The unprecedented times of the COVID-19 pandemic has shaken up the entire world and India too has not been spared through the adverse impact of the same. However, even in such situations, India has emerged as a global manufacturing hub and effectively surpassed the United States to become the world’s second most desired manufacturing destination. This indicates the growing interest in India by manufacturers as a preferred manufacturing hub over other countries including the United States and the manufacturing giant nation, China. India’s ranking was reflected in Cushman & Wakefield’s 2021 Global Manufacturing Risk Index.
India: Desired Destination for Manufacturers
In regards to manufacturing, often compared to its Asian rival, India has a huge population, which means a younger workforce with innovative capabilities that has the potential to fuel the country’s manufacturing sector. The rise in the rank for India is ascribed to the country’s working conditions and competitiveness in terms of value. Further, India’s performance in meeting outsourcing requirements is also responsible for an annual increase in the rankings.
-Benefits of having a manufacturing set-up in India:
Manufacturing set-up requires favorable business conditions, policies along various intricate details, for business to thrive. As a manufacturing hub, India provides various advantages for companies worldwide. India has relatively cheap land and labor, ever-improving infrastructure, and policies that go in favor of a thriving business. Further, there is ample government support and India also has reduced corporate tax rates. Besides offering favorable conditions, India is also aggressively working to enhance its supply chain capacities, which in turn, will cater to foreign companies looking to shift from other neighboring countries to India. In addition, Ease of Doing Business in India has gained significant traction and India climbed 14 positions to stand at 63rd now.
Over the years, India has evolved from an agrarian to a service-based economy. Throughout the pandemic, Indian manufacturing has shown remarkable growth. Cushman & Wakefield’s Head of Perception & Evaluation, Asia Pacific, Dominic Brown, commented that the different markets also profited from increased demand for imported products such as microprocessors, laptop chips, and prescription medications.
Boosting India as a Manufacturing Destination
With the ambition to boost domestic manufacturing in the nation and turn India into a global manufacturing hub, earlier this year, the government introduced various financial incentives for companies to produce IT hardware. Apart from this, the government of India is actively bringing reforms to boost the Indian economy and some of the efforts taken include:
– Accounting as the lowest in Southeast Asia, India has reduced corporate tax from 30% to 25%.
– Government introduced initiatives like ‘Make in India’ and ‘Skill India’ that have achieved a feat in creating job opportunities in the manufacturing sector. Further, these initiatives have also enhanced skill development to create a large pool of skilled human resources.
Rules regarding land acquisition have been subsequently relaxed over the years
Income tax, GST, and other custom reliefs provided for favorable business conditions.
About global Manufacturing Risk Index:
Based on the most favorable locations for international manufacturing, Cushman & Wakefield’s Manufacturing Risk Index report ranks countries based on a range of factors including:
– Risk and cost factors
– Political and economic risk
– Market conditions and labor costs
The index ranks 47 countries across Europe, the Americas, and the Asia Pacific.