The future of manufacturing in India, as with that in any other country, is not to be taken for granted. That said, India is better poised to handle the quandary of challenges posed by the post-pandemic climate than several other nations. The simple reason for this optimism is that even as of mid-2020, India stood third in the global index of the manufacturing powerhouses of the world.
The future of manufacturing in India is secure because India isn’t a single-track farm economy or service-based economy. On the contrary, it’s been a mixed economy for decades. This was a conscious approach adopted by the post-independence era that allowed public and private sectors to coexist in harmony.
The rule of thumb for the manufacturing sector of India in a mixed economy is that private players vie to bring competitiveness and standardization to the means of production, spare parts, OEMs, and raw material, while the government acts as an overarching regulatory body. Add to this the liberalization policy and the modern ethos of governance naturally uphold industrialization.
Behind contemporary emerging market China and the heavily-industrialized world leader United States, India retains the distinctive third rank for being welcoming to industries and factories for the following trifecta of reasons:
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One – A proactive, sensitive administration and a competitive, spirited body of industry leaders. India’s central as well as state governments vie to provide an environment conducive to setting up production of goods and support for intermediaries and logistical elements.
Two – Fresh relief packages. As part of the relief measures for COVID-19, the government of India rushed to introduce a bailout for manufacturers and intermediaries grappling with demand deceleration and supply chain snags. Prime Minister Narendra Modi’s eye is always trained on the future of manufacturing in India.
Third – Stable political climate translates to low risk of operations. India’s unruffled social and economic composure is reflected in its competitive operating costs and interest rates on lines of credit.
The most remarkable trait that sets India as a manufacturing hub apart is that the above factors of production remain largely unchanged despite the slackened pace of the industry caused by covid and the decelerating liquidity levels. Rather, the timely lockdowns now spur the workers to return to work with redoubled vigor.
The mid-year picture for India’s manufacturing sector has been tinged with worry
India’s manufacturing opportunities dropped to near zero as demand petered out. While personal care, luxury, and cosmetics were hit heavily by falling demand, pharma and healthcare equipment producers were caught off guard by the sudden surge in demand. Production of non-essential commodities had to be stalled. Grocery and ready-made foods faced a sweeping peak and failed to meet the demand at all events.
Jobs in the areas of logistics, stocking, and inventory management faced similar unpredictable trends. This brought a much-needed close-up on the future of jobs in India.
India’s response to trends and worries about jobs in the manufacturing sector
Indian industry went back to the drawing board in terms of categorizing and tending to the micro, small, and medium-sized enterprises based on turnover. Then the “fund of funds” bailout package totaling to the tune of USD 260 billion was rolled out in stages to create blue-collar jobs and offer loans to manufacturing companies that fall in the MSME categories.
At the same time, the future of manufacturing in India is safeguarded by stalling foreign tenders and welcoming local vendors and small businesses in their stead.
State governments likewise revised labor laws to allow migrant workers to take up more short-term assignments. Striking workers face more rigorous conditions while employers have greater flexibility in hiring and firing. The inclination of the government to safeguard industries, and thus, the future of manufacturing in India is clear.
Is future of manufacturing in India secure?
At a glance, yes. In comparison with the year 2000 (15.3%), it’s at a high of 17.4% as of the year 2020. A slump followed the highly encouraging growth numbers of the early 2010s, but it’s recovered sufficiently. The markers point to promising growth, although not as much as the services sector. There is plenty of growth potential for the future of manufacturing in India yet to be realized.
References:
- The future of manufacturing in India | YourStory | Alok Kirloskar | Dec 2020
- A new growth formula for manufacturing in India | McKinsey | Rajat Dhawan and Suvojoy Sengupta | Oct 2020
- Changes to labor laws will put most workers out of legal protection: Unions | The Hindu | Sharath Srivatsa | July 2020
- Impact of COVID-19 on the Manufacturing Industries | Industrial Automation India | Dec 2020
- How COVID 19 can be a ‘blessing in disguise’ for India’s manufacturing sector | The Economic Times | Sushant Chopra | April 2020
- COVID-19 Economic Relief Package for Micro, Small and Medium-Sized Enterprises in India | Ecovis | R L Kabra | Aug 2020
- India ranks 3rd in global manufacturing locations among 48 countries, shows report | The Economic Times | Press Trust India | July 2020
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