India Struggling to become a Global Manufacturing Hub

Source: The post India struggling to become a global manufacturing hub has been created, based on the article “The absence of a quality mindset” published in “Business standard” on 7th May 2024.

UPSC Syllabus Topic: GS Paper 3 – Economy – changes in industrial policy and their effects on industrial growth.

Context: This article discusses how poor-quality products have plagued India’s manufacturing reputation. The government and regulators have taken steps to improve quality, like mandating GMP for drugs and testing cars and spices but concerns over enforcement and inconsistencies remain. India Struggling to become a Global Manufacturing Hub

How have poor-quality products plagued India’s manufacturing reputation?

Pharmaceutical Scandals: Indian pharmaceutical exports caused multiple deaths globally due to non-standard and counterfeit drugs. This led to mandatory WHO GMP certification for all manufacturers.

For more information read here

Spice Contaminants: Singapore and Hong Kong banned spice blends from MDH and Everest due to high ethylene oxide (ETO) levels. Despite testing exports, FSSAI ignored ETO levels domestically.

For more information read Article 1, Article 2

Vehicle Safety: Before adopting the Bharat New Car Assessment Programme (Bharat NCAP), based on the Global NCAP, Indian consumers couldn’t assess car safety accurately due to the absence of standardized crash-test data.

Why is India struggling to become a global manufacturing hub?

Inconsistent Quality Standards: Despite exporting high-quality goods to developed markets like the U.S. and Europe, Indian manufacturers often sell substandard products domestically, which tarnishes the nation’s manufacturing reputation.

Regulatory Lapses: The FSSAI failed to enforce strict quality standards domestically, particularly with MDH and Everest spices that contained high levels of ethylene oxide (ETO).

Limited Inspection Capacity: The government mandates WHO GMP for all drug manufacturers but lacks the institutional capacity to enforce compliance consistently.

High Costs: Power and logistics costs remain high, making it difficult for manufacturers to maintain quality while staying competitive.

Tax Burden: High taxes on cars mean domestic customers pay more than overseas buyers for vehicles, but they receive lower-quality products.

What should be done?

Increase Testing Facilities: Set up more labs and hire qualified inspectors to oversee manufacturing processes.

Support Small Enterprises: Help micro, small, and medium businesses upgrade quality with guidance and resources.

Reduce Production Costs: Lower logistics and power costs to help maintain competitiveness without compromising quality.

Reform Tax Policies: Adjust taxes to balance pricing for domestic customers while maintaining safety standards.

Promote Quality Mindset: Foster awareness in companies to improve manufacturing quality and aim for global standards.

Question for practice:

Discuss how poor-quality products have affected India’s manufacturing reputation and what measures can be taken to address this issue?