India’s Rise as the new global manufacturing hub

Synopsis: India’s recent achievements have positioned it as an alternative global manufacturing hub to China at the global level.

Background

• Democratic countries consider a rising China, with its authoritarian one-party system, as a challenge to the democratic order.
• This provided the strategic case for the formation of Quadrilateral Security dialogue. It envisioned to develop a more sustainable model of governance.
• But the QUAD formed in 2007 was not able to progress further. The dependence on China’s factories kept the grouping of democracies from emerging.
• But two recent developments have completely changed the dynamic.
  • • One, Australia returning to the Malabar Naval exercises in 2020, after 13 years.
    • Two, the first summit-level meet of the Quad is scheduled to take place in March.
• The rise in India’s manufacturing ability seen as an alternative global manufacturing hub to China. This has been one of the reasons for the above-mentioned developments.

What are the recent promising developments showcasing India as a new global manufacturing hub?

1. First, the success in manufacturing PPE kits at a large scale. Initially, after the pandemic, the world was dependent on china to secure supplies of PPE kits. But, India’s ability to produce on a mass scale at a much cheaper price provided an alternative to the other countries. A similar case was with ventilators and other essential supplies, such as the drug HCQ.
2. Second, the success of ‘Vaccine Maitri’ diplomacy. India exported millions of vaccines to other countries in need and all through domestically-manufactured vaccines. For example, Canada Pakistan, Caribbean Islands, Brazil and many more.
3. Third, the growing success of India’s private industry. For example, the manufacturing capacity of Hindustan Syringes & Medical Devices was almost 6,000 syringes a minute.
4. Fourth, India’s success in precision high-end manufacturing. India’s PLI scheme was able to attract 22 top companies, including Apple and Samsung mobile phones in the electronics’ manufacturing segment. It is expected that, over the next five years, a manufacturing capacity of over $150 billion and exports of $100 billion will be tied up through the PLI scheme.
5. Fifth, the success of India’s fourth-generation fighter jet Programme. The government has decided to procure 83 indigenously-developed Light Combat Aircraft (LCA) Tejas for the Indian Air Force. Very few countries have such ability to indigenously manufacture high-tech fighter planes.
6. Sixth, simultaneously India’s Economic policy reforms have made India an attractive manufacturing destination. For example,
   • • India has the lowest tax rate anywhere in the world. (15 per cent for new manufacturing units).
     • FDI norms have been further relaxed to allow for automatic approval processes in some sectors even up to 100 per cent.
     • Privatisation of PSUs to bring more efficiency and managerial capacity.
     • Labour laws have been reformed to ease compliance burdens.
     • Abolition of Rent-seeking behaviour by making the taxation procedure faceless.
7. Apart from this, effective bankruptcy laws, low-interest rates, strong digital infrastructure makes India a more attractive destination for manufacturing.

All the benefits that China provided – quality, scale, speed, skilled manpower and a huge domestic market are now operative in India without the drawbacks of the Chinese model. So, India have positioned itself well as a new global manufacturing hub.

Source: Indian Express