With its cost-competitive edge at the forefront, India has recently leapt over the United States (US) to become the second most desirable manufacturing destination across the globe. This significant development is reflected in the Global Manufacturing Risk Index 2021. In the previous year’s report, the US held the second position while India was placed third.
Understanding the Global Manufacturing Risk Index
The Global Manufacturing Risk Index evaluates 47 countries situated in Europe, the Americas, and the Asia-Pacific (APAC) region to decide which ones offer the most advantages for global manufacturing. The index rankings are derived from four crucial parameters: a country’s capability to restart manufacturing, its business environment (including talent/labour availability and market access), operational costs, and risks of political, economic, and environmental nature. Cushman & Wakefield, a property consultant firm based in the US, releases this index.
In 2021, despite the shifts in other positions, China has maintained its lead in the Global Manufacturing Risk Index. While the US has slid down to third position, India has stepped up to claim the second spot. This upgraded ranking indicates an increasing trend among manufacturers to choose India as their preferred manufacturing hub over several countries, including the US and those in the APAC region.
Driving Factors Behind India’s Improved Ranking
Several factors contribute to India’s escalated standing in the Global Manufacturing Risk Index. The major cause is India’s favourable operating conditions and cost competitiveness. The country’s vast population provides a young, dynamic workforce teeming with innovative capabilities, acting as a significant driving force for the manufacturing sector.
Another contributing factor to India’s improved standing is the relocation of plants from China to other parts of Asia, due to an already established base in important sectors like pharmaceuticals, chemicals, and engineering. These areas continue to remain at the heart of the ongoing trade tensions between the US and China.
Recent Initiatives to Boost the Manufacturing Sector in India
The Indian government has launched several initiatives to strengthen the country’s manufacturing sector, thereby enhancing its appeal as a global manufacturing destination. Among these is the National Infrastructure Pipeline (NIP), aimed at increasing infrastructure investments across various sectors.
The ‘Make in India’ initiative encourages companies to manufacture their products in India. Similarly, ‘Skill India’ aims to train over 40 crore people in different skills by 2022. The Credit Guarantee Scheme provides financial assistance for Micro and Small Enterprises.
Moreover, the Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE) has been initiated to promote innovation and rural entrepreneurship. The Prime Minister’s Employment Generation Programme (PMEGP) is another important scheme that aims at generating employment opportunities through self-employment ventures. Additionally, several industrial corridors are being developed for providing an impetus to industrial development.
