2. MANUFACTURING SECTOR
The make-in India Initiative call given by the Prime
Minister of India shri Narendra Modi has given a
big boost to the Manufacturing sector in India. The
government has identified 25 thrust sectors and
has taken steps for easing of doing business with
India. Although the World Bank report puts us way
behind in the list of countries for ease of doing
business, the government is taking a number of
measures to alleviate the problem. Telangana state
is one of the four states, the others being Punjab,
Gujarat, and Maharashtra as the prime drivers
for boosting the ranking of India in ease of doing
business, because of the proactive governmental
efforts. The governments at both the state and
central levels have rationalized the procedure for
most of the time consuming clearances and this
boosted the investor’s confidence that the projects
can be completed in time and there would not be
unnecessary overruns. The RBI’s industrial outlook
survey indicates that more than 75 percent of the
companies who invested in 2014-15 have planned to
invest more in 2015-16. The major industrial sectors
considered are 15 and they are Pumps & valves,
Textiles, Capital goods, Metals, Chemicals, Cement,
Electronics, Automotive, Leather & footwear,
Machine tools, Food processing, Paper, Tyre,
Ceramics and Textile machinery and others.
3. Sectoral Growth: The growth potential has been studied from published data and it was observed that from
out of the fifteen sectors studied five sectors are likely to have low growth (less than 5%), six sectors to have
moderate growth between (5 and 10 percent), while the balance four sectors are likely to have a high growth of
over 10%.as shown in the Table below. A small executive summary is made on ten of the important sectors.
4. Telangana state due to acute power shortage in 2014, while facing the
demand of power for agricultural pumpsets which numbered about
1.84 million, has embarked as solar power. This has made necessary the
conversion of the existing electric pumpsets into solar pumpsets. Thus
creating demand for 1.8million solar pumpsets at a cost of Rs.540 billion. In
state of Andhra Pradesh also solar pumpsets are required in huge number as
that state also has power problems.
Increasing material prices has put pressure on the export margins of valves
companies. The valve sector growth depends on the OEM sector growth. As
the OEM sector growth is expected, there is a very bright future for valves
sector.
AP & Telanagana
5. AP & Telanagana
A majority of the auto component units are located
around Nellore and Chittoor districts and the plastic
component units are located in Hyderabad, Ranga
Reddy district and surroundings. The dash board
and other components are supplied from units in
Hyderabad. Around 37 kgs of plastics components
go into an automobile and this is supposed to
increase to 115 kgs in 2015-16. Thus there is a good
scope for manufacture of plastics components for
automobiles.
1) Automobiles
The automobiles sector which was showing
a bleak outlook during the last two years has
shown substantial improvement in 2015-16. The
components segment has been experiencing slow
down and there has been virtually no increase in the
levels of production during the last two years and
exports have come down. This sector has registered
a turn over of US $ 38.5 Billion in 2014-15 and a
CAGR of 11%. The revenue grew by 14% and are
likely to achieve their 2020 target of US $ 115 Billion
according to ACMA President. The exports are
expected to touch US $ 16 Billions by 2016. This is
essentially due to 10 to 25 percent lower costs of the
components made in India compared with European
and Latin American Counties.
Tamil Nadu has become the automobile capital
of India. They are acquiring a lot of mechanical
and plastics components from AP. Hyderabad in
Telanagana has been supplying a lot of plastics
components to Tamil Nadu and Pune in Maharashtra.
There is huge scope here.
There are 185 units involved in manufacturing and
sale of maintenance components for motor vehicles
in Telanagana state. Most of them are registered
with various District industries centres in Telanagana
state and almost equal number of them are in the
unorganised sector.
6. 2) Cement
There are 188 large cement plants and 365 small and mini cement plants in the
country. The installed capacities are given in the table below:
Table 2: Cement plant
The Indian cement consumption is expected to grow to
324MTS in 2015. The cement industry has been showing
a growth of 15.7% CAGR. The per capita consumption
of cement in India is 190 kg while the world average is
500kg. Since the deregulation of the cement industry
in 1982 many plants have come up and by the year 2025
the cement production is expected to touch 600 MMTS.
