India to challenge China's forte as manufacturing hub

NEW DELHI: India, popularly known as the world's back office for IT and BPO services, is all set to threaten China's position as the world's backyard for manufacturing in the next 3-5 years, says a new report.

"India could challenge the position of China as the manufacturing centre of the world in next three to five years. Companies are planning to offshore manufacturing activities primarily to India that will surpass its IT and BPO activities," global consulting, technology and outsourcing services major Capgemini said in its latest report.

At present, manufacturing is the least offshored activity to India, but the survey respondents expected the country to become the number one outsourced manufacturing destination due to its competitive cost advantages over China, Capgemini added.

"Current developments suggest that some of the main manufacturing locations in China are becoming too expensive relative to other countries in the region, which includes India," the report added.

Emerging economies like India and China have the largest market share of offshoring activities. India is diversifying from its stronghold in the IT and BPO segment to the manufacturing segment, which is currently dominated by its neighbour.

The report, however, highlights that India has to make significant investments for improving its infrastructure to cater to the increased demand of manufacturing and supply chain operations.

The Indian government is eager to attract foreign manufacturing activities, but it will need to make significant investments to harvest this potential, Capgemini added.

Read More......

Steel cos cutting prices to fight imports

Mumbai, July 2 Steel companies have started slashing prices of flat steel products, including HR and CR coils, to match import prices.Taking the lead, SAIL has announced a cut in prices of flat products by Rs 500-1,000 a tonne with effect from July 1 in line with the prevailing market trend.

In the past 2-3 months, the prices of imported steel have come down by over Rs 2,000 a tonne as a result of the rupee’s appreciation against the dollar.

A SAIL statement said though the demand for GP/GC sheets rises during the monsoon, as they are used in roofing, the prices have been slashed to make them more affordable.

However, the company kept prices of steel products like TMT bars unchanged.

Other steel companies such as Tata Steel, JSW Steel, Essar Steel and Ispat Industries are yet to officially announce a price cut, which is expected to be more or less in the same range.

Sources said that Essar Steel is expected to announce a price cut of Rs 700-750 a tonne of HR coils, which currently cost Rs 28,300 a tonne.

JSW Steel is expected to come out with a Rs 700 cut.

Mr V.S. Seshagiri Rao, CFO, said: “Our board will be meeting tomorrow on the issue.” He added that the board will consider rupee appreciation against dollar while taking a decision on the price cut.

“International prices have fallen in the last 2-3 months due to large-scale exports by China.”

An Ispat Industries spokesman said that the company’s board met on Monday to take a call on the issue.

Stating that the company was expected to announce its decision on Tuesday, he indicated that the price reduction would be Rs 600-700 a tonne.

Industry analysts said that although the cost of imported HR coils has been stable at $620 a tonne during the last four months, the rupee’s appreciation during the period (from 44.28 to 40.70 against the dollar) brought down the landed cost down by an average of over Rs 2,000 a tonne.

This has prompted Indian steel makers to water down their prices to compete with imports.

“We believe that owing to the rupee’s appreciation and slowdown in domestic demand due to the monsoon, domestic producers are being forced to reduce prices by Rs 500-1,000 a tonne, either by way of direct reduction in list prices or through increase in discounts,” said an Emkay Stock Broking report.

Domestic prices in China have been softening over the past one month as HR coil prices declined by $45-412 a tonne.

In Western Europe, HR prices have witnessed their second price decline in the past six months.

According to SteelBenchmarker, a metal bulletin, hot-rolled prices in Western Europe are down by $12 a tonne to $696.

Read More......