COVID-19 impact | Things that need to change for India to kickstart manufacturing

By Nitin Mohan

The value of the manufacturing sector in reviving the fortunes of the economy is well understood by all. The government has also constantly emphasised on increasing the progress of the manufacturing sector for healthy economic growth.

'Make in India', launched in 2014 was also a step taken by the government to bolster domestic manufacturing of goods and to achieve 25 percent GDP share and offer 100 million jobs in the sector by 2022. However, as an unintended consequence of the global pandemic, these plans have come to a grinding halt and India's manufacturing sector is now at a crossroads.

The virus has come as a heavy blow to the already struggling economy and we need to devise strong strategies for the future to meet the fast-changing global dynamics. Despite this, the current situation has the potential to pave India’s much-anticipated way into the manufacturing sector. With the constantly changing global dynamics, conditions are ripe and if India plays its card right, then it can definitely reverse the fortune in the times to come. Though, the less discernible fact at the moment, is what can encourage the manufacturing industry to grow faster in the post-COVID-19 world.

India's expanding economy and robust middle class offer a lucrative market along with its abundant skilled and semi-skilled workforce add to the country’s ability to support bulk manufacturing, assembling, and processing. Not just this, India also possesses the power to optimize supply chains and minimise transportation costs because of its strategic position and connect with Asia-Pacific markets. Additionally, India's willingness to meet supplier obligations without weaponising the trade offers an opportunity of fair trade to the global business communities.

These advantages clearly indicate, India’s potential to re-invent itself as the global manufacturing powerhouse. But the question arises, how can Indian brands capitalise on these advantages and opportunities? Rolling out a phased strategy by the Indian government, prioritizing various immediate, medium, and long-term aspects can serve the purpose to a great extent.

Focus on the basics: It is important to attract the companies to shift their manufacturing base to India. This can be achieved with the introduction of impressive schemes that can motivate the firms to manufacture in India’s traditional manufacturing clusters. What can further boost this is the government’s effective communication network to convey easy availability of land, sector-specific regulationson ease of doing business, simplified labor norms, and other incentives aimed at bringing its manufacturing competitiveness on par with other competitive locations across the globe.

Invest on achievable targets: At the initial stages, India should focus primarily on winning major investment deals in the sectors where the economy has domestic supply chains. After all, climbing the ladder is easier when the foundation is strong. In such a scenario, one of the prominent targets will be the apparel sector which has a strong network of various small and medium-sized enterprises. Other potential targets can include mobile phones, pharmacy, and machinery. This step will set the momentum for attracting subsequent manufacturing investments in other sectors as well.

Infrastructural Development: India's infrastructure has also been one of the areas which require special attention to meet India's manufacturing demands and to boost our economic growth story. While on one hand, cheap labor costs and large work-force can entice prospects to India, it will be difficult to retain them for a longer period of time if India lags behind in improving its infrastructural developments. Therefore, a dedicated budget by the government to improve India's infrastructure, especially across identified geographical pockets that can smoothly facilitate the manufacturing of goods across verticals becomes the need of the hour.

Incentivise Production: In order to meet the objectives for faster growth of the manufacturing sector, the government can work on a framework that incentivises the production of new projects along with incentivising the expansion of existing facilities while continuing with the tax profits. The introduction of new schemes to support the importing of machinery will also help in the development of the manufacturing sector in India.

Implementation of smart technology: No doubt, India has strong geographical capabilities to support the manufacturing of all kinds of products including apparel, accessories, electrical appliances, and others. All domestic brands are putting in their best efforts to become adept at using smart technologies to improve the services at every level of manufacturing. Creation of a forum to connect the 'Startup' with existing businesses that will help in developing new-age ways of supporting manufacturing, reduce process time and create a single seamless supply chain funnel, can prove to be a beneficial step in this regard.

While the world has leapfrogged the adoption of digital technology in the last 75 days, this is also the opportunity to take a big leap on legacy manufacturing practices.

Strengthening of long-term commercial diplomacy: In addition to the above, the Indian government also needs to lay special emphasis on expanding India’s diplomatic strength. The government should permit the lateral entry of some of India's sectoral experts into the diplomatic force. India should have few commercial diplomats in advantageous locations to reinforce its position as the next big manufacturing hub.

Despite all these things coming in place, the question - 'Can India Make It?' will still persist for quite some time. While, it is non-viable to predict the future, especially given the uncertainty of the situation, it is truly a viable option to be optimistic. India possesses the power of coming out of a crisis situation much stronger than before and this can be clearly seen in history, for instance, during the Balance of Payments crisis.

This time, the government just needs to leverage the changing geopolitical tide to propel India’s manufacturing. With initiatives like 'Make in India' and 'Vocal for Local', we are following the right track. These initiatives will not only help India become a global manufacturing destination but will also open the doors to numerous employment opportunities and give rise to many new industries. It is time now to uphold our faith in the central and state governments and wait for future trends to unfold. A systematic and strategic approach will certainly lead towards India's economic growth which will further be fuelled by its flourishing manufacturing sector in the times to come.

(The author is founder and director, Blackberrys)