India’s New journey into manufacturing
S Mohini Ratna, Editor, VARINDIA
The continuing debate whether or not India will emerge as the alternative manufacturing to China grossly ignores certain ongoing success of manufacturing business & number of significant facts of India. Today India holds the world’s largest mobile manufacturing plant which is operated by Samsung, the biggest complete indigenous 2 wheeler manufacturing company in the world and second biggest mobile phone manufacturing base in the world. To the biggest surprise mobile manufacturing in India offered the best of the quality ever achieved in the world and best cost parameters of Asia as claimed.
There are two major drivers for establishing a manufacturing plant and selecting a location for any global company, one is the access to a large market and second one is ease of having an uninterrupted local supply chain management (SCM). The SCM of the new location should enable the protection and mitigation of single sourcing risks. The size and growth of India consumption and economical dividend have a major differentiation. India is continuously enriched by hi-tech, digital & IT development hub for the last two decades.
Having around $300 bn worth of technology developments plus 3 million IT workers it offers one of the best talent pools in the world. The compelling need of manufacturing setup is to be future ready with Industry 4.0. India is now having the lion's share in development,
optimization & adoption of the same by many global companies, who are building it from here. Plus all major technology houses have their own R&D and product developments in India.
Industry 4.0 is the new AVTAR of manufacturing with a change the way it works today. It is the complete digital version of traditional manufacturing blended with the power of big data, high computing capacity, artificial intelligence and analytics with an ultimate goal of production excellence. A new $150 Bn of investment due to this is awaited and strengths of India makes it the best place with the finest ecosystem. Take the example of Boeing, who is developing the same with IISC Bangalore. There are more than fifteen giants doing the same from India. There is a systematic growth in high value components in getting manufactured in India.
Post COVID world the preference of the manufacturing landscape has changed. It is futile to think now; China is going to be invincibly the world's most favorite destination for manufacturing. Based on scientific and factual deep due diligence and analysis it’s found outside of China, India offers the best alternative place for manufacturing. There is a vivid contrast to China. The product to be sold in China in most cases needs to be a Chinese brand. In India the global brand largely leverages the local market and also utilizes it as a base for the global market. The volume growth brings the cost advantage with benefits and ease on reverse logistics management. This also gets enhanced by the most reliable & qualitatively well educated resource factors. In India the technical resource with experience costs lower overhead cost as compared to anywhere else.
The ESDM ( Electronic Systems Design & Manufacturing ) segment in India is very robust. In the last couple of years from US $1 bn it has reached an annual US $10 bn mark with the presence of all global leaders like Foxconn, Flex, Jabil, Sanmina & Wistron etc. The recent Industrial manufacturing incentives package by the Central Government launched and known as Scheme for Promotion of manufacturing of Electronic Component and Semiconductors (SPECS) definitely has ignited a massive positive interest for global giants. Capital subsidy, ease of repatriation and having simultaneous setup for SEZ (Special economic zone) for export & DTA (Domestic Tariff Area) for India business is a tremendous business enabler.
A major hidden success story of local manufacturing in India is always unnoticed with the US $ 135 bn incumbent automobile market success. In addition to this the automobile segment is doing an annual average export of US $15 bn. A state-of –the-art high technology and unmatched quality with lowest cost in the world became the hallmark identity of Indian automobile segment.
Today the consumer electronics market in India has surpassed US $12 bn and is expected to reach $20 bn in next two years. Korean brands successfully read this market early and harvested their dividend by entering India around 2009-10 strongly. In the last couple of years Japanese brands rejigged their strategy to be India centric and recently we are seeing an immense traction from Taiwan companies.
India has a magic and miracle left to experts to explore & decode. In addition to this India offers lowest corporate tax and ease of repatriation of dividend as compared to anywhere in the world.
Lastly, the next gen manufacturing and intelligent manufacturing is perhaps having the best available support systems in India more than anywhere else in the world.