India’s Remarkable Ascent on the World Competitiveness Index
India has experienced the most substantial ascent among the Asian economies, leaping six positions on the World Competitiveness Index released by Institute for Management Development, climbing from 43rd in 2021 to 37th rank in 2022. Over the years, the nation has witnessed significant strides across various sectors, and one sector that stands out for its immense potential and impact is manufacturing. As the backbone of economic growth and job creation, the manufacturing sector in India has been steadily evolving to meet the demands of a rapidly changing global landscape.
Understanding Competitiveness at Different Levels
With economic reforms gaining momentum, long term prospects for growth remain bright for India. Competitiveness is based on the idea of productivity, implying an economy’s capability to mobilise its available labour force and other assets to generate value. It plays a pivotal role in driving economic growth, fostering innovation, and ensuring long-term sustainability for an economy. Bringing competitiveness to an economy can be examined from two distinct perspectives: competitiveness at the country-level and at the level of the individual firm. These perspectives offer valuable insights into different levels of the economy, shedding light on the factors that contribute to overall competitiveness.
Interconnected Perspectives: Building Blocks of a Competitive Economy
These two perspectives are interconnected and mutually reinforcing. When individual firms or Industries excel at what they do, their focus on factors like product quality, innovation, cost- efficiency, human resources, supply chain management, and market dynamics contributes to the overall competitiveness of a country. It’s like building blocks when each piece is strong, it creates a solid and competitive economy on a larger scale. At the same time, a conducive environment with good policies, infrastructure, institutions, and economic stability creates an ecosystem that nurtures the competitiveness of individual firms and industries.
The Need for a Clear Strategy
Thus, it can be determined that advancing competitiveness is a gradual, long-haul endeavour and not a swift race. There are no shortcuts, or simple solutions based on narrow interventions. However, there is huge potential to accelerate progress through a clear strategy that enables action to focus on ways to excel in enhancing competitiveness. We need to focus on systematically developing sectors aligned with India’s current and future competitive advantages.
Enhancing Competitiveness: A Case Study of the Cement Industry
Let’s take the cement industry as an example. To enhance competitiveness in this sector, a comprehensive approach is necessary. One strategy is to optimise raw material usage and cost by preserving existing resources and exploring opportunities in circularity by consuming waste from other industries, municipalities and reducing use of coal. By carefully managing resources, the industry can minimise costs and improve profitability. Another important aspect is reducing energy consumption and sourcing energy needs from renewable sources such as Waste Heat Recovery/ Cogeneration, Solar, Biomass and other sources, which not only saves costs but also contributes to sustainability. These measures would ensure that the company remains cost competitive in a highly cyclical commodity business.
Investing in a Skilled Workforce
The aforementioned prospects will remain unattainable in the absence of proper skill development and education among the required stakeholders. Having a skilled and knowledgeable workforce, investment in employee training and development programs to enhance technical expertise and managerial capabilities can provide impetus to skill development in the sector. Further, collaborating with academic institutions and research organizations can help access cutting-edge knowledge and expertise. Investing in research and development (R&D) can further drive innovation and maintain a competitive edge in the industry. The Competitiveness Roadmap for India@100 released by the Economic Advisory Council to the Prime Minister (EAC-PM) last year also emphasises skilling the country’s massive youth population, promoting export competitiveness, and augmenting fiscal support to crucial sectors to foster green growth.
India’s Position on the Global Competitiveness Landscape
India’s competitiveness challenges and opportunities provide valuable insights into the broader global landscape of competitiveness. With the world constantly changing. India is poised to emerge as a norm creator in the near future. With a focus on driving innovation, embracing technology. and fostering favourable business environments. India’s manufacturing sector is primed to unlock new possibilities and elevate the nation’s position on the global manufacturing map. By prioritising competitiveness, the Indian industry can shape its own destiny and create a prosperous future based on its ability to compete and succeed in the global marketplace.
This article was contributed by Madhavkrishna Singhania, Deputy Chairman, CII Northern Region and Deputy MD & CEO, JK Cement Limited and was published in the July 2023 edition of the CII Northern Insights.