July 4, 2020

Top 7 Reasons For India To Emerge As a Global Manufacturing Hub In Post COVID19 World

India, being insulated from the Corona Virus, is seen as the next option as a global manufacturing hub. India has an opportunity to stand up as a resilient and diversified economy. Do you want to know why countries are moving away from China? Umm, Well, There are numerous reasons to answer this question. Firstly, global companies want to diversify their manufacturing centers around the world. This will help the countries in future emergencies. Another reason is the US and China Trade war. COVID19 has just added fuel to the already lit fire. There is an assumption that the US giants may consider India as a substitute or parallel field for China to set up their manufacturing units here.

Let us now discuss some companies which have come forward to shake hands with India.

  • Facebook has made a gigantic investment of USD 5.7 billion in Reliance Jio amidst the pandemic. It is the true reflection of the new faith of multinational companies in India.
  • Apple’s manufacturing partner Wistron is interested in shifting to India.
  • Pegatron, the manufacturing partner of Apple, is the company that assembles the iPhone and is also considering India.
  • Posco and Hyundai Steel are some South Korean companies doing the rounds.
  • Korean Consulate in Chennai, India, has requests for two Iron and Steel Industries for setting up the manufacturing hubs in India.

Now you must be wondering why India? Why not some other countries? Okay!! Okay!! I have the answer to this well. Read on to find out:

Low-cost Labor: India has a large stock of both skilled and unskilled labor. The availability of labor at a cheap rate can be of great stimulus to foreign investors. Various skill imparting schemes of the Government are already in motion to fulfill this task. Make In India, Pradhan Mantri Rozgar Protsahan Yojana, and National Apprenticeship Scheme are some noteworthy names. For skilled laborers, India produces 30 lacs graduates, including 7.8 lacs Engineering and another 2.5 lacs from other science faculties with 20% converted to Postgraduate.

IT-Infrastructure: IT is in its full bloom in India. Bangalore is known as the Second Silicon Valley of the world. India has the vast potential to attract multinational brands into the country. US, UK, and Australian shifts coupled with English speaking professionals can provide the requisite support to investors from the US, UK, and even Australia. India is the biggest home of outsourced software development and Business Process from all over the world.

International Communication: Do you know India was an English Colony before 1947? It gained independence from the Britishers in 1947. You might be wondering why I am telling all these things to you? Well, here goes your answer. Being an English colony in the past, Indians have a profound knowledge of English. Skilled professionals from India can easily talk, read, and write in English even more neutral in accent.
Large Market: India has a very large market for consumer goods and services. This is because of the increase in the purchasing power of the Indians. So, foreign brands can invest and benefit both from the vast market. Ok, let’s have the statistics do the talking. According to a report of the World Economic Forum, India is expected to be the third-largest consumer market by 2025.

Corporate Tax Reduction: The corporate rate in India has been slashed from 25% to 15%. Do you know why? The Indian government has cut down the corporate tax for the first time in three decades. The lower tax rate is to pull investments from developed countries. It also helped India to compete with other emerging countries like Vietnam, Brazil, Thailand, and Indonesia.

Special Economic Zones(SEZs): India has 6 special economic zones. These SEZs powered with EPZs (Export Processing Zones) are helpful in earning foreign currency. The role of SEZs in establishing manufacturing hubs is unparalleled. The SEZs have been created to increase investment from overseas. Not only these SEZs are provided with proper infrastructure and effective administration to back it up.

Transports: India shares an important geopolitical location. India has 13 international and 200 national ports. India also has twenty international airports. Some renowned cargo handling seaports are Kolkata, Mangalore, Mumbai Port, and Tuticorin port. India also has the World’s 4th largest Railway Network of 1 lac Km spread over the country with freight corridors. India also has around 6 million km highways, including National, State highways, and Expressways carrying around 100 million tonnes of freight. It will always be easier to bring in the raw material and carry out the finished products to different parts of the world using these infrastructures.

Besides having all these facilities, southeast Asian countries like Vietnam, Indonesia, Malaysia, and the Philippines are going to give India a tough competition. India can challenge China as a global manufacturing hub, only if India acts quickly. It will have to overcome hitches from this country.

Around 1,000 foreign businesses are presently engaged in conversations with Indian authorities. At least 300 are actively pursuing production plans in India. The production plan is for sectors such as smartphones, electronics, medical devices, textiles, and synthetic fabric. Thus, COVID19 seems to have a trajectory of silver lining to it.

It is however, difficult to predict the future. Anticipating where a single seed can be planted for a massive fruit-bearing tree is what we need to do. The COVID-19 pandemic undoubtedly will continue to keep us all on our toes until a vaccine comes to the rescue. But hope is the only thing we have, and it is the only thing we can use.