The cement consumption is highest in the domestic
housing sector at 67% and in commercial constructions
at 13%, Infrastructure and Industries 11% and the
balance for other works. It is also observed that 70% of
the cement is produced by the top 20 companies and
some of the leading companies are Birla corporation,
Dalmia cements, Ultratech cements, Andhra Cements,
Heromotor corporation, JSW etc..
AP & Telanagana
When the policy opened up, Andhra Pradesh and
Telanagana have become the haven for mini cement plants
and scores of units were started. Besides the Andhra
Cements, Dalmia and Bharti Cements in AP, particularly
in Telanagana State, in the khammam, Nalgonda areas,
scores of cement plants have come up. Still there is a huge
demand for setting up cement plants in the Andhra Pradesh
and Telanagana State. Also there is plenty of raw material
available. There are a total number 40 cements plants in
both AP and Telanagana put together including large and
mini cement plants. As the real estate and construction
activity has zoomed up in 2014-15, the demand has
increased. Also the government of Telanagana State is
laying CC Roads and this has increased the demand many
fold. It has plans to extend the ORR to eight lanes and 23
Link roads and sky walks etc.. The capital constructions
in Andhra Pradesh at Amaravati has also triggered the
demand.
7. AP & Telanagana
The government of India,. Ministry of Fertilizers an chemicals
has sanctioned a plastics park of Telanagana State and the
state has identified 100 Acres of site at TIIC industrial area at
Tumalur, maheswaram mandal, Ranga Reddy district and is
now ready to embark on this project with full vigour.
Recently at the Visakhapatnam conclave, the minster for
fertilizers and chemicals, GOI has announced the expansion
of HPCL, the setting up for PCPIR in Visakhapatnam-
Kakinda industrial corridor and a petrochemical complex at
Visakhapatnam with an investment of Rs.500 billion. This
would generate employment to more than 50,000 persons.
After Mumbai, Hyderabad is the biggest hub of
Pharmaceutical Industries for both Bulk drugs and
Formulations. During 2014-15 Pharma exports were $ 15.5
Billion and have registered a growth of 11.9% CAGR. The
exports are to Germany, UK, US, Switzerland, Spain, Turkey,
Japan and Singapore. In Telanagana State, Reddy Labs,
Shanta Biotech, NATCO and Gland pharma are the largest
exporters. There is a very huge scope for the pharma industry
in Telanagana State it has created necessary infrastructure
and special zones for pharmaceutical industries. There is a
huge scope for FDI and foreign companies also can enter
through M & A in the pharmaceutical sector, besides starting
their 100% owned units..
3) Chemicals & Pharma
The chemicals sector comprises of
petrochemicals, organic and inorganic
chemicals, pharmaceuticals and other
chemicals. The chemical industries have
registered a growth of 13-14% CAGR during
the last five years and the petrochemicals have
registered a growth of 8 to 9% during the last
five years. Except Phosgene and Isocyanates
which require compulsory licensing, other
chemicals can be manufactured without any
hastles.. 100% FDI is permitted in the chemical
sector. Most of the FDI is through M & A
(Mergers and Acquisitions).
The top ten chemical Industries are Tata Chem.
Ltd, United Phosphates Ltd, BASF, India Glycols,
Pidilite Ltd, Philips carbon Black, Gujarat Heavy
Chemicals Ltd Gujarat Alkali Chemicals Ltd
etc.. Among petrochemicals the top industries
are Reliance Industries Ltd, GAIL Ltd, Haldia
Petrochemicals Ltd. and IOC Petrochemicals
Ltd.
Indian Pharma Industry is worth US $ 26 billion
and is expect to touch US $ 45 Billion by 2020
and is the third largest globally.
8. The Indian pumps market is along saga from
pumping water from wells for households to a
plethora of industrial applications and exports.
A large number of international companies engaged
in manufacture of pumps and valves are entering
India with manufacturing bases into Asian market,
particularly India, to take advantage of the low
cost and less expensive but highly skilled labour
available in India. With the LPG (Liberalisation,
Privatisation and Globalisation) effect the Indian
Pumps and valves manufacturers have started
exporting to developed countries for industrial
applications especially the oil refineries, steel mills
etc…
The Indian pumps industry which has a share of
Euro 500 Million in the global market, is poised to
grow at 7% while the global Euro 10 Billion market
is growing at 4%. There are 800 Large, Medium and
small industries manufacturing one million pumps
worth Rs.35 billion. India exports to 70 countries.
