Emergence of India as a new global manufacturing powerhouse

We could be witnessing the emergence of India as a new global manufacturing powerhouse

It could be that India is about to start living up to its promise of being a star sourcing destination. The new Prime Minister, Natendra Modi, is setting about invoking some changes that could make China and a few other Asian nations look to their laurels in the global manufacturing stakes.

Political reform could underpin a new stable manufacturing infrastructure

Modi swept into power by ousting the Congress party from government, a position it had held onto for three decades. The manifesto that led him to victory majored on turning India into a veritable stronghold of manufacturing power. The changes are already clear to see.

The impact of the second largest consumer population in the world

India’s population is second only to China in size. As well as the country being ideally placed geographically from a global sourcing point of view, the huge population forms a thriving potential consumer market. Although India has had problems, its middle-class population is growing rapidly and could be set to grow even faster under the new government.

Abbot Labs pave the way

A great example is Abbot Labs, the Indian subsidiary of the American pharmaceuticals giant. They’ve just started production in their new $75 million factory in Western Gujarat, where they will be making Similac (a baby feed product) and PediaSure, (a nutrition supplement). When the plant is fully operational it will employ 400 staff, and its products will be sought after by the rapidly expanding Indian population. But the company has a keen eye of the export market too.

A steady infrastructure will calm the nerves of potential buyers

Part of the drawbacks India has suffered, and that has prevented her from taking centre stage as a major global source of manufacturing in the past, has been the fragility of her infrastructure. But at the new industrial park in Gujarat where Abbots Labs are, they now have reliable power, ready supplies of quality water, and a good road network. All of the things needed to underpin the stability of production. When global buyers realise this, their competitive prices will become hard to resist.

Employment law reform on the way

On the global manufacturing stage as a whole, this steadying of the infrastructure will be welcomed with open arms. It is has been one of the global supply chain’s procurement guru’s biggest concerns. Another area of significant worry to buyers all round the world has been awkward India’s employment laws, making hiring and firing an absolute nightmare. But this is another area that the Modi government is addressing. Once this takes place and knowledge spreads, there will be little to hold buyers back from taking advantage of the fact that India’s labor rates are significantly lower than China’s.

Are we witnessing the birthing of the Indian equivalent to the Guangdong province in China?

More good news for the improvement of India’s infrastructure comes from the fact that Japan is allocating a massive $35.5 million to sink into India’s manufacturing industry. It is strongly rumored that much of this money will fund the development of a huge industrial corridor between Delhi and Mumbai, including hi-speed rail links and a network of superhighways. Up until now Japan has invested heavily in China. But with the political unrest about governance of the many islands between the two countries, this new investment in India is being seen by those in the know as paving the way for a new economic area that will rival that of the Guangdong province in China. This is the province that was fundamental in China’s dominance on world manufacturing stage.

The final price of the jigsaw – wage control

The final piece on the jigsaw in drawing this new picture of India as a potential world manufacturing giant comes from the fact that India is not suffering from the same escalating labor costs that are prevalent in China.

Setting the stage

The stage is being set. We could soon see the emergence of India as a new manufacturing powerhouse within the global supply chain scene.

Do you think under the leadership of Modi, India will emerge as global choice for manufacturing? Let us know your thoughts at the comments section below.

One Comment

  1. I am keen to make a successful caeerr into Supply chain management.First of all I would like to thank you for creating this blog as this opens a new avenue for inquisitive aspirants like me to communicate with successful professionals like you.Over the years my experience has covered areas including Operations Management, Supply Chain Management, Purchase, Procurement, Business Development, Market Research, Database /Knowledge Management, Compliance and Independently handling short term and medium term projects.Now I am doing Full time Post Graduation in Supply Chain Management. I want to specialize in Forecasting.Once one of my friend asked me about supply chain management, what are caeerr options , Which are job profile & departments into SCM that one can look to work after completions of course, what is an average salary of professionals in SCM, which is the highest paying field into supply chain, as most of the working individuals are not aware of supply chain in india, but I think in coming year SCM industry will grow a lot. more and more companies will hire trained manpower for SCM & firms will innovate effective SCM to compete with each other.Sir, I request you to please add following things to my knowledgea) Are their any other field or job profile or departments into SCM apart from Forecasting, Retail Logistics, Shipping Logistics, Warehousing management, Inventory management and Purchase or procurement in which I can specialize? b) please enlighten me about the average salary in all the above fields (highest to Lowest in order).Sincerely,Sunil Motiramani

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