Only a decade ago, China surpassed the USA and emerged as the world’s largest manufacturing sector. However, the rise of China as the world’s factory began way back in the 1980s. According to estimations made by the UN Statistics Division, in 2018, China contributed 28 percent of global manufacturing output. Yet, the coronavirus epidemic is beginning to change this in many ways. The country-wide shutdown in China has sent global firms a supply shock, which has made these firms look for alternatives to keep their businesses going.
This has brought about an opportunity for India which can reap rich dividends by creating a manufacturing-friendly environment and offering lucrative deals to global players for setting up units in the country. Reports have shown that a large number of companies are already in talks with Indian authorities seeking to pursue production plans in this country in sectors such as electronics, medical devices and textiles, among others. India needs to take this opportunity and present itself as a viable alternative manufacturing destination.
Creating a world-class manufacturing ecosystem
Before COVID-19, the China-US tariff battle had already made global companies jittery about keeping a bulk of their manufacturing centres in China. However, the pandemic further accelerated their plans to diversify their manufacturing capacity beyond China.
India needs to act proactively to create an environment that is favourable to global manufacturing so that once the COVID 19 crisis blows off, international organizations can look at us as a trusted supply chain partner. This needs creation of the best-in-class manufacturing ecosystem that offers efficient and highly trained manpower, encourages innovation, allows ease of doing businesses and protects intellectual property.
India would do well to go back 30 years in history and learn what the Chinese did back then to become a global manufacturing powerhouse. What prompted China’s success were the factors such as world-class infrastructure, logistics, complete policy support to the sector as well as low labour wages. If India learns from that experience and creates a favourable ecosystem with a cluster of buyers, sellers, technology and skilled labour, it can become the next global manufacturing hub.
Fostering Innovation and Skill
As a country that wishes to become a manufacturing hub, India must work to bolster its capabilities in all kinds of production ends by fostering innovation. Indian manufacturing sector must also rise to the occasion and plan with a futuristic approach at how to grab a major pie of the shifting manufacturing business. We hope in future the evolution of the Indian market and manufacturing sector can allow us to scale up manufacturing hotspots to feed multiple manufacturing requirements of global industries.