The main players in the Indian market for the pumps
are Kirloskar Brothers Ltd, CRI Pumps, Crompton
Greaves, Grundfos KSB, and Texmo, Suguna &
Mahendra pumps. Major valves manufacturers are
Flow serve corporation, Tyco Flow Control, Dresser
Inc., L & T AUDCO, BHEL, Fisher Sanmar, JC Valves,
Koyo , Weir group PLC etc.. The unorgainsed sector
of the valves accounts for about Rs. 5 billion while
the organized sector is about Rs.9 billion. This
sector is growing at 15% CAGR. In addition to the
replacement market, the Virgin market for valves in
power and refinery sectors is expected to be over
Rupees 43 Billion in the next three years.
4) Pumps & Valves
9. 5) Leather & Footwear Industry
Footwear industry is one of the fastest growing industries in India and is expected to touch Rs. 38.700 Billion
by the end of FY2015. The per capita consumption of footwear in India is 2.5 shoes per year. Indian Production
is approximately 3000 million pairs. Per annum and exports are approximately 300 million pairs. There are
approximately 4000 units involved in making footwear Apache (Taiwan), Feng Tay (Taiwan) Itares (Italy) have
License to manufacture footwear in India. India with its very high population of buffalos, goats and sheeps is
one of the biggest sources of leather in the world. India is the second largest producer of footwear and leather
garments in the world. The Indian leather trade is 2 Billion sft valued at US $ 12 Billion and is approximately 10%
of the leather produced in the world. Tanning industry has developed new technology called the ZLD (Zero
Liquid Discharge) system to meet environment regulations.
6) Ceramic Industry
Crockery, Sanitary ware and tiles are the main products of ceramic industry and are primarily called hygiene
products. China is the largest exporter of Ceramics and it has exported US $ 8 Trillion in 2008 and US is the
largest importer. India occupies eighth place globally with approximately 2.5% of global production and provides
direct employment to 550,000 persons and to 50000 persons indirect employment.
Tiles are the largest and fastest growing market which registered a CAGR of 14% in 2014. The per capita
consumption of tiles in India is 0.54 square metres compared with China (3.07 aqmts), Brazil (4 sq mts) and Iran
(4.84 sq mts). The main impediments of the ceramic industry are the growing power and fuel costs which are
impeding the expansion. Kajaria sanitary ware and the HSIL of Somany group are the two largest manufactures
and exporters of ceramics in India.
AP & Telanagana
The growth in the leather and
footwear sector is expected to be
very bright. This is concentrated in
Hyderabad and Warangal districts in
Telangana, East Godavari district in AP.
The government has taken a very big
initiative in forming Leather Industries
Development Corporation (LIDCAP)
and this has encouraged many artisans
and footwear manufacturers by giving
them Kiosks and other incentives. It
is also helping them in marketing and
opening sales outlets. Thus there is a
lot of governmental effort in both the
states to develop this sector.
10. AP & Telanagana
There is a great potential for ceramic industries in both Andhra and Telanagana. One unit is located near
Kakinada, but that is technically in Pondicherry state. There is ample raw material availability in Andhra Pradesh
for this and so that scope is very high.
7) Tyre Industry
Thanks to a number of automobile and motor cycle, scooter industries operating in the country, this sector
has been continuously growing in the last few years. The leaders are MRF, Apollo, JK, Ceat and others as the pi
diagram below shows.
India exports to 65 countries 3.6% year on year growth is registered in 2014. Rubber price declined 9% in March
2015 to Rs. 134.70 per Kg.
MRF is expanding its capacity at Hyderabad, Trichy and Goa with a Rs. 40 Billion plan MRF produces 1.2 lakh
tyres per day. Ceat is investing Rs. 4 Billion in the first phase to set up a plant at Butibori near Nagpur. JK tyres is
investing Rs.14.3 billion near Chennai to double its capacities.
