U.S. conglomerate General Electric (GE, Financial) is concentrating more on its industrial segment as it urges to generate more than 70% of its overall profit from this segment within the next few years. But whenever the company thinks of investing in the industrial segment by setting up its best of facilities around the globe catering to the customer needs of this segment, investors and analysts presume U.S. or Europe to be its first geographical choice. But certainly none of them think of Asia Pacific or specifically India to be GE’s choice for setting up its world-class manufacturing facilities. But this time the company has proved such a thought process to be completely wrong as it’s has recently announced the setup of its first “best-of-kind” manufacturing facility in India – something which directly reflects that GE is extending its wings in the Indian soil as it urges to turn India into a major global manufacturing destination.
So, what is the entire story behind setting up the industrial plant in India? Let’s plunge in to get to the crux of GE’s plans in India.
GE unveils the recent roadmap
On February 14, GE unveiled its first best-in-kind multi-modal manufacturing facility at Pune in India which would focus on manufacturing diversified products for four of its industrial sectors – aviation, transportation, oil and gas and energy sectors.
In an interview with Reuters, GE Vice Chairman John Rice stated that the company is looking forward to investing around $200 million on setting up this facility in India, but he did not share any further details on the same or on production quantities being estimated from this facility once it becomes operational in the near future.
In fact besides setting up this facility in India, the company is also eyeing other opportunities in this rapidly developing country. Rice quoted during the interview with Reuters – “From an orders and revenue perspective, I still think we're playing below our weight…”
But one thing that has been made clear from the management corner is that India would serve as an export hub for the company as it plans to send half of the output from this “Brilliant Factory” unit to its global factories.
Working towards revival of India’s manufacturing sector
The relationship of GE with India is not something new; it is something that dates back to almost 110 years ago. GE is just trying to nurture and grow this relationship for meeting its long term strategy of making India its core export center.
With this “brilliant factory” setup, GE has brought its advanced facilities such as automation, 3D printing technology and industrial Internet under the same roof – all of these together aids in manufacturing a diverse stream of products and catering to several business streams at one point in time.
GE aims to achieve the economies of scale by serving both the domestic and global market needs through this industrial facility in India. A management official commented that GE’s operations in Pune, India could also help in tackling intense localized competition, and such a venture in India can be termed as a huge milestone on GE’s timeline.
Final thoughts
GE knows well how to create intrinsic value from its core investments, and even while opening this manufacturing facility in India it must have gone through all the calculations before taking any ultimate decision. In fact, this is one step being advocated by the U.S. conglomerate to generate more value for its shareholders by setting up technologically enabled facilities in developing countries like India where labor rates are cheaper than in developed countries and thus operational costs can be kept under tight reins. And it goes without saying that GE’s out to carve its own niche in the Indian soil. So, let’s stay tuned and keep watching how GE pursues newer opportunities in India in the upcoming days.
