Karnataka has emerged numero uno amongst the mainstream states across India in manufacturing excellence, said apex industry body ASSOCHAM.
The state is also the third top in terms of attracting investments in manufacturing sector thereby leaving frontline states like Gujarat behind.
“Karnataka has the best manufacturing process ratio of 2.63 with maximum value of goods being converted into finished goods valuing over Rs 2,000 crore,” pointed out in the study titled ‘Manufacturing Excellence and Emergence in India: The state level analysis’, conducted by the chamber’s Economic Research Bureau of ASSOCHAM.
The study was released in Bangalore by ASSOCHAM Karnataka Region Development Council chairman, R Shivakumar along with national secretary general, D.S. Rawat.
Of the total live investments attracted by the Indian states worth Rs 169 lakh crore as of the fiscal 2016, Karnataka accounted for 6.3 percent share with Rs 10.7 lakh crore worth of investments attracted in different sectors.
Manufacturing sector also accounts for about 32 per cent share in total investments attracted by the state. Within manufacturing, Karnataka attracted maximum investments in metal and metal products that accounted for over 68 per cent share followed by construction materials (10 per cent), chemical and chemical products (8 per cent), machinery (4 per cent), food and agro (3.5 per cent) and transport equipment (3.4 per cent).
Karnataka is also ranked third across top states in India in terms of low ratio of interest cost i.e. 0.11 for total interest paid in current year for loans outstanding in previous year. Only Odisha (0.08) and Chhattisgarh (0.11) are ahead of Karnataka in this regard.
In overall Karnataka has performed decently on different parameters like – growth in number of industries (#5), capacity utilisation and capital structure (#6), input cost (#7) and road density (#10). But the state requires to focus on improving efficiency along with low employee cost and higher rail density, the study noted.
“Though Maharashtra has been at par with Karnataka but if the state continues to focus on promoting ease of doing business, it can emerge as a potential investment hub for various sectors,” the report pointed out.
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 two three major categories according to geographical conditions like north-eastern, Himalayan and mainstream states. Mainstream states were further divided into two sub-categories, namely, excellence and emergence.
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.