Sat, 25-Jun-2022
Monday 13 Apr 2020 , 3:19 pm

After the Impact of COVID-19 on China, Will India Become the Next Manufacturing Hub?

From past two decades, China has become a hardware base for the world when India is considered as a software hub. Because of the COVID-19 pandemic, many companies are thinking to migrate from China. Will it be beneficial for the growth of India's manufacturing sector?
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Japan has announced an allocation of economic stimulus package of $2.2 billion last week to help Japanese manufacturing firms to shift their production out of China as there is disruption in supply chains due to coronavirus outbreak, as per the news published on South China Morning Post. Out of these US$2.2 billion, the Japanese government has proposed to allot over US$2 billion for the firms shifting production back to Japan. Remaining amount is allocated to the companies wanting to move manufacturing units to other countries, said the reports.

COVID-19 was originated from Wuhan and now it is affecting health and economic conditions of almost every country. Countries are facing shortages of various products due the disruption in supply chain from China. Also, manufacturing units of many companies are shut to prevent the spread and healthcare sector is also disturbed. To secure the businesses, along with Japan, the United States and many other countries are also planning to migrate their businesses from China. Considering this migration, these companies will need good deals and infrastructures from countries like India to set their business.

From past two decades, China has become a hardware base for the world when India is considered as a software hub. Even if the India’s reputation in the global economy revolves around digital bits and services, the country has started attracting foreign manufacturers because

  • After the U.S. and China, India is the world’s third largest economy in purchasing power parity
  • It has largest population of engineers
  • India’s intellectual property is widely respected
  • It is very easy to find fluent English-speaking human resource in India.

In spite of these benefits, manufacturers find it difficult to do business in India. Here are some overcoming challenges that India must work on to attract these businesses.

Under Prime Minister Narendra Modi’s “Make in India” initiative, many companies from various countries showed interest to make business in India. But they faced difficulties to start their business in India. As the India is collection of many states, it becomes frustrating and time consuming for companies for land acquisition and to get required licenses. The process of changing residential or agricultural land into industrial is very lengthy and government regulations are also strict.

To solve this issue, governments from all Indian states must implement an online portal to replace the complex system. So that it can become easy for applicants to register and track their applications for business related needs and licenses.

Also, there is no need for foreign companies to build their own manufacturing stations. They can simply rely on Indian factories for the manufacturing of their products. One study says that Indian suppliers can be globally competitive in manufacturing of items as diverse as manhole covers, personal care cosmetics and automotive component.

Another concern in the Indian manufacturing is that there is shortage of skilled labor. As per the India’s social mindset, people prefer to work in IT, banks or any other service sector but they don’t wish to work in heavy industrial sectors. This mindset must change.

To increase acceptance for these jobs, there is a need for skill-based education to provide more practical knowledge than theoretical. This way, right from school, students will begin to realize what are their interests and that will help them to choose progressive options different from conventional sectors.

India’s government has already started “Skill India” mission to promote skill-based activities. Under this initiative, government provides various skill-based education to the poor and eligible students at no or low costs.

It is clear that in coming few years, coronavirus pandemic will make huge changes in various sectors. And considering India’s conditions, manufacturing is probably the only possible way to make great job opportunities and lift its most of the population out of poverty. If PM Modi’s government succeeds to attract these foreign manufacturers by unlocking India’s land and labor, global and domestic corporations will definitely transform exponentially.

Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

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