Dirty laundry: Welspun tangle highlights #India's #quality challenge. #MakeInIndia #Modi
http://reut.rs/2bLju9n via @Reuters
Questions over the exact provenance of bedsheets sold by Welspun India to America's middle classes have not only wiped $740 million off the firm's market value, but also revived one of Indian manufacturing's enduring headaches: quality.
India's government, desperate to accelerate growth and create more jobs, has backed a "Make in India" manufacturing push. India already makes everything from car parts to t-shirts, but is trying to move up the chain to make higher-end products, like Apple's iPhone.
One major hurdle, however, has been product quality, often blighted by low salaries, poor training and sketchy suppliers. As India manufactures more, cheap is not always cheerful.
Quality assurance experts in India and beyond, however, said damage from the Welspun case could be contained - if the authorities and businesses move quickly to put in place stringent quality assurance standards.
"The government and the companies should themselves put in place better quality control standards to ensure India's image is protected," said a certifier at the Indian arm of a Europe-based textile certification company.
The $108 billion textile industry accounts for a tenth of India's manufacturing production, 5 percent of GDP and 13 percent of export earnings, according to government data. It is the country's second-largest employer after agriculture.
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It's not clear what led to the problem. Welspun, whose share price nearly halved this week, has said it would do an external audit of its supply chain.
Other Indian manufacturers distanced themselves from Welspun, but many fretted over the broader impact as the country tries to bet on quality, not just cheap workers, where it faces constant competition from regional rivals.
"It's high time exporters improve the quality of their products," said S.C. Ralhan, president of the Federation of Indian Export Organisations, set up by the government and industry to promote exports. He said the group would take up the issue of quality with its members.
Arvind Sinha, national president of the Textile Association of India, said India's image as a manufacturing destination for textiles could be tarnished.
"This is another blot on the Indian exports resume," said an analyst at a local brokerage, who asked not to be named as it would violate his firm's policies. "The Welspun fiasco could have ripple effects and force companies to scout for options in other regions in Asia that have unscathed records."
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DRUGS AND NOODLES
India has been here before.
Its $15 billion pharmaceutical industry, a global supplier of cheaper generic medicines, has been dogged by quality concerns, with health regulators in the United States, Britain and Europe barring some plants from producing drugs for their markets because of inadequate standards.
Highlighting weak official checks and under-resourced testing facilities, Nestle India had to pull its popular Maggi instant noodles off the shelves last year after local regulators found some samples contained unsafe levels of lead. Subsequent tests at government-accredited laboratories showed the noodles were safe for consumption.
