Since 1990s, India has maintained its position as the back office of the world and china has maintained its position as the manufacturing powerhouse of the world. To maintain its position, China has taken huge strides in the field of manufacturing. In order to replace china in manufacturing, India has to take various steps, utilizing its strengths and exploiting weaknesses of China.
China’s currency, though controlled by the government, provides stability to the exporters. India cannot go back to a fixed exchange rate regime but it can develop the market of currency hedging in order to boost confidence of exporters. Futures, forwards, swaps and options provide good hedging opportunities. A deep market of these products will automatically boost exports and thus manufacturing in India.
India is second most populous country after China. The youth of India need to be trained and prepared in a manner that they prove an asset to manufacturing industries. Various schemes like PMEGP,NRLM,MNREGA must be revised to include trainings programs for high quality skill development. A skilled force can act in multiple dimensions to make India the manufacturing powerhouse of the world.
The laws for entry and exit of companies in India are still archaic. China provides easy entry and exit options, which are attractive for foreign companies & entrepreneurs. If India wants to replace China in manufacturing, it needs to create better laws and regulations for the benefit of global entrepreneurs. Although India has improved in Ease of doing business index from 130+ to 63rd, there is a long way to go before India can claim to be a replacement of Chin Infrastructure is the backbone of Manufacturing. Ports, Roads, waterways, railway network, good quality electricity, Industrial locations etc are areas where India needs to grow fast in order to compete with China. The Infrastructure we presently provide is still way behind China’s.
The last and most important step is to use our strengths. We don’t have to copy china in order to replace it as the global manufacturing powerhouse. India’s strength lies in Solar energy, handicrafts, MSMEs, textiles, a diverse climate and local, small scale manufacturing. Companies like Fabindia have become global brands by utilizing our strength i.e. local manufacturing in India’s rural areas. We need to scale on our strengths. Many production linked incentive schemes are running to boost the same but the focus is still on copying global methods and not on creating our own.
“Vocal for local” like programmes are meant to re-invigorate a sense of pride among Indians. If we, as a nation can use this feeling of pride positively in every area of manufacturing, we can easily boost a new market of manufacturing and replace china in high quality products as well as mass scale products. Our pride lies in local manufacturing, a capable youth, ability to create unique and high quality products and a diverse climate that can support a variety of productions