New Delhi, Feb. 7: The government should try and persuade manufacturing companies overseas to outsource more from India if it wants to develop the country as a manufacturing hub.

Global outsourcing presents a huge business opportunity for the Indian manufacturing sector, said Naresh Narad, secretary in the department of heavy industries and public enterprises.

Narad said the government would work to remove procedural difficulties while the Confederation of Indian Industry (CII) could help find buyers and short list suppliers.

“One of the ways to achieve this would be to dramatically increase exports of manufactured goods. Outsourcing is a good way to increase manufacturing exports,” Narad said at a session organised by CII on “Indian manufacturing: global outsourcing opportunities”.

Narad added: “There are many global companies that are looking at lower costs but insist on high quality suppliers for components and sub-assemblies. India with its diverse manufacturing base, large pool of trained manpower and raw material supplies can become an integral part of global manufacturing chain in the same way as it has become a part of the global IT chain.”

Explaining issues concerning the capital goods sector, Narad said the heavy industry ministry had set up an inter-ministerial group focusing on the growth of capital goods. “This group is going to co-ordinate and reconcile the inter-ministerial issues vital for the growth of the capital goods sector. It will also set up a task force on exports, whose objective is to prioritise exports of capital goods,” he said.

Speaking on the occasion, Jamshyd Godrej, chairman and managing director of Godrej and Boyce, identified the high incidence of indirect taxes and high cost of finances as two major factors hampering the growth of the Indian manufacturing.

“Companies, particularly small and medium term enterprises, faced problems of accessing capital at competitive rates. The factors constraining the growth of internal market were responsible for Indian manufacturing companies not being able to create the appropriate scale for their operations,” said Godrej.

Naishadh Parekh, deputy chairman of CII’s western region, said, “A CII-McKinsey report recommended simplification of indirect taxes on manufacturing by introducing value added tax, relaxation of labour laws, lower interest rates, elimination of incentives for small scale industries and implementation of power sector reforms.”