India is a land with many possibilities. With its abundance of natural resources and manpower, India is slowly gaining the much needed global attention and is soon going to emerge as one of the biggest manufacturing hubs in the world. In the last two decades, China has been ruling the hardware base in the world, while India has mainly been the software base. The South Korean giant’s mobile phone factory in Noida is currently the world’s largest manufacturing hub and 30% of the mobile phones made in this plant will be exported all across the world.
The Make in India initiative is not just an economic policy, but it also a means of forming bilateral ties with foreign countries like South Korea, USA and other European countries that have already established themselves as a manufacturing hub.
What Makes India The New Global Manufacturing Centre?
A study shows that by 2020, India would jump six ranks and reach the fifth rank in the list for Predicted Manufacturing Competitiveness. There have been several initiatives undertaken by the Indian government to increase the manufacturing share to 25% of the GDP. This goal is deemed to be achieved through Industrial Revolution 4.0 that will lead to a convergence of the digital and the manufacturing sectors. Internet of Things and Artificial Intelligence applications such as 3D printing and real-time automated processes can bring down the cost of manufacturing to a great level. The phased manufacturing program by the government is trying to shift electronics manufacturing from semi-knocked down (SKD) to completely-knocked-down (CKD) kits.
The most important reason behind India turning into the new manufacturing hub is the ease of doing business here. In the World Bank’s Ease of Doing Business global rankings, India has moved up to the 100th rank due to consistent business reforms. Global investors will gauge both national reforms and conduct due diligence of local business networks before setting up their plants in India. According to a report published by Assocham, the logistics cost in India can be brought down from 14% to 9% of the GDP by making greater use of the ports. This can greatly benefit the manufacturing sector in India.
India Attracting Global Manufacturers
According to a US-based advocacy group, post the 2019 elections, around 200 US companies are planning to move their manufacturing base from China to India. This is mainly happening because the global players are seeing India as an excellent alternative with fantastic opportunities vis-à-vis China. In fact, the US-India Strategic and Partnership Forum (USISPF), is having an on-going dialogue with the companies on how to increase investments in India.
According to USISPF US government has been closely observing the strategic decisions that the Indian government has been taking and it would be good if more reforms are accelerated and transparency is brought in the process to attract more foreign investments. They also said that the former Assistant US Representative for South and Central Asian Affairs is currently working with the USISPF countries to formulate recommendations regarding what the Indian government should do to make India a big manufacturing base and improve its exports. One of the recommendations is a Free Trade Agreement (FTA) between India and the US. A manufacturing council has also been setup to draft a document listing the reforms that India needs to undertake to turn itself into the next big manufacturing hub, a strong alternative to China.
Conclusion
With big international players considering India to be their suitable manufacturing base, the country indeed has a bright future. Also, with initiatives such as Digital India, the connectivity in remote areas of the country is also increasing, making it even more lucrative for foreign investors to invest in India.
