India's gear industry poised to rev up

India continues to hog the global limelight because of its strong economic growth. This trend continues, even with the world talking about a slowdown in growth due to soaring oil prices.

The Indian economy is expected to experience growth of at least seven per cent this year in spite of high oil and commodity prices. This thus makes this economy a very interesting one.

I have been trying to highlight my country's various industries through this newspaper. This week, I'm going to cover the gear industry in India.

In my first article in this series, I talked about India's automobile industry. This industry has been seeing double digit growth for quite some time, and this growth is expected to continue.

This surge in the automobile industry has helped related industries to grow. The auto ancillary industry in India has been doing well. One segment in particular the gear industry has done well.

Globally, the fortunes of the auto ancillary industry correlate broadly with general economic conditions.

In India, however, this industry was under tremendous pressure in the recent past. This was due to some technological lags facing the industry.

Today, however, things have changed a great deal and through rapid technological developments, the industry is seen as a world-class player. The industry is also stronger because it can draw up a pool of low-cost but highly-skilled labour. Finally, thanks to India's IT advantage, the industry has been able to identify additional ways to minimise costs.

Export market

As a result, the industry is being called upon to produce goods for the export market, too. Costs in India are low when compared to other jurisdictions, the industry is competitive on price as well.

The growing automobile industry in the country has attracted many big global players. They have set up bases in the country and are using it to meet both the local as well as the global demand.

This has helped the auto ancillary industry in general, and the gear industry in particular. They have been able to producte in bulk and thus get economies of scale into play, which has made them highly cost-competitive.

The Indian gear industry is well placed in the global economy, due to a combination of factors, such as easy availability of raw materials. Now, with demand also increasing sufficiently in the automobile industry, this industry is set to benefit from this current situation.

Bourse outlook

Now, India is the world's second-largest producer of two wheelers and the fifth-largest producer of commercial vehicles.

It also produces more than one million cars. All this has resulted in high demand for the items produced by the gear segment of the automobile industry.

With all these segments expected to continue to grow, the industry as a whole looks poised to experience robust growth in the times to come.

Stock markets staged a comeback last week and ended the week at 6,388.

Oil and gas stocks did well on the back of oil prices cooling in international markets. IT stocks staged a comeback this week.

Auto stocks were on fire this week, with most of the companies in this sector coming out with good numbers.

The writer heads the Dubai office of Karvy Stock Broking Ltd.