SME

Jay is heading the small and medium enterprise association and is fed up of life. 5 years back he was having a compressor manufacturing unit but it collapsed. 2 years back, he initiated an electronic component and it has crashed.. too

With a debt of over 2M$.. he is left handling an association..

Neeru comes to meet him..

Neeru ‘this whole bit of hardware, software and all these manufacturing bit.. government never encourages manufacturing.. only software.. IT.. so not sure.. what.. I wish to open a toy manufacturing unit’

Jay ‘what will be the cost of 1 toy?’

Neeru ‘Rs100.. 2$ max’

Jay ‘In China.. same is available at 1$. Why cannot you import?’

Neeru ‘why we cannot compete?’

Jay ‘labor cost.. taxation.. so many issues in India.. where you feel we can do it?’

Neeru ‘Í plan to bring in Chinese labors in India’

Jay begins laughing

Neeru ‘is it tough?’

Jay is still laughing

Jay ‘Labor cost in fact in India is cheaper but.. but.. but…

 Logistics Efficiency Indicators India Global
 Road Transportation
 Average truck speed (in kmph) 30 – 40 60 – 80 (including China)
 Four lane road length (in kms) 7,000 34,000 (China)
 National highway length in kms) 66,590 1,900,000
 Average surface freight (in  cents/km) ~ 7 3.7 (Japan)
 Average distance travelled by a  truck per day (in kms) 200 400
 Air Transportation
 Airport waiting time – Exports (in  hours) 50 12
 Airport waiting time – Imports (in  hours) 182 24
 Aviation turbine fuel as a % of  operating cost 35 – 40% 20 – 25%
 Ports & Sea Transportation
 Turnaround time at ports (in  hours) 84 7 (Hong Kong & Singapore)
 Annual container handling  capacity 8.4mn TEUs 60mm TEUs (China)
 Containers handled per ship, per  hour (maximum) 15 25 – 30
 Throughput density (maximum) 45,000 TEUs / hectare 170,000 – 220,000 TEUs / hectare
 Warehousing
 Average inventory days 33 24 (China)

Source: Cygnus Business Consulting & Research, KPMG analysis

Manufacturing in India vs. China

by John Niggl

The above piece of writing is just for information and acknowledge the writer’s deep analysis on subject as well acknowledge the consulting companies.

It is important for entrepreneurs who wish to get into manufacturing understand pros and cons.

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