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The Global Manufacturing Dilemma and Opportunities in India

The industrial sentiment around India is very positive and this will certainly lead to companies moving their supply chains to our country.

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We are in between an unanticipated pandemic that has disrupted the way businesses operate around the world. With almost every industry trying to combat manufacturing challenges and ensure survival with resilience, the changed business landscape has made it clear that a major change for business leaders and global decision makers is here. The US, South Korea and Europe among others have understood the risks of depending solely on China to meet a large part of their global demand and their sentiments are in unison and evident- it’s time to shift out. Japan has become the first country to acknowledge this crippling reliance and has announced a package of 2.2 billion dollars to manufacturers in their country for helping them to relocate their overseas factories.

Changing tides
China has been a major global trade hub, with its exports at well over $2 trillion but its disrupted supply chain is now opening a very important window of opportunity for our nation. India has already demonstrated its stature as a responsible global power by taking lead in the "One Sun One World One Grid" project. Apart from the labor cost arbitrage, a demographically gifted India also offers lower operating costs, a competitive infrastructure, incentives to boost domestic manufacturing and business friendly government policies.

There has been a series of initiatives and policy reforms undertaken by the Indian government to establish India as a manufacturing hub for the world. These include, but are not limited to corporate tax reduction in 2019, Make in India, Skill India and many more. Now at the 169th position in ease of doing business, our Prime Minister Narendra Modi aims to bring it to the 50th position in the next few years and this could be a perfect catalyst.

The industrial sentiment around India is very positive and this will certainly lead to companies moving their supply chains to our country. The public announcements made by major global players in the recent past including Apple, LG, Philips, Lava, Von Wellx are a testimony to the fact that India is indeed on the right track towards becoming a global manufacturing hub. Further easing of regulatory control and tax norms will go a long way in ushering in waves of investment.

Exploring Indian terrain in manufacturing
In order to weather this storm, business leaders need to execute their crisis and business continuity plans to mitigate the disruption to their operations. When it comes to business expansion, successful sustenance and growth relies on finding the right balance between workforce and industrial parameters. While India may present a picture with greener pastures, understanding grass root level details about the industrial ecosystem; available workforce and related insights is imperative. Decision makers from manufacturing would ideally consider the following when contemplating any growth plan in India-

·      Quantified costs and skill advantages in human resources that the country offers
·      Selection of the right manufacturing destination within India based on an individual context
·      Procurement of human resources and related data for business planning

A democratic India presents itself uniquely as a great proposition owing to its large domestic market, affordable & skilled workforce availability at scale, English and digital proficiencies, and a truly China independent economy. The international trade issues that have emerged in the recent past have exhibited the fact that the world can confidently trust in India’s economic resilience, governance, and geo-political contributions. Many global giants like Apple (through Foxconn and Wistron) already have a sizable manufacturing setup in India, so ‘Make in India’ is a proven concept. Companies get access to a huge market while also derisking their supply chain aberrations in India.

It is true that economies across the world have suffered damage due to the recent crisis but there is a lot to learn and ride on if we are able to adapt to the changing world. The current crisis can transform India to become the "Factory of the World". "A systematic and strategic approach can lead the way towards enormous economic growth, which will be powered through the manufacturing sector in the near future.

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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Gaurav Chattur

The author is Managing Director and Co-founder, Catenon Asia

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