Is India becoming a more competitive manufacturing hub than China?

 Is India becoming a more competitive manufacturing hub than China?

As per a research published by the think tank Global Trade Research Initiative (GTRI), China has been experiencing recurrent outbreaks of respiratory infections resulting from human-animal interaction, which includes the Covid-19 epidemic in 2019. H7N9 avian flu (19). H5N6 and H10N3 avian flu, respectively, in 2013 and 2014.

Because of these outbreaks, especially COVID-19, companies are allegedly reevaluating their worldwide supply networks and dependence on China for production. Some are even contemplating moving their operations overseas. the process of shifting functions. To lower the dangers, the research suggests either returning to the nation from where it was initially transported or diversifying the sources of supply.

The report serves as a reminder of the times when the world had to deal with disrupted medicine supply lines during the Covid pandemic, stating that since mid-October 2023, there has been an increase in breathing-related illnesses among children in northern China, linked to the removing of Covid-19 restrictions and the onset of cold weather. According to the research, India is in a good position to profit from this trend by strengthening its infrastructure in the healthcare sector and improving its supply chain skills. The research recommends that India establish its own independent monitoring centers in order to better plan for and react to future health emergencies, in light of the criticism leveled at the WHO and China's handling of COVID-19.

An alternative Chinese manufacturing powerhouse would be India?

The survey claims that with the exception of washing machines, solar PV cells (which are parts of solar panels that convert solar energy into electricity), and EV batteries, more than 90% of computers and most of their components are supplied by China. produces it internally. An electric car battery, also known as a hybrid electric vehicle battery, is a rechargeable battery that powers the electric motors of these vehicles.

Emphasizing that a disruption in supply chains would cause losses for the whole globe, the study applauds India's efforts to produce computers and mobile phones domestically for global use. India may benefit from the trend of diversification, according to the research, by strengthening its supply chain capacities. The government should also promote manufacturing in industries where India has a competitive edge or where it can expand more quickly. According to the paper, India can reassure foreign stakeholders about its resilience in the face of global crises by developing a robust framework for crisis management, including pandemic preparation.

India's current state

During his 2022 World Economic Forum speech, Indian Prime Minister Narendra Modi is believed to have announced the commencement of work on the "Make in India – Make for the World" program. The policy aims to establish India as a worldwide powerhouse for manufacturing and exports. This demonstrates India's will to advance. It should be recalled that Mark Mobius, the founder of Mobius Capital Partners, said in November 2022 that there is a rising trend of manufacturing moving from China to India.

An article on CNBC claims that Boeing, an American maker of airplanes, is thinking about launching manufacturing in India. The US$34 billion agreement between Boeing and Air India to deliver the aircraft is expected to be seen as a test for both companies and India, the dominant economy in South Asia, in its pursuit of becoming a significant manufacturing hub. We're doing all we can to draw in international businesses. foundation, as Western companies want to lessen their reliance on China—the true global factory. Email correspondence purports to have been sent by Dave Schulte, regional marketing director of commercial aircraft management for Boeing's Asia Pacific and India area. "India presents a plethora of opportunities, and our progress towards achieving self-reliance as a nation is evidenced by our growing supplier participation."

A Forbes story claims that Apple is also making an effort to diversify its manufacturing sources outside of China. In 2017, it began producing earlier phone models in India, and as of right now, the company also produces its flagship iPhone 14 models there.

In 2022, over 70% of iPhones made in India were produced domestically, up from less than 40% in 2020, according to Forbes. While moving Apple's whole value chain from China to India would be very difficult, India is gradually making the same progress. Electronics will play a significant role in the industrial value chain.

India's ability to manufacture

India's industrial potential is stated to stem from the following benefits:

a highly skilled labor force; digital infrastructure that makes operations more effective; investments in logistics infrastructure; proximity to other nations for supply chain diversification; a prime location for accessing emerging markets; and financial benefits from low-cost, cost-effective manufacturing supported by robust legal framework and patent protection.

Conclusion

India is making a concerted effort to portray itself as an Asian alternative for Chinese manufacturing. He started the "Make in India" campaign back in 2014 in an effort to promote India as a center of global manufacturing and to entice foreign businesses to locate their production there. The Self-reliant India initiative was introduced in 2020, which is more recent.

The Government of India has said that one of its strategic objectives is to become a worldwide powerhouse for manufacturing. In several important businesses, including semiconductors and smartphones, China is losing ground to other countries due to global expansion; India intends to gain ground in these areas by bringing in important supply chain components. India is apparently aggressively pursuing a "plus-one" approach in addition to this program. It has been said that the only aspects of India's economy that are similar to China are its labor force and home market. The Indian government is apparently trying to make it simpler for companies to establish their manufacturing facilities in India since it is seen of as a natural partner for Western nations.

In order to capitalize on the advantageous conditions and opportunity presented, India has to address the major concerns that both domestic and international businesses confront in order to become a viable alternative to China as a center for manufacturing.