In a major development in January 2015, the US commerce department’s international Trade Administration
levied preliminary “ADD” (Anti Dumping Duty) on Chinese tyres in the US market, duty rates varying from 19.7%
to 87.99%. This has resulted in Chinese dumping their tyres in India causing 1.5% surge in imports in the first half
of FY 2015. This has led to increase of customs duty to 20% on tyre imports, to safeguard the domestic industry.
11. AP & Telanagana
The general outlook for the tyres industry is positive. CEAT and Stallion Tyres are based in Telangana State
besides several MRF outfits which manufacture tyres and they are all on an expansion spree. MRF has invested
more than Rs.10.8 billion during the last two years to double its capacity. In AP Mangalagiri Tyres & Tubes is
producing two wheeler tyres and tubes and is also on an expansion spree.
AP & Telanagana
The sick National Textile Corporation (NTC) has been revived and its net worth stands at Rs.16020 million as on
31.03.2014. it is one of the biggest textile units in Telangana. Pochampally designs are very well received in
India and abroad and it is one of the most promising silk and handlooms centres in TS. In AP, Guntur, Nellore,
Anantapur have Cotton consumption of approximately 40 million bales (each bale is of 170 kgs) per annum. It
employs 4.33 million persons in handloom sector and 6.09 Million persons in the powerloom sector. There is a
huge export potential, for Indian cottons.
Scheme for integrated textiles parks is under implementation under the SPP. There are eleven export promotion
councils helping the textile sector and by the end of 12th plan i.e. by 2017 the export target has been fixed at US $
64.41 Billion.
8) Textiles
The textile sector comprises of cotton fabrics, man made fabrics filament yam, wool and Woolen textiles, seri
culture and silk textiles, Jute and Jute textiles and textiles export.
Indian textiles Industry has an overwhelming pressure in the economy as it contributes about 14%
to Industrial production and 13% of the country’s export earnings. It is one of the largest provider of
employment. The Indian textile industry has a full spectrum panorama of hand spun, hand woven fabrics
at one end and highly sophisticated mill sector at the other end. The ‘Make in India’ programme’s theme
of ‘SabkeSaath Sabkaa Vikas’ has made the development process inclusive and participative. The 2014-15
year is a cotton surplus year and so consequently the prices have declined. To support the domestic cotton
growers cotton corporation of India has planned and coordinated large scale support operations in 11 cotton
producing states. About 315 procurement centres were opened and are operational out of proposed 340.
12. 9) Textile machinery
Textile and apparel is a major sector and generates
huge employment and contributes substantially to
the manufacturing output and exports. The world’s
production of textile machinery is over US $ 20
Billion. Major manufacturing countries are Italy,
Germany, Switzerland, France, China and now India.
India is now upgrading in the weaving and processing
sectors. China is now manufacturing entire range
of machineries for the textile industry not only
weaving and processing but also knitting, embroidery
shuttleless weaving and machinery for the non-
woven industry.
Though during the period of economic slow
down there was considerable fall in exports and
manufacture, this sector almost fully recovered by
2012-13 and is now its way for a good growth.
The Indian textile machinery is 1000 units
strong comprising machinery and component
manufacturing units. Nearly 300 units produce
complete machinery while others manufacture
10) Paper Sector
Paper Industry Sector is an important one and the
main operators in this sector are JK paper Mill Ltd,
International paper – AP Paper Mills Ltd, BPL Limited,
Ballarpur Paper Industries Ltd, Century Pulp and
paper Ltd, yash Paper Mills Ltd, TN News print Ltd,
Nepanagar Paper Mills Ltd, etc. The paper industry is
mainly private owned.
The paper consumption in India in 2015-16 is
expected to be 15 million tonnes including all
varieties of paper with a turnover of US $ 5.95 Billion.
The news print paper consumption is 2 million tonnes
and out of this 1.2 million tonnes is domestically
produced while 0.8 million tonnes is imported paper.
The demand growth in this sector is 13% while the
general growth in the paper industry sector is 8%.
The total direct employment in this sector is about
120,000 personnel while the indirect employment is
for 340,000.
The other types of paper are the tea bags, filter
paper, tissue paper, medical grade coated paper.
components. The total investment in this sector is
approximately Rs.2 billion.
The machinery comprises of ginning and pressing
machines, spinning and allied equipments, synthetic
filament yam machines, weaving and allied
machine, hosiery/RMG machines, textile equipment,
accessories and components.
