McKinsey associate principal Rajat Bhargava (extreme left) at a CII-organised seminar in Calcutta on Friday. Picture by Kishor Roy Chowdhury

Calcutta, April 9: India can garner nearly $300 billion in manufacturing exports by 2015, according to a report jointly developed by McKinsey and the Confederation of Indian Industry (CII).

The report was tabled by McKinsey associate principal Rajat Bhargava at a recent seminar organised by the CII on world-class manufacturing through technology.

It says the global trend to manufacture and source products in low-cost countries is likely to be stronger over the next 10 years, particularly in skill-intensive industries where India has a significant competitive advantage.

Four factors will drive this growth ? continued margin pressure on players in home markets, emergence of a strong supplier base and an explosive demand growth in low-cost countries and the dismantling of regulatory barriers by the World Trade Organisation (WTO).

Of the $300 billion, India can capture $70-90 billion in manufacturing exports from just four sectors ? apparel, auto components, speciality chemicals and electrical and electronic products. India?s exports in these sectors were $10 billion in 2002-03.

The report said the government should remove four barriers to expedite exports. These will stimulate domestic demand by reducing indirect taxes and import duties, de-bottlenecking ports and accelerating power reforms, encouraging the development of manufacturing sectors and hastening labour reforms and facilitating skill development.

Bhargava said China?s success in manufacturing is built on a strong domestic market, achieved through systematic lowering of indirect taxes from 32 to 15 per cent of retail price in 1994. A similar exercise needs to be carried out in India as well.

Citing China?s example, he said clusters in the form of special economic zones with special economic systems and policies are a key feature of China?s success in manufacturing. ?In India, a lot more needs to be done before its SEZs can be considered world-class,? he added.

The report also emphasised that India should have flexible labour laws to attract labour-intensive industries such as manufacturing.

?To make Indian manufacturers globally competitive, the government should allow the use of contract labour for all activities,? the McKinsey representative said.