chapter  13
33 Pages

Integration of the Indian Machinery Sector into Global Production Networks

ByNeha Gupta

A lthough ‘global production networks’ (GPNs) is an old concept, it is receiving bigger attention in recent times and is known by different terms, namely, global commodity chains (GCCs), global value chains (GVCs), global supply chains (GSCs), global production sharing, fragmentation, or the like. Trade is now looked upon in a different perspective, which is not limited to fi nished goods only, but is getting inclined more towards intermediate goods. Several fi rms located in varied locations of the world are undertaking different sets of activities involved in designing, production, marketing, and distribution of products. Intra-industry trade (IIT) is taking place where a country simultaneously exports and imports goods within the same product category. The most prominent and well-established GPNs are observed in the machinery sector of East Asian countries. Worldwide, researchers are studying them with great interest, focussing mainly on their advantageous features. For instance, producers of developing countries/LDCs need not undertake all the production processes indigenously; they can concentrate on simple tasks in which they have an edge, while leaving the rest of the activities at the consideration of lead fi rms of chains (Nathan, 2010). These lead fi rms also help them to acquire production capabilities fast by instilling appropriate learning experience and pressure for cost reduction, quality enhancement, etc. (Humphrey and Schmitz, 2001).