Declaring place of manufacturing will hit cos hard

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Bikky Khosla | 15 Jun, 2010
The recent government notification making it mandatory for companies to declare the place of manufacturing of their product with immediate effect has taken the industry by surprise. I agree with industry body, ASSOCHAM, on its view that the notification issued by the Ministry of Consumer Affairs will add to the woes of companies who would now require increased and separate inventory and logistic control in respect of each packer or factory location.

Moreover, doing so will take away the level playing field between the indigenous and imported packages and will thus greatly affect a manufacturer's flexibility. Since manufacturers pack their products at various factory premises located across the country through third parties, primarily to reduce the cost of the products, the move will now increase the inventory costs and logistic control cost of the companies.

Declaration of factory address will also go against maintaining business secrecy and will only add to confusion as to how companies would declare the addresses in the case of imported packages, wherein the factory address will be located outside the country, hence out of reach of enforcement authorities.

Meanwhile, I was quite elated to know that Small and Medium Enterprises (SMEs) have outperformed bigger companies in the country in terms of job creation in the aftermath of the global economic meltdown. The trend shows that SMEs are bullish in growth and are looking forward to take their businesses to the next level. SMEs, I believe, have shown more flexibility and have adapted wonderfully to the changing trends of the markets and to the needs of their consumers.

However despite the optimism, their path to growth is marred by several hurdles - one being, unduly delayed payments by large industry players. Working on limited resources and with not much help from the banking sector, larger companies should understand the needs of the smaller companies in these crucial times.