New Delhi, 23 April, 2007 — "Made in India" may well be espoused in the future by consumers around the globe. While the pace of change in the Indian manufacturing sector has been at a blistering pace over the last decade, there remain significant challenges ahead for the industry to achieve world-class prominence. However, according to a new report released today on "Globalizing Indian Manufacturing. Competing in Global Manufacturing and Service Networks," overcoming these hurdles is well worth the effort and will help manufacturing in India to thrive by fostering further expansion of domestic enterprises and boosting investments by global manufacturers from abroad.

Developed in collaboration with the Center for Global Logistics and Manufacturing Strategies of the Indian School of Business, Deloitte Research, the Global Business Institute of the Stern School of Business at New York University and the Krannert School of Management at Purdue University, with support from the National Science Foundation, the new report highlights the discussions at the Summit of Indian Manufacturing Competitiveness now it its second successful year. The Summit, held last August in Hyderabad and attended by 200 business executives, industry experts, government officials and academic researchers from around the world, set out to map the challenges and opportunities of manufacturing in India.

"Innovation is probably the most underexploited strategy for the Indian manufacturing industry," says Kumar Kandaswami, India manufacturing industry leader and a director with Deloitte Touche Tohmatsu India Private Limited. "To become a global powerhouse and remain competitive over the next 15 years, local manufacturers need to cultivate innovation capabilities not just in product development, but also in the areas of processes, technologies and business model innovation. We have highly-skilled talent locally, especially in engineering, with good English language capabilities, and we should take more advantage of this."

The research presented at the Summit suggests manufacturers operating in India – domestic and multinationals – need to rethink their operating models to take advantage of the spectacular growth rates. The research also indicates that many leading manufacturers in India today enjoy an average annual revenue growth of nearly 20 percent. If investment rates keep up with those growth rates, this would mean that in just a few years the vast majority of investments in those companies will consists of new investment – not old ones. This massive "greenfield" opportunity is rarely matched in any other manufacturing economy. Indian manufacturers, however, are lagging behind their global peers in investing in research and development (R&D). But this is starting to change. Grabbing the opportunity and rethinking the design of a new business model for manufacturing in India can provide a fertile ground for innovation in global manufacturing in the coming years.

While there is still a long way to go for Indian manufacturing to transform itself through innovation, India as a destination for R&D is well recognized. Recent trends support this with many multinational companies in all manufacturing sectors, including automotive, life sciences, process and industrial products, establishing or increasing investments in R&D centers in India. In fact, India is a top destination in the world for R&D investment. Due to the availability of low-cost, well-educated and highly skilled talent, in some sectors, the cost of R&D in India is as low as a third of what would be spent in a developed country in the west.

Despite a modest 17 percent share of gross domestic product (GDP), the Summit organizers and attendees view a bright future for manufacturing in India. But to succeed, India must follow a balanced approach of developing its manufacturing and operational capabilities and supporting infrastructure and other required services.

"Improving the global competitiveness of the manufacturing industry is critical to India's growth," says N. Viswanadham, executive director of the Centre for Global Logistics and Manufacturing Strategies at the Indian School of Business. "This growth, however, will require the strong collaboration of industry, government and academia alike to effect significant changes. We need to take action to address our local infrastructure, which is the most critical concern, raise productivity and quality levels at the plant levels, and to create more incentives to attract private investment."

For a copy of the "Globalizing Indian Manufacturing" report, please visit www.deloitte.com/indiamanufacturing.

Editor’s Notes

Through the media contact above, interviews can be scheduled with one or more of the representatives involved in this study:

• Ananth Iyer, Krannert School of Business, Purdue University
• Kumar Kandaswami, Deloitte Touche Tohmatsu India Private Limited
• Peter Koudal, Deloitte Research, Deloitte Services LP
• Sridhar Seshadri, Stern School of Business, New York University
• Milind Sohoni, Operations and Information Technology Department, Indian School of Business
• N. Viswanadham, Centre for Global Logistics and Manufacturing Strategies, Indian School of Business

About Deloitte and Deloitte Research
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Deloitte Research, a part of Deloitte Services LP, identifies, analyzes and explains the major issues driving today's business dynamics and shaping tomorrow's global marketplace. From provocative points of view about strategy and organizational change to straight talk about economics, regulation and technology, Deloitte Research delivers innovative, practical insights companies can use to improve their bottom-line performance. Operating through a network of dedicated research professionals, senior consulting practitioners of the various member firms of Deloitte Touche Tohmatsu, academics and technology specialists, Deloitte Research exhibits deep industry knowledge, functional understanding and commitment to thought leadership. In boardrooms and business journals, Deloitte Research is known for bringing new perspective to real-world concerns. Please visit www.deloitte.com/research for the latest Deloitte Research thought leadership or contact Deloitte Research at delresearch@deloitte.com.

