In the tumultuous 2020s, global upheavals have reshaped supply chains, presenting India and ASEAN as emerging manufacturing hubs. India, with its demographic advantage and economic growth, seeks to boost manufacturing to 25% of GDP. Policy reforms, infrastructure investments, and sectoral focus aim to propel India towards global manufacturing leadership. Collaboration between government and business, emphasis on innovation, and skilling initiatives are pivotal in realizing this vision, heralding a promising era for Indian manufacturing.
As we stride further into the 2020s, a decade fraught with uncertainties, remarkable opportunities are unveiling themselves amidst the challenges. The global landscape, marred by the pandemic, regional conflicts, and energy price fluctuations, has placed immense pressure on supply chains worldwide. However, amidst this turmoil, a notable transformation in foreign direct investments and trade routes is paving the way for countries like India and members of ASEAN to emerge as global manufacturing powerhouses.
India, with its vast and youthful population, stands as an alluring market for international giants, indigenous enterprises, and startups alike to establish manufacturing hubs that can cater to a global audience. The nation's stable governance, emphasis on infrastructure development, and its assertive stance in a changing geopolitical scenario further enhance its appeal.
Over the past fifteen years, the Indian economy has burgeoned threefold, reaching $3.5 trillion in 2023, with a bold target of $30 trillion by India's centenary in 2047 under "Amrit Kaal." While the services sector has been a shining beacon, future growth hinges on unlocking the dormant potential of manufacturing, which presently contributes only 17% to the GDP, a crucial driver for employment generation.
Recent policy overhauls coupled with efficient execution have primed India for the upcoming growth phase. The rapid expansion of infrastructure through the National Infrastructure Pipeline is forecasted to slash logistics costs from 14% to 10% of the GDP. Incentives geared towards production are anticipated to spur investments in burgeoning sectors like battery materials, electronics, specialty steel, and auto components.
In tandem with physical infrastructure enhancements, initiatives such as digitizing taxation systems, fostering a competitive tax environment, and fortifying creditor rights are pivotal in bolstering India's competitiveness. Signs of progress are already surfacing, with substantial investments from tech giants and Indian enterprises venturing into sectors like semiconductors and defense. This momentum underscores the belief in India's capacity to evolve into a globally renowned manufacturing hub synonymous with quality and cost-efficiency.
Despite these promising strides, India aims to elevate manufacturing's contribution to 25% of the GDP, necessitating a synergistic approach across five core dimensions:
- Make in India for India: Focusing on sectors with high GDP value-added potential like automotive, metals, and chemicals.
- Make in India for India and the world: Emphasizing job creation in industries such as textiles, furniture, toys, footwear, agri-processing, and plastic products.
- Build Aatmanirbharta: Enhancing self-reliance in strategic sectors.
- Foster Sunrise Industries: Spearheading growth in emerging sectors crucial for the future.
- Lead Emerging Markets in Decarbonizing Supply Chains: Accelerating the shift towards low-cost renewable energy infrastructure and establishing technological leadership in areas like hydrogen and sustainable aviation fuel.
Realizing this vision necessitates concerted efforts from both the government and the private sector. The government must persist in enhancing the business environment by investing in infrastructure, reducing operational costs through structural reforms, and streamlining regulatory processes. Sectors like textiles, toys, and furniture stand to gain from a cluster-based strategy, facilitated by expedited land acquisition and clearances. Ongoing improvements in the ease of doing business, coupled with labor market reforms and customs duty optimizations, are imperative for sustained progress. Moreover, a move towards higher value addition entails localizing more segments of the supply chain, from design to assembly.
For global corporations and Indian businesses, the current milieu offers a ripe opportunity to accelerate investments in innovation, research and development, upskilling, leveraging the gender dividend through enhanced female workforce participation, and positioning "Make in India" as a global standard for quality and sustainability. By attracting top-tier talent to India, offering substantial resources for research and development, and collaborating with the government to establish skilling infrastructure akin to Taiwan's semiconductor training institutes, these entities can play a pivotal role in propelling India's manufacturing prowess to new heights.
The growth of leading industries hinges on nurturing a robust manufacturing ecosystem inclusive of SMEs and MSMEs, necessitating streamlined credit access at competitive rates and shared infrastructure facilities. Supporting incubators, accelerators, and academic institutions to commercialize innovations in sunrise sectors will foster bottom-up innovation.
Indian manufacturing stands at a critical juncture. This era could well mark India's ascendancy as a manufacturing powerhouse, but it demands a concerted effort from both the government and industry, characterized by boldness, agility, and scale. Through collaborative endeavors, the renaissance of Indian manufacturing beckons, offering a promising trajectory for the future.
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