Indian manufacturing sector: Optimistic about the future

Bimal Tanna, Leader, Industrial Products, PwC India

The second edition of the FICCI-PwC India Manufacturing Barometer was released by Ajay Shankar, former Member Secretary, National Manufacturing Competitiveness Council, at the FICCI office in New Delhi.

The India Manufacturing Barometer 2014: Turning the Corner delves into the current sentiments of business leaders from the manufacturing sector and explores the factors they perceive will impact their businesses over the next few months and the strategies they expect to employ in order to address barriers to growth in order to make the most of the sector turning the corner.

The Indian manufacturing sector faces a defining moment in its evolutionary path. As the global economy revives, growth rates across several major economies are expected to improve. The new Indian government has also stated its intention to attract manufacturing sector investment through its Make in India campaign.

Overall, there is an increase in the level of optimism and activity as compared to the sentiments captured in the previous edition of the report.

Business leaders in the manufacturing sector are optimistic about performance of their businesses and the sector as a whole over the next 12 months. More than half the companies in the sector expect to plan major investments with research and development, new products or services introduction and facilities expansion being the three priority areas.

Concerns related to raw material and energy costs persist, though domestic demand is less of a worry than last year. Business leaders are looking to the government to rationalise taxes and duties and to invest in infrastructure improvement.

In our view, a series of short- and long-term measures will help take the manufacturing sector to the next level of growth. In the short run, the government needs to streamline regulatory processes and take meaningful confidence-building measures for investors. It has already begun this process through a number of measures aimed at labour reforms. In the long run, a modern set of laws in the areas of taxation, labour, FDI, land acquisition and environment needs to be implemented.

Riding the digital wave

Smita Jha, Entertainment and Media Leader, PwC India

The Indian entertainment and media industry grew at a healthy 19% in 2013 over 2012. The growth was driven mostly by the strong growth in the subscription revenue of the television segment, which continues to be boosted by ongoing digitisation.

The relatively newer segments of internet access and internet advertising witnessed rapid growth, and the former surpassed the entire print segment (i.e. the sum of advertising and subscription revenues from magazines and newspapers) as the second-largest segment of the industry. As digitisation drives growth in the industry, the biggest challenge remains monetising the digital consumer.

We at PwC believe that digital success is not just about technology, but about applying a digital mindset to build the right behaviours. We’re in a world where digital technology is constantly redefining the nature of the business. It has provided businesses with the ability to provide a richer customer experience.

But to capitalise on this digital revolution, companies need to develop a stronger digital IQ, with digital as an enterprise capability woven into the business. Instead of just a digital strategy, they need a business strategy in a digital age.

Alongside, customers have now realised that they can be at the centre of their own world of entertainment and media. Through personalisation, online services have shown consumers that they can find content experiences of their choice. The challenge is monetisation of this experience, which companies need to focus on.

Delivering such an experience requires getting to know consumers as individuals—and them knowing you back. This requires not just the right technology, but also the right mindset and talent for relationship innovation. Thus, investment in customer analytics will no longer be a luxury but a necessity for survival in the digital age.

Read the India Entertainment and Media Outlook 2014 for more insights.

Budget proposals augur well for the education sector

Dhiraj Mathur, Leader, Education, PwC India

Clearly stating that elementary education is a priority for the government is a public good and therefore a primary responsibility. The launch of the New Teacher Training Programme with an initial sum of 500 crore INR allocation is important for addressing the issue of teacher training and quality. The FM has announced a new Beti padhaao, beti badhaao yojana and has also made provision for drinking water and toilets in all girl schools.

The launch of the new Skill India programme is welcome, subject to its ability to achieve convergence of the plethora of programmes being run by multiple departments and ministries.

IT can provide vital support in delivering education and hence the new programme that leverages IT in setting up virtual classrooms, as Communication Linked Interface for Cultivating Knowledge (CLICK) and online courses is also an important decision that could potentially improve the quality of education in schools.

Setting up five IITs and IIMs is a welcome step. However, there is no mention of involving private sector participation in providing higher education. This is a departure from the recommendation made in the Economic Survey that government spending must focus on providing public goods. Higher education does not fall under that category.

Investment in new cities is a must

Neel Ratan, Leader, Management Consulting, PwC India

With the urban migration trend, the only way for us to sustain as a society is to invest in new cities, cities that need to focus on leveraging technology to improve service delivery, quality of life and at the same time optimise the usage of resources. Although the actual creation of 100 new cities will require large financial outlays, the current Budget allocation is a step in the right direction.