Indian School of Business Centre for Global Logistics and Manufacturing Strategies
The Indian School of Business (ISB) symbolizes the vision of the school's founders. The school evolved from a need for a globally top-ranked and distinctive business school in the Asian region dedicated to providing the best management education. The school is the dream of some of the best minds from the corporate and academic world. Their goal in creating the ISB was to establish an internationally top-ranked, research-driven, independent management institution that grooms future leaders for India and the world. The school's governing board comprises business leaders, entrepreneurs and academicians from some of the world's leading business and management education institutions. Its partnership with the Kellogg School of Management, The Wharton School and London Business School makes the ISB one of its kind in Asia. The ISB’s aspiration in educating tomorrow's leaders is grounded in the belief that leadership skills can be learned and that successful leaders must take charge of their own development and growth to achieve their true potential. Further, it is the ISB's belief that leadership should be grounded in a strong foundation of core values.

The Centre for Global Logistics and Manufacturing Strategies (GLAMS) at ISB was created with the vision of being a knowledge partner of choice to both government and industry in the areas of manufacturing, logistics and supply chain management. Its focus is to engage in innovative research, conduct training programs and work with government and industry to become the driving force for the growth of global logistics and manufacturing in India. Two top industry houses TAFE and Hero Group support some of the Centre’s activities. GLAMS intends to develop partnerships and collaborations with leading industrial institutions and work closely with the industry in disseminating information. The research activities at GLAMS include: Developing frameworks and techniques for analysis and design of global supply chain networks, lean supply chain design for various industry sectors, retail in emerging markets and developing strategies for rural business transformation.

National Science Foundation
The National Science Foundation (NSF) is an independent federal agency created by the United States Congress in 1950 “to promote the progress of science; to advance the national health, prosperity and welfare; to secure the national defense…” With an annual budget of about US$5.5 billion, it is the funding source for approximately 20 percent of all federally supported basic research conducted by America's colleges and universities. In many fields such as mathematics, computer science and the social sciences, NSF is the major source of federal backing.

Global Business Institute, Leonard N. Stern School of Business, New York University
The Stern Global Business Institute (GBI) was established in 2003 to consolidate an array of long-standing academic activities and create a coherent platform for their future development. Stern was one of the first institutions to emphasize the international dimensions of business over three decades earlier, spanning first-rate applied research, an extensive list of undergraduate and MBA course offerings and a doctoral specialization in the international dimensions of academic disciplines to develop the next generation of professorial faculty. The school launched an academic International Business initiative long before international and global business aspects were formally built into the curricula of any of the other major business schools. This 30-year "first mover" history is now capitalized in the franchise value of the school. Each of the international activities has been firmly rooted in the academic key disciplines, so that both faculty and students combine discipline-based rigor with ample opportunities to focus on the international dimensions. Throughout this period, the Stern School was consistently rated among the top-five institutions focusing on international business worldwide. The Stern Global Business Institute is charged with taking this evolution to the next level, leveraging the school's growing research strength in core disciplines into the global arena and providing consistent academic oversight and support for the school's extensive activities in global business education.

Global Supply Chain Management Initiative, Krannert School of Business Purdue University
Many of today's most successful firms attribute their success to a strategically managed global supply chain. The complexities of coordinating and collaborating within a global network of designers, manufacturers, distributors and retailers grow as businesses seek to attain a competitive advantage through carefully formulated strategies for managing flows in physical, informational and financial channels. The Global Supply Chain Management Initiative gives current and future managers the opportunity to be on the forefront of emerging ideas and technologies that promise to provide a differentiating advantage to businesses in the future. This initiative offers a broad-based, global approach to taking business skills global through a variety of programs, including conferences and events for executives, students and faculty.