India is now second-most attractive global manufacturing hub, surpasses USA
The Cushman and Wakefield 2021 Global Manufacturing Risk Index has ranked India one place upwards from last year, gives hopes of a turnaround in the badly performing manufacturing sector.
The much-famed & marketed make in India initiative was launched with a target of making the manufacturing sector 25 % of the GDP along with the creation of 10 crore jobs by 2022. Not only has it failed miserably till now but also the jobs in the manufacturing sector have decreased by half.
The Cushman and Wakefield 2021 Global Manufacturing Risk Index report has emerged as a much-needed ray of hope. According to the report, India has moved upwards by one place and has overtaken the USA to become the second most attractive global manufacturing hub.
The report assesses the most advantageous locations for global manufacturing among 47 countries in Europe, the Americas, and the Asia Pacific according to 4 key parameters that are: conditions, risks, and costs of doing business in that country with also the pace at which the country can recover from the covid induced economic slump being considered.
India has performed well in the costs and conditions parameters for doing business. India has relatively cheap land and labor which brings the costs involved relatively down. India has also reduced the corporate tax from 30% to 25% further bringing the costs down. The conditions to do business have been eased by focussing on having a skilled workforce through the ” Skill India ” scheme and improving the supply chain infrastructure by projects like dedicated freight corridors.
But when it comes to the risk scenario that takes into account lower levels of economic and political risks, India is nowhere near the top. India has been clubbed in the third quartile of the rankings. Likewise, when it comes to the bounce back rating that takes into account a country’s ability to restart its manufacturing sector, India is in the fourth quartile mainly due to the low and slow-paced vaccination rate.
The report further stated that India could benefit from relocations from China to other parts of Asia, as it already has an established base in pharmaceuticals, chemicals, and engineering — sectors that continue to be the focus of the US-China trade tensions. It, however, stated that reforms in land and labor laws are critical to ensure India’s success as a global manufacturing hub.
However, China is continuously diversifying its manufacturing sector hence to overtake it and achieve first place is a mammoth task needing a lot of quick and well-implemented reforms.
