Kochi: Kerala is second only to Karnataka in terms of manufacturing excellence across mainstream states in India, says a recent study conducted by industry body ASSOCHAM. “Kerala has second highest ratio in terms of road density, third highest ratio in terms of efficiency and fourth highest capacity utilisation ratio denoting state’s performance in these parameters during the course of past five years,” stated a study titled ‘Manufacturing Excellence and Emergence in India: The state level analysis. Besides, Kerala also has recorded third lowest ratio in terms of employee cost and sixth highest manufacturing process ratio, the report noted.
The ASSOCHAM Economic Research Bureau (AERB) had considered various parameters like number of factories, output value, working capital, net fixed capital formation, fixed capital, finished goods, capital invested, total inputs and others to ascertain the states’ performance in terms of manufacturing sector. Highlighting the methodology, the study stated that all states were divided into three major categories according to geographical conditions, viz., north-eastern, Himalayan and mainstream states. Mainstream states were further divided into two sub-categories, namely, excellence and emergence.
However, Kerala needs to work towards improving its performance in areas like growth of industries (13th rank), capital structure (16th rank) i.e. improving the ratio between invested and fixed capital. Besides, the state also needs to register improvement in terms of brining down input cost as it ranks 16th in total input cost as a proportion of value of output (lower ratio is better). The study also highlighted various challenges being faced by India’s manufacturing sector – competitive cost and technology being offered by countries like Bangladesh, China, Indonesia, Korea, Singapore and Taiwan.
While development process in other countries follows a transition from agriculture to manufacturing and then towards services sector, however India’s growth has been services sector-led as such there have always been concerns about sustainability of such a growth, the study said. The study also stressed upon the importance of increasing share of manufacturing sector in India’s gross domestic product (GDP) to absorb a young workforce as bulk of population relies on agriculture for employment.
