Building India to build in India
New Delhi, May 26 (IANS) It is sometimes said that if you want to be great, look for other people’s problems. Another interpretation you may have heard is ‘someone else’s problem is their opportunity’.
Before Covid-19 came to dominate our lives, much of the world, particularly the West, relied (and to some degree still relies) on China for manufacturing. With extreme disruptions in global supply chains, a country’s heavy reliance on basic medical equipment, pharmaceuticals and raw materials was aggressively challenged, subsequently leading many countries and industries to strategize to relocate their manufacturing centers outside of China or at least diversify them at a distance. Protect yourself from geopolitical risks.
Compared to most of the world, the Indian economy showed “exemplary resilience” in recovering from the pandemic. However, the associated setback brought with it several revelations, such as the need to become self-sufficient for long-term economic growth. As a result, structural reforms were swiftly introduced to turn the crisis into an opportunity and grease the wheels of the Indian manufacturing sector.
Today, with the introduction of structural reforms, India is being seen as a strong alternative to China and an attractive manufacturing destination by various industries and countries.
In the past three years, Prime Minister Narendra Modi has reiterated his vision of a self-sufficient Aatmanirbhar Bharat (India) with numerous initiatives launched to boost manufacturing; For example, the visionary Make in India program aims to transform India into a global hub for manufacturing, research and innovation, and an integral part of the global supply chain.
The initiative focuses on 25 sectors such as automobiles, aviation, textiles and clothing, the pharmaceutical industry, and renewable energy. Industrial corridors are also being built in several regions. The most notable aspect is that sectors such as defense and railways have opened up to significantly higher levels of foreign direct investment. Regulatory policies have also been relaxed to facilitate investment and the ease of doing business.
While growth has mainly been driven by the services sector, the manufacturing sector has untapped potential that, if harnessed effectively, can drive growth even further. Production-Linked Incentive (PLI) schemes have also been announced for 13 sectors (eg, Food Products and Tech Products) to provide companies with incentives on incremental sales of Indian-made products, during the base year.
Specifically designed to boost domestic manufacturing in emerging and strategic sectors, the goal is to reduce cheaper imports and import bills, improve the cost competitiveness of domestically manufactured products, and increase domestic capacity and exports. For example, PLI for large-scale electronics manufacturing is expected to result in a robust manufacturing ecosystem for electronic components, leading to improved manufacturing of LED products and IT hardware, among others.
As many sectors are undergoing major reforms, the indigenization of defense has also become a priority. To create a ‘global supply chain free from vulnerabilities and uncertainties’, the defense minister invited US defense manufacturers to set up units in India and collaborate with the Indian industry.
In a one-of-a-kind deal, Airbus Defense and Space and Tata Advanced Systems have formed a joint venture to manufacture C-295 medium-duty military transport aircraft, further supporting the government’s vision of an Atmanirbhar Bharat. safran (EPA:), the world’s second largest aircraft equipment manufacturer, is also establishing its largest MRO facility in India to service aero engines.
While the country has yet to address persistent problems such as inadequate infrastructure development, complex regulatory frameworks, and a shortage of skilled workers, it cannot be said that steps are not being taken in this direction. For example, industrial corridors and smart cities are being developed to provide state-of-the-art infrastructure with modern high-speed communications and integrated logistics arrangements.
This year’s budget also reported a 33 percent increase in infrastructure investment spending, with 100 critical transportation infrastructure projects identified to improve logistics in the ports, coal, steel, fertilizer, and food grain sectors. To promote sound infrastructure development, the government announced the National Infrastructure Project (2019), which will use private funds in addition to the public budget. The country is also receiving support from partners such as Japan, its largest partner in terms of financial cooperation for infrastructure development.
To ease the regulatory burden, thousands of compliances have been reduced and legal provisions have been decriminalized. The use of digital technology has proven to be a game changer, the introduction of the Goods and Services Tax has improved the movement of goods in India, and labor law amendments are attracting foreign players with ambitious plans to scale their presence. in India.
India’s gradual adoption of Industry 4.0 practices through initiatives such as the National Manufacturing Policy (which aims to increase manufacturing’s share of GDP to 25 percent by 2025), shifting to more automated processes, and Driven by technology on par with global standards, a strong domestic market and demographic advantage are sure to accelerate growth, allowing the country to reinvigorate its manufacturing sector.