India's goal of becoming a centre for global manufacturing

 India's goal of becoming a centre for global manufacturing

India is faced with a window of opportunity to fulfill its long-cherished aspiration to become the factory of the world as the globe "de-risks," or shifts supply chains away of China. The manufacturing-led economic development model that has been so successful in Northeast Asian countries like China, Japan, and South Korea has long been believed by India's leaders to be replicable there. India, like China, has a sizable labor force that is both skilled and unskilled, which is necessary to become a low-cost producer and exporter.   

"Make in India, sell worldwide"

The 'Make in India' campaign was launched to entice multinational corporations to relocate their manufacturing to India. The project has been effective, but it hasn't been able to displace China as the world's factory, which is still held by India.

India is becoming a world-class smartphone manufacturing thanks to the effort.

India exported 2 billion locally produced smartphones and feature phones between 2014 and 2022. 98% of the phones supplied in India in 2022 were made there, while 16% of those phones were exported. Just 19% of phones delivered to India in 2014 were locally built, to put things in context.[1].

The goal of Make in India  

The government hopes to increase economic development, generate employment, and lessen reliance on imports by making India a top producer of smartphones. According to this school of thinking, India will begin by producing low-cost items in massive factories with hordes of untrained and skilled laborers, just as China, Korea, and Japan did. India will follow in the footsteps of China, Korea, and Japan in steadily moving up the value chain to become dealers and producers of cutting-edge goods that rival those made in the rest of the globe and the origin of household names.

'Make in India' is only one of the policies and efforts that are already in place to help India follow the economic trajectories of these other nations.

Scheme for Production-Linked Incentives

A successful example of one such program is the Production-Linked Incentive (PLI), which provides producers with subsidies in order to increase manufacturing in India. Only 3 types of manufactured items were eligible for subsidies when the PLI was first implemented in 2020. These days, it includes mobiles and spans 14 categories.

The 14 sectors of the PLI received 1.97 crore from the Indian government. Up till March 2023, 733 manufacturer applications have been accepted. Manufacturer investments are anticipated to total INR 3.65 lakh crore, but only INR 62,500 crore have been made so yet. 3.25 lakh individuals have found work as a consequence of investments, which have increased output and sales by 6.75 lakh crore[2].    

The PLI's largest success to far has been in the smartphone industry. Exports of mobile phones are projected to surpass 1.2 lakh crore in the current fiscal year. These exports totaled INR 90,000 crore in the previous fiscal year.

Special Incentive Package Scheme with Modifications

The Modified Special Incentive Package Scheme, often known as M-SIPS, was introduced in 2012 to support the growth of an ecosystem for semiconductor and display production in India. The plan has only partially succeeded in bringing semiconductor production to Indian soil up to this point.

Developing Skilled Labor

The Indian government is aware that a more trained labor force is necessary for the success of "Make in India" and "PLI." The authorities of India are likewise aware that their country needs competent laborers in all sectors, especially the tertiary sector, if it is to develop into a vibrant economy in the twenty-first century. 

The National Skill India Mission was established by the Indian government in 2015 to fast develop such a workforce. The mission seeks to solve the disjointed strategy of earlier skill-building initiatives[3]. Its goals are carefully in line with the government's ambition to make India into a vibrant, modern economy. It will go a long way toward preparing a workforce with the abilities needed to operate in current factories that assemble and produce cellphones.  

Gains in Infrastructure

The Indian government is implementing significant reforms in order to improve the nation's weak infrastructure, which is the main barrier to the country's progress, in addition to developing a more trained labor force.

India is now developing its infrastructure at a faster rate than any other country outside of China. The Indian government is expected to boost its capital spending on roads from.5% of GDP in 2020 to.8% of GDP in 2023. Every year, the nation adds 10,000 kilometers to its roadway system. India is expected to spend 1.7% of its GDP on infrastructure this year, which is twice as much as the USA and the majority of European nations.  

The cost of shipping gadgets throughout India and abroad will decrease as long as this infrastructure is kept up.

Single Window National System

A National Single Window System has been implemented by the government to make it simpler for international merchants to do business in India. Through this solution, international business owners in India may provide one agency with all of their information. They are saved the inconvenience of having to visit several authorities in various places in order to get approvals, documents, and permissions. Foreign companies will find it simpler than ever to access the Indian market and start doing business thanks to this effort.  

A major multinational praised the government of Andhra Pradesh in January for making doing business in the state simpler with the help of the NSWS. There are several examples of NSWS success in this manner[4].  

High R&D

India is making huge R&D investments in order to promote innovation. Currently, the nation spends more on research and development than the UK at around $65.2 billion. In India, top smartphone makers already have R&D facilities. They are creating goods and services at these facilities to address regional and international problems. However, India only spends.65% of its GDP on R&D, and the proportion of R&D to GDP has been declining. India had its highest level of GDP spending in 2019 when it almost reached $100 billion[5].

Partnerships between the government and industry are required to promote innovation in the next years. Successful government-industry cooperation will aid in overcoming obstacles and encourage innovation. The goal-driven impetus underpinning India's industrial goals will be these partnerships.

A protective attitude 

Recently, the Indian government increased import taxes on imported computers in an effort to entice overseas producers of laptops and other gadgets to begin producing in India. Starting on November 1st, 2023, import taxes will be imposed. Following the announcement, 32 organizations—including well-known producers like Dell, Asus, Foxconn, and HP—applied for permits to produce servers, laptops, and personal computers in India. Their arrival in India would encourage investment and generate employment.

Through incentives, subsidies, and regulatory changes, these efforts aim to increase local production, particularly in the electronics and mobile device sectors. Major smartphone makers have been drawn to this tactic, resulting in the creation of employment and the transfer of knowledge. India is now the second-largest producer of mobile phones in the world, behind China, thanks to the development of a robust supply chain ecosystem that includes component suppliers, contract manufacturers, and local assembly facilities.

Realizing the 'Make in India' Vision

India's large and affordable labor pool is a major factor in the country's potential to become a major global mobile phone manufacturing center. To fully achieve this promise, manufacturing capabilities must be developed gradually, beginning with assembly and moving on to sophisticated components, as shown by China, Korea, and Japan.

For this growth, import barriers must be eliminated. Increasing import taxes on phones may encourage companies to locate operations in India, promoting investments and employment growth.

To compete in both the Indian and international markets, domestic smartphone makers should give high-end technology top priority. India's 'Make in India' plan, supported by government funding, infrastructure development, and R&D, positions the country as a key participant in the global IT sector. India's star is blazing brighter than ever when it comes to manufacturing smartphones, and its path will be one worth monitoring as the globe searches for alternatives in the supply chain.