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Make In India: Prepare For the Next Wave

There is a need to prepare well for this opportunity. Here are top five action items to ensure effective achievement of our aspirations:

Photo Credit :

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The COVID19 pandemic has posed unprecedented challenges, bringing drastic changes in the business as usual world. Global corporations are impacted by two levels of complexity. Firstly, the global and domestic supply chains and market reach are disturbed. Secondly, the pandemic is also making B2B and B2C clients rethink their goods and products choices. 

However, every challenge provides new opportunities to innovators. Can this be the “Tipping Point” to accelerate Make in India possibilities to fruition? What are the global companies’ needs, India’s USPs, capabilities & recommendations for India to emerge as a global manufacturing hub? 

Diversification is the new differentiation:

In the pre-COVID scenario, supply chain efficiency and cost effectiveness were key competitiveness pillars in the battle for profitability and global scale. The pandemic adds another dimension: you can win the war only if your products can be produced and can reach your clients’ markets even under extreme situations. These MNCs now view a distributed production supply chain and any resultant additional costs as an insurance cost and business enabler. 

What does “China+1” imply for India?

The USA & EU countries were already in the midst of a trade & tariff war prior to the COVID19 situation triggering news about the potential “exodus” of companies from China. Of late, other countries like Japan have joined the call, asking their companies to move out of China. 

As we delve deeper, there are additional considerations:

  1. Global value chains are complicated. Total decoupling may not be feasible.

  2. In the short term, MNCs’ focus is on effective operations, resumption and business continuity.

  3. Many companies are rethinking their strategy and identifying newer target markets to address lower demand from current segments.

This will imply companies are initiating reduction in over-concentration and implementation of a distributed supply chain (after operations stabilization) and are tapping new potential markets for their goods. Next, they will evaluate between moving back to their home countries and choosing other attractive destinations. Many South Asian countries including Vietnam, Thailand, Myanmar, etc. are aggressively wooing these investments.

Taking the above factors in cognizance, India requires strategic planning, nimble execution and pursuit rigour to successfully fulfil the potential global manufacturing opportunity.   

India’s winning strategy playbook 

A successful strategy is always driven by proactive framework and keen awareness of one’s strengths. India must leverage its existing capabilities:

  • Demand from domestic consumption market: This will be a number one attractiveness for incoming MNCs. While China and other markets may offer production cost advantages, India’s demand for B2B and B2C goods can generate additional revenue.

  • Economy: As more companies bring their manufacturing base to India, there will be enhanced demand for upstream and downstream supplier ecosystem development, new vendors and partners, entrepreneurs, skill providers, etc. for end to end supply chain creation. This can create a multiplier effect driving true quantum growth. India needs to demonstrate all these capabilities to position its economic development as a driver of global growth.  

  • Infrastructure: India must ensure that companies coming to India experience world class plug & play infrastructure, ease of market distribution and seamless exports facilities. There is ready availability of existing industrial ecosystems of various grades. This can ensure quick decision finalization by companies for India transition, 

  • Technology, IT & service capabilities: Diversified SCM, cost pressures and contactless reach out means all businesses will need to go Digital.  India must leverage its IT leadership skills & domain expertise to offer this as a business differentiator for companies. 

  • Youth/demographic dividend; India’s young population with their aspirations and technology familiarity bring two advantages: one, they constitute very vibrant consumer base; secondly, an innovation spirit and readiness to work hard to better their situation can help ensure workforce availability. This in turn can help companies scale faster and on a larger scale. It can be further augmented by ensuring proactive skill mapping, skill development and vocational training.

India can also leverage upon its cultural strengths. Sustainability in action combined with Frugal Innovation/ “Jugaad” can enable production of world class goods in rapid times and transformational cost structure. India has already demonstrated this in telecom services, mobiles & electronics, automobiles, vaccines & pharmaceutical industries, to name a few.

Extending from our Hon’ble Prime Minister’s speech, these pillars can shape the template for India’s success.

Execution plan: how to make ‘Make in India’ happen:

There is a need to prepare well for this opportunity. Here are top five action items to ensure effective achievement of our aspirations:

  1. Focussed target segmentation: We need to move rapidly and map global value chains in identifying target countries, industries and companies which fit the bill for the China+1 strategy for India. Priority sectors include manufacturing components, machinery, electronics & components, and medical devices, amongst others.  

  1. Intense reachout strategy: A comprehensive effort has to be undertaken involving all stakeholders including national and state level government, policymakers, credible industry and ecosystem providers and other volunteers. A unified force for a maximum reach exercise in the shortest possible time frame is the need of the hour.  This can be time of national reckoning as the USA, Germany, Japan etc have demonstrated in their respective milestone journeys. All hands on deck!

  1. Implement enhanced Ease of Doing Business: EODB has to be treated as a transformational mindset shift and not an incremental policy initiative. This implies end-to-end process management at each stage of a prospect’s discussion to translate into definitive agreements, followed by rapid construction and production. Dashboard monitoring is required to review progress in real-time and pre-emptively identify any issues.

  1. Offer attractive incentives: New prospects evaluating potential countries for expansion consider two primary factors in their financial business case:

    A. Lower tax rates: India has already implemented this w.e.f. Sep 2019
    B. Incentives for new establishments: We will need to be aggressive in offering incentives with direct linkage for creation of new investments and employment, similar to practices already prevalent in smaller nations in South & South-East Asia.
    The multiplier impact of additional economic output will outweigh any short-term potential “revenue loss”.

  1. Leverage existing India client credentials: Make in India will follow the trajectory of a strategic B2B decision-making process.  We must create a portfolio of case studies representing the MNCs who have started diversifying from Europe and China and have gone live in India in the last 3-5 years. They will be our most credible brand ambassadors.

Conclusion:

India must play to its strengths and be smart in executing the Make in India strategic plan. We can be the bridge between Asia’s vibrant markets and the technology and R&D capabilities of Europe, USA and rest of the world. An effective execution of this ambitious plan is the key. If done right, this can ensure GDP growth, economic prosperity & employment generation

This is a once in a lifetime opportunity for India to create a legacy as an innovative economic powerhouse. Let’s strive for “Make In India” to be a mantra for global MNCs in finding new markets, rapid product development and efficient but diversified supply chain existence with business continuity. That will be the real game changer.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Sanjay Srivastava

The author leads Mahindra Lifespace’s Integrated Cities & Industrial Clusters (IC&IC) business including sales & marketing, business development and new initiatives’ evaluation. He is currently Business Head – Mahindra World City (Jaipur) Ltd and Board Director at Origins, Ahmedabad and Origins, Chennai.

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