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Modi needs to make India a competitive manufacturing hub: Bhargava



Following a resounding victory at India's parliamentary elections, Prime Minister Narendra Modi needs to improve the country's manufacturing capabilities to attract global investors.

For India to become a highly competitive manufacturing hub, several things still need to happen – including an improvement in infrastructure efficiency, compliance and the country's public sector works, said RC Bhargava, chairman of Maruti Suzuki, one of India's largest automobile manufacturers.

CNBC's Tanvir Gill in an interview on Saturday.

"This time, he has to make sure that India is doing a highly competitive manufacturing hub. The efficiency and the levels of the public sector are not globally competitive, "he said.

Another great weakness in India has been the ability to implement good policies, he added. I think (Modi) has to disprove the factors which make India a poor implementer of projects and policies, "Bhargava said.

Modi's landslide victory

Modi's Bharatiya Janata party snatched a resounding win in a single party majority with over 300 seats.

Analysts have said that the BJP's dominance could give a bit of maneuvering room within the National Democratic Alliance (NDA) coalition to push major reforms in areas such as land and labor ̵

1; that are important for India's long-term growth.

The Government's Vigilance from the State Governments are likely to be made available to them, according to Priyanka Kishore, head of India and South East Asia economics at Oxford Economics.

State governments, Kishore explained in a recent note, may well follow a different agenda – even if they belong to the same party – and "the initial experience with the labor reforms in the NDA's first term showed. " Instead, they said, "It will likely be that they are on the right track."

Bhargava added that the Reserve Bank of India cuts interest rates It could help by reducing borrowing costs even though it's not the main determinant of growth. Auto sector's growth potential

Earlier this month, passenger car sales in India dropped 17% in April, which was the worst monthly decline in almost eight years. Poor consumer sentiment, reports said.

R. gal. Bhargava, chairman of Maruti Suzuki India., Comments on a news conference in New Delhi, India.

Anindito Muk | Bloomberg | Getty Images

Bhargava said that India's auto sector, along with the rest of the economy, tends to slow down a year before voting before picking up again after the polls are conducted.

The auto sales slowdown in India has "nothing to do with the fundamentals of the economy, "he added. "Things like the China-US trade was going up and down – that's the thing that's happening, it's not unusual for this to happen."

He said India's auto sector wants to remain the fastest growing car market for many years leaving behind them little room for growth.

"We're about 25 cars per 1,000 (people)." The USA is over 800, Europe is over 500, China has already reached 150. So, you see the difference, "he said.

– Reuters contributed to this report.


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