tr>
<td>New export orders</td>
<td style="text-align: center;">50.9</td>
<td style="text-align: center;"><span style="color: #ff0000;">48.6</span></td>
</tr>
<tr>
<td>Backlog of work</td>
<td style="text-align: center;">47.1</td>
<td style="text-align: center;"><span style="color: #ff0000;">43.6</span></td>
</tr>
<tr>
<td>Inventories of finished goods  </td>
<td style="text-align: center;">50.2</td>
<td style="text-align: center;"><span style="color: #ff0000;">47.7</span></td>
</tr>
<tr>
<td>Purchases quantity</td>
<td style="text-align: center;">51.9</td>
<td style="text-align: center;"><span style="color: #ff0000;">51.0</span></td>
</tr>
<tr>
<td>Imports</td>
<td style="text-align: center;">48.9</td>
<td style="text-align: center;"><span style="color: #ff0000;">48.7</span></td>
</tr>
<tr>
<td>Input prices</td>
<td style="text-align: center;"><span style="color: #000000;">50.6</span></td>
<td style="text-align: center;"><span style="color: #ff0000;">40.1</span></td>
</tr>
<tr>
<td>Inventories of raw materials</td>
<td style="text-align: center;"><span style="color: #000000;">47.5</span></td>
<td style="text-align: center;"><span style="color: #000000;">47.5</span></td>
</tr>
<tr>
<td>Employment</td>
<td style="text-align: center;">49.8</td>
<td style="text-align: center;"><span style="color: #ff0000;">49.0</span></td>
</tr>
<tr>
<td>
<p>Supplier delivery times   </p>
<p>Business Activity Expectation</p>
</td>
<td style="text-align: center;">
<p>51.1</p>
<p>65.5</p>
</td>
<td style="text-align: center;">
<p><span style="color: #ff0000;">50.8</span></p>
<p><span style="color: #ff0000;">59.3</span></p>
</td>
</tr>
</tbody>
</table>
<p>Earlier this month, we got a preliminary reading of HSBC's unofficial PMI, which <a href="http://www.businessinsider.com/chinese-flash-pmi-2013-4">unexpectedly fell to 50.5</a> from 51.6 in March.  The final reading of this index will come out tomorrow.</p>

CHINA'S MANUFACTURING SECTOR DECELERATES

Going by the data presented by Minister of State for Defence Rao Inderjit Singh in parliament on Tuesday, the <keyword id="6412360" type="UNKNOWN" weightage="20" keywordseo="Defence-Sector">defence sector</keyword> stood at the bottom of the list of sectors that received foreign investment this year with merely Rs 56 lakh in its kitty.<br />
 <br /> This is despite the persistent government efforts to market India as a defence manufacturing hub ever since last year when the norms were eased by the <keyword id="65795" type="ORGANIZATION" weightage="20" keywordseo="BJP-government">BJP government</keyword> last year in August, including FII <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword> upto 24 percent on automatic route. <br />
 <br /> This dismal <keyword id="44528" type="ORGANIZATION" weightage="20" keywordseo="FDI">FDI</keyword> inflow was the reason why another set of big changes was announced by the government in November in defence FDI. The changes included FDI upto 49 percent through automatic route, permissions to be taken from FIPB beyond 49 percent, besides FVCI and portfolio being also permitted 49 pc through automatic route. <br />
 <br /> However, while the government made it easier for foreign investors to venture into the defence <keyword id="6395867" type="UNKNOWN" weightage="20" keywordseo="manufacturing-sector">manufacturing sector</keyword>, it shied away from being liberal on the FDI limit, capping it to 49 percent under the new automatic process, a bone of contention for investors who desire a controlling stake. <br />
<br />
Other significant sectors like Glue and Gelatin, Dye Stuff and Scientific Instruments beat the investments into the defence sector exponentially. <br />
<br />
(image credit: BCCL)<br />

Government fails to attract FDI in Defence Industry, only Rs 56 lakh since Sept last year

<keyword id="175632" type="UNKNOWN" weightage="20" keywordseo="MSME-sector">MSME sector</keyword> is one of the most neglected sectors with respect to public policy but has immense potential. It is because MSMEs are the backbone of any industrial economy. Across the world, most transformations have happened on the back of robust industrial sector, and MSMEs have played a critical role in these transformations.<br />
 <br /> In India, the <keyword id="6395867" type="UNKNOWN" weightage="20" keywordseo="manufacturing-sector">manufacturing sector</keyword> has been lagged behind and the government has envisaged an ambitious '<keyword id="6354869" type="UNKNOWN" weightage="20" keywordseo="make-in-India">Make in India</keyword>' program to give the sector a boost. The 'Make in India' program cannot do well without the MSME sector overall doing well because the sector, at present, provides employment roughly to one in 15 people in India and is responsible for roughly 45 per cent of India's exports. Despite all this, the sector remains highly troubled.<br />
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It is because there are several unique problems that the sector faces in India. Most of these emanate from the fact that roughly 95 percent of enterprises in the sector are still unregistered. It means these enterprises are outside the ambit of formal schemes and programs of the government.<br />
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For this, the government recently launched the Udyog Aadhar Scheme, which aims to register unregistered enterprises and bring them with the ambit of schemes and policies of the government. It is a major initiative and may help enterprises become part of the formal system.<br />
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The second issue is that the unorganized nature of the sector results in the lack of marketing support at the national and international level and lack of integration in the global value chains. It has resulted in restriction of goods and services to only local markets that results in loss of revenue to the people employed in the value chain of the overall network. A collaborative approach between the stakeholders of the MSME ecosystem can help in improving quality as well as give an access to markets for a large number of MSME enterprises.<br />
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The third major issue is the feeling of trust between an agglomeration of firms/enterprises and even between a firm and the government.<br />
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Firms feel that the government is taking information from them to get taxes or harass them rather than to build a database for helping the enterprises achieve their true potential. It is even seen in the last year's national innovation survey that saw a large amount of enterprises talking about government as a major barrier to innovation.<br />
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Also, another major problem is with respect to labour laws in the sector, which makes the firms perceive the government as a problem rather than as a helper/collaborator. The inhibition of trust has hampered and continues to hamper the growth of the MSME sector and the Indian economy.<br />
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Fourth is the issue of credit flow to the sector. The RBI has adopted the recommendations of the PM's task force on MSMEs in 2010 and continues to use it for schemes to benefit MSME sector, but the implementation of these by banks and benefits to the individual firms are seen as major challenges that are seen on the ground.<br />
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Fifth issue is innovation in the MSME sector. India's overall approach to innovation in MSMEs has been built around the idea that technology and R&amp;D are innovation. While technology and R&amp;D can be used to support or result in innovation, they are not innovation. Similarly, some government institutions and MSME sector are misaligned. It is because government CSIR labs produce technologies and R&amp;D that is very rarely taken up by the MSME sector. It makes R&amp;D and innovation in MSME's quite antithetical.<br />
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Finally, there are several institutions at the innovation level in the country that are simply defunct. These include institutions like the National Innovation Council and the National Manufacturing Competitiveness Council (NMCC) that are without the head of institutions at present. These should see appointments at the earliest or should be completely dismantled.<br />
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Over the next few decades a critical factor in making India competitive will be making MSMEs competitive. It will happen only when the government and firms resolve some of the issues mentioned here. A process driven and systematic approach to bridging the trust deficit will help MSME become more competitive.<br />
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(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness &amp; Editor of Thinkers. The views expressed are personal. Amit can be reached at <a href="mailto:amit.kapoor@competitiveness.in">amit.kapoor@competitiveness.in</a> and tweets @kautiliya)<br />
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