This announcement will definitely excite stakeholders including urban planners, city administrators and industry to come together and create sustainable models for new cities. It is essential to focus on the right governance and regulatory frameworks to ensure speedy execution and benefits realisation. Since the smart city concept is a nascent development, it will be prudent for stakeholders to gain insights from the planners of similar initiatives such as GIFT, DMIC and Naya Raipur. Conceptualising and developing new cities is a time-consuming process. This announcement therefore will give the required thrust to fast-track the planning of new cities.

It has been seen in the recent past that technology companies have become wary of government contracts, leading to their reduced participation. To reinforce the level of confidence in the investor community, it is pertinent for the government to work out measures that help in the 'ease of doing business' with the government.

The retailer steps into a new age

Rachna Nath, Leader, Retail and Consumer

As boundaries merge and customers interact with retailers and brands anytime, anywhere, the world is truly flattening. Technology is no longer an inhibitor and has truly evolved into a partner. In fact, technology has developed faster than its adoption. The dilemma facing today's retailer is to understand how to deploy these technologies to drive revenue, customer engagement or operations excellence.

Today’s consumer expects much more. The retailer needs to not only provide her home shopping, but also via her devices of choice. The consumer expects to pay using digital wallets, mCommerce, online, via cash on delivery. She expects to buy online, return in store or vice versa, check online, buy in store or check in store and order online. And that's not all. Right through the experience, the consumer expects the retailer to stay engaged with her via text messaging, social media and other communication, updating her with the latest trends and offers.

The consumer will settle for nothing less than a seamless experience across channels.

PwC’s multi-channel report from earlier this year, Total Retail discussed how these consumer expectations are driving the retailer’s business model. It is no longer just important to be present across channels and expect the consumer to ‘walk in’. Today, a customer-focussed organisation, supported by an optimised supply chain, a seamlessly integrated technology across functions and an analytical engine to provide personalised services, are critical.

This is a radical change from a decade ago in India, when the most important aspect in retail was ‘location, location, location’. The emphasis was on opening stores and technology was all about supporting the point of sale, managing inventory and providing MIS to the ‘central’ management team. Customer experience was largely ignored.

A volte face to a new era brings with it challenges as well as opportunities. How have India's retailers performed?

Fit for the future: Retail

K Venkataraman, CEO, Mahindra Retail

 

K Venkataraman talks about the key takeaways from the PwC CEO Summit 2014 and how the discourse on skill and leadership development will help him make important investment decisions.

To view the Global CEO Survey report, click here: http://www.pwc.com/gx/en/ceo-survey/index.jhtml

For the India cut, click here: https://www.pwc.in/global-ceo-survey-2014/index.jhtml

Fit for the future: Consulting

Sanjay Kumar, CEO and MD, Altran India

 

Sanjay Kumar says that in order to overcome the current gloom and doom, structural reforms are needed to stimulate growth within the domestic environment.

To view the Global CEO Survey report, click here: http://www.pwc.com/gx/en/ceo-survey/index.jhtml

For the India cut, click here: https://www.pwc.in/global-ceo-survey-2014/index.jhtml

Fit for the future: Financial services

Vimal Bhandari, MD and CEO, Indostar Capital Finance Ltd

 

Vimal Bhandari talks about the survey findings regarding the level of despondency among Indian CEOs and hopes that the situation gets better.

To view the Global CEO Survey report, click here: http://www.pwc.com/gx/en/ceo-survey/index.jhtml

For the India cut, click here: https://www.pwc.in/global-ceo-survey-2014/index.jhtml

Fit for the future: Logistics

Shashi Kiran Shetty, Executive Chairman, All Cargo Logistics Ltd

 

Shashi Kiran Shetty says that in order for imports and exports to grow, India needs better and more stable policies.

To view the Global CEO Survey report, click here: http://www.pwc.com/gx/en/ceo-survey/index.jhtml

For the India cut, click here: https://www.pwc.in/global-ceo-survey-2014/index.jhtml

Fit for the future: Electronics

Sanjay Johri, Managing Director, Voltas Ltd

 

Sanjay Johri looks at the growing business confidence in the West, particularly the US, found in PwC's CEO Survey Report as a promising sign for the future.

To view the Global CEO Survey report, click here: http://www.pwc.com/gx/en/ceo-survey/index.jhtml

For the India cut, click here: https://www.pwc.in/global-ceo-survey-2014/index.jhtml

The opinions expressed in the blogs are personal.


 

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