Table of Contents
India’s Rise in Global Manufacturing:
India is becoming a big player in making and selling stuff to the world, says Boston Consulting Group. They say it’s because India has cheap costs, lots of workers, and can make all sorts of things really well.
Projected Surge in Exports:
The Indian Export Organization predicts that India’s sales to other countries will go up to $900 billion in 2023-24, from $770 billion last year. Big companies like Boeing, Vestas, and Tesla are noticing and getting more things from India or planning to set up shops there.
Major Companies Investing in India:
For example, Boeing is thinking of making planes in India, Vestas built factories for wind turbines, and Tesla wants more car parts from India. Even Apple is boosting its iPhone production in India.Lots of electronic gadgets, like smartphones, are also being made in India. Foxconn, the company that puts together most iPhones, is investing more money in India. Apple plans to make 20 million iPhones in India by 2024, and experts think a quarter of all iPhones will be made in India by 2025.
Global Politics Driving Investment in India:
India is becoming a favorite for companies because of global politics. Some companies are worried about issues with China, like disruptions in the supply chain and pressure to share technology. So, they’re looking at India as a backup plan, following a strategy called “China plus one.”The U.S. has become India’s top trading partner recently, and it’s part of a plan by the Biden administration to reduce dependence on China. India’s exports to the U.S. have been going up, especially in auto parts, machinery, and semiconductors. In contrast, China’s exports in these areas to the U.S. have been going down.
Government Initiatives and Incentives:
The Indian government wants to be a big manufacturing hub globally. They’re offering incentives and subsidies to companies, like more than $26 billion, to make things in India. This is helping India compete and sell more stuff around the world.
Focus on Workforce Development:
The Indian government is supporting the development of its workforce by establishing the Center of Excellence (CoE) under the Ministry of Electronics and IT to build a design ecosystem in India. Additionally, new skill development centers are being introduced to provide trained manpower.
Challenges and Areas for Improvement:
Although these efforts have been successful in increasing the production of electronics, industries like garments, gems and jewelry, marine products, and plastics, which heavily rely on labor, are not progressing as much. Currently, almost half of India’s electronics exports come from mobile phones, highlighting the need to diversify technology product offerings. Challenges such as poor production quality and reluctance to adopt rapidly evolving technology still exist, and the manufacturing sector is relatively small compared to India’s GDP.
Neighborhood First Policy and Future Prospects:
To overcome these challenges, India needs to expand its production capabilities further. Similar to China, which benefits from the complementary capabilities of neighboring countries like Japan, South Korea, Hong Kong, and Taiwan, India should aim to build collective capacity in the countries along its borders. Fiscal incentives under the ‘Neighborhood First Policy’ can play a crucial role in spreading India’s manufacturing operations across South Asia. Promoting regional trade and developing supply chains with countries like Nepal, Bangladesh, Bhutan, and Sri Lanka can extend the Make in India program to Make in South Asia, contributing to the Modi government’s goal of achieving $2 trillion in exports by 2030.
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