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London, Dec. 20: Is western admiration for India as a rising economic power turning into dangerous flattery'
This thought might occur to many Indians following the publication today of a report by Britain's Engineering Employers Federation (EEF), which makes a startling discovery ' six out of every 10 of its members apparently believe that 'India's business culture is better than that of the European Union'.
This finding might massage Indian egos but asked to justify the claim, which is based on a survey of 494 UK companies, Mark Swift, spokesman for the EEF, said it was felt that Indian businesses had easier access to skilled labour and the country offered a better climate for starting new ventures.
This seems to overturn the old picture of Indian companies struggling under a 'licence raj'.
Swift gave the example of IT where 'India is big in software' and has easier access to skilled workers than the European Union when considering business start-ups.
When comparing the business climate in India with that in the EU, it was thought that the government in India made things easier by adopting a 'more flexible attitude' towards companies.
The EEF, the manufacturers' organisation, has a membership of over 6,000 manufacturing-, engineering- and technology-based businesses and represents their interests at all levels of government.
The survey was carried out in August and today's report, Where now for manufacturing', admits that China, central and eastern Europe and India are throwing up challenges to industries in the EU.
However, instead of 'whinging' at the loss of jobs, companies in the EU should use outsourcing to their advantage, the report suggests.
If this 'if we can't beat them, let's join them' attitude is adopted, it would mean a shift away from the stance of trade unions such as Amicus, the white collar union, which have focused mainly on the loss of jobs to India.
Swift said: 'The figures do back up the fact that many British companies are taking advantage of low-cost manufacturing centres in China and India. We do hear the trade unions expressing concern about this. But we have to be realistic. This is a global, not a British phenomenon.'
Areas in which Britain could cooperate with India would be in the setting up of joint ventures to manufacture car parts ' for example, 'high-volume, low-cost products', explained Swift.
The proportion of companies which considered China posed 'the biggest threat in the next five years' has jumped to 57 per cent from just 18 per cent in 2001 and 27 per cent in 2002.
China is followed by central and eastern Europe (27 per cent) and India (18 per cent).
'To counter this threat from the lower-cost economies of the east, UK companies are successfully adopting a twin-track approach of combining an increased focus on innovation and outsourcing abroad to lower costs,' the report says.
The survey shows that almost half the manufacturers believe that more production would take place outside the UK over the next five years, with the primary reason being cost reduction (86 per cent). A further fifth are considering outsourcing. In addition, two thirds of companies say their dominant focus is on increasing innovation, with 46 disclosing that they are also developing niche markets and customising their products.
According to the report: 'Six out of 10 companies think the EU business culture is poor and India's business culture is regarded as better than that of the EU.'
Commenting on how UK companies could exploit outsourcing to their advantage, EEF director-general Martin Temple said: 'These results prove that manufacturers are well placed to succeed in an increasingly competitive environment by adopting strategies which focus on adding value in the UK, whilst making best use of the options that low-cost manufacture overseas gives them. However, we must ensure that companies who go down this route are doing so as part of a long-term business plan and not because they perceive the UK as a poor location for manufacturing.'
Temple added: 'The figures also provide a stark warning that the low-cost economies of the east are arriving like an express train. If UK and EU policymakers do not commit to measures that will free up enterprise and make their economies more dynamic, there is a grave danger that the Euro zone will be left standing on the platform.'