A majority of these are located in Tamil Nadu and
Gujarat. AP has several ginning mills, while AP and TS
also have number of handlooms and spinning units.
The big operators are Laxmi Machine Works,
Rieter India, Dhall Group, Yamuna Machine Works,
Shri Bhagwati Textile Industries etc.. The capacity
utilization of Textile machinery has also substantially
increased during the last five years. According to
the office of the textile commissioner, the production
of machines during 2012-13 is worth Rs. 56.5 billion
and is growing at 10% CAGR. In AP and Telanagana,
several textile machinery component units are
located and they supply million of Rupees worth
components to OEMs is Tamil Nadu and Gujarat.
After US imposed ADD (Anti Dumping Duty) on
Chinese imports, there is a good scope for the Indian
paper products in the American market.
Indian per capita consumption is 10 kgs while Europe
has a per capita consumption of 110 kgs and US 337
kgs and china 30 kgs and the world average is 55
kgs. Thus there is a great scope for paper industry to
grow.
In AP International paper Ltd and Bhadrachalam
Paper Boards Ltd. in Telanagana are going is for major
expansions during the current year,
Manufacturing Sector in Andhra Pradesh
Much of the investment growth within the AP state is
expected from the industrial sector which is excepted
to contribute around 25% of GSDP by 2020. It is
excepted to cross Rs. 8 billion by 2015 and touch Rs.
9 billions by 2020 Eighty Two Mega projects (Projects
with investment of more than Rs. One Billion) with
a total investment of Rs. 831.42 billion are under
active implementation. 211 mega projects with an
investment of Rs. 2591 billion are under initial stages
of implementation.
13. Estimated Mineral resources of AP (Composite)
Source: Economic Survey of AP (Pre- Bifurcation 2014 Feb.)
The huge resources of minerals encourages private
participation. In exploring these minerals, APMDC
has already initiated investment proposals in Bauxite,
Beach Sand and Granite thus sectors with potential
for growth in AP are mineral based industries.
Manufacturing Sector in Telanagana
The government of Telanagana is of the firm opinion
that industrializations holds the key for higher and
sustainable growth leading to growth in exports. The
investor friendly industrial policy (TS-iPASS) is a first
step of the government in that direction. Telanagana
has a huge forest area and nearly 7% of coal deposits
are in the State besides huge deposits of lime stone
that caters to the cement industry. Granite, Bauxite
and Mica are the other minerals.
Telanagana State GSDP at constant prices (Base:
2004-05) for FY15 is estimated at Rs.2174.32 Billion
as against Rs.2064.27 Billion for FY 2014 indicating a
growth of 5.3%. The industry sector growth was 41%
Y-o-Y.
Telanagana is essentially a services driven economy
contributing 62.9% to GSDP. The Telanagana
industrial Sector contribution on to the GSDP is
around 24.6%. New pharma and chemicals city
with well developed infrastructure including waste
management is included in the development
programme. Govt. intend to develop Warangal as
Textile hub and has proposed to setup a mega textile
Park. With the introduction of TS-I pass (Telanagana
State industrial project approval self certification
system) and Telanagana state-Wide Investment
Facilitation Board (T-Swift), the Telanagana state
government is removing all hurdles and making
industrilsation hastle free in the process of ‘Ease
of doing business’. Sector with potential in TS are
Automobile, Plastics, Pharma Industries.
Conclusions
There is very good encouragement from both
Telangana and Andhra Pradesh governments for
the promotion of the manufacturing sector in a big
way. The chief ministers of both the states have been
parleying with many countries and, international
business conglomerates encouraging them to set
up their manufacturing units in their respective
states. They are assuring them of completing of
all government formalities within 30 days and
incentivizing them with several sops. Over and above
the states have highly skilled manpower available at
a relatively low cost compared with other countries.
The infrastructure cost also is relatively low. With the
introduction of GST which the government proposes
to implement from the next Financial Year the
taxes will also be rationalized. Thus there is a huge
scope for foreign investors and companies currently
operating in India in other states, also can gainfully
set up manufacturing units in these two states.
Recently government of Telangana has allotted 100
Acres for Chinese industrialists to start a cluster of
manufacturing units in Telangana.
