When the idea of first outsourcing came up, India was considered to be a third world country with limited economic potential but the scenario changed completely two decades later. India becomes the ultimate destination for outsourcing software services as well as the knowledge process. Now India is looking towards becoming a global manufacturing hub. The market size for manufacturing grew at an average of 8% year-to-year. Automobile, mobile brands already established their manufacturing bases in India. The manufacturing industry in India is still growing.
Impact of COVID-19 Outbreak
The outbreak of coronavirus which originated in Wuhan china, changed the global economy affecting hundreds of thousands of people.it continues to spread rapidly around the world but the burden is asymmetrically distributed. The virus has put many businesses and lawmakers on notice to move their supply chains out of China. Many of them are into a search to source materials or to establish manufacturing facilities outside China. The survey released by the National Association of Manufacturers stated that Just over half of all manufacturers are planning changes to their supply chains in the coming months as a result of the pandemic and also planning to find alternative suppliers
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India on the Verge of Becoming Preferred Manufacturing Hub Post-Pandemic
Though the trend of manufacturers rethinking China as a source began well before the pandemic, but sudden outbreak pushed companies to diversify their business. The companies who are planning to de-risk their china -based manufacturing is considering India as the manufacturing destination as India’s foreign direct investment doubled in 2019. From food, electronics to pharmaceuticals, India has a scale advantage.
India, a country of 1.3 billion people, has started to become affluent in recent years. For Abbott pharmaceuticals, India became its third-largest market in the world. Cummins witnessed a 15% growth in its operations over a decade that it has been in the nation. Multinationals want to sell their products o Indian customers as the disposable income of the people in India increased over time. And to cater to the growing needs of the consumers over here, companies started manufacturing in India which turned out to be the most cost-effective strategy. Recently, the government of India eased the regulations in banking space. The interest of the foreign investors renewed, because of digital payments and banking, especially PE.
Though China’s humongous manufacturing ecosystem and interlinked supply chains will still be there, even after the pandemic, India has the perfect chance to grab the biggest opportunity. As the country is dealing with recession and deflation, there is no threat of inflation currently. Stimulus by the government and Reserve Bank of India to Indian enterprises will further amplify India’s prospect of becoming the next manufacturing hub.
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