The absence of a quality mindset

There have been many reasons proffered for India’s inability to become a global manufacturing hub despite the efforts and plans of successive governments for the past many decades. While problems like higher logistic and power costs, lower labour productivity, and issues with local regulations have often been talked about, the abysmal quality standards of many Indian products generally escape attentions.

Successive Union governments, state government, as well as sector regulators, have often paid little heed to the quality of goods being manufactured and sold in India, or even those being exported to lesser-developed countries in Latin America, Africa, or Asia.

It is not that Indian manufacturers cannot manufacture high-quality products. Any manufacturing unit in any sector exporting to the US, Europe, Japan, South Korea, etc, will meet the higher quality standards of these markets. The goods they export are vastly superior in quality compared to the goods the same manufacturer sells in the domestic market.

Nor is it that the Indian regulations are routinely lax, though that is also the case in many sectors. Indian regulators typically model their regulations based on global practise and norms. While some Indian norms – in drugs or foods – are not as astringent as those of developed countries, others compare favourably. The issue is often that of institutional capacity.

It is of little help, if you cannot ensure whether the firms are actually following the standards regularly and not just at the time of certification.

Similarly, there is no point in subjecting only spices meant for exports to stringent testing for ETO and other contaminants like pesticides, while letting domestic customers consume products that are substandard or contaminated.

The argument that micro, small, and medium enterprises lack the capital and resources is a poor excuse for inaction and lack of thinking by policy-makers and regulators. Setting up enough laboratory testing facilities, hiring enough qualitified inspectors, and helping smaller enterprises to become better in quality is the job of the government and regulators.

Nor is the argument that meeting quality standards will increase costs tenable. Cost competitiveness can be achieved by improving logistics, reducing power costs and government taxes – without compromising on quality standards. Most cars have a higher sticker price in Indian than in developed markets because of the taxes levied by the government. And yet, the domestic consumer gets short-changed in terms of quality compared to those in the overseas market, even though the same manufacturing facility may be making both.

Every country that became a manufacturing power did so by raising the quality bar of products made by them, and by ensuring that domestic customers were not short changed in terms of quality. Indian policymakers need to understand this.

Equally, the corporate sector needs to understand that without adopting the quality mindset, they can never aspire to be globally competitive.

P. Dutta

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