Covid-19 Pandemic: Can India Overtake China as the New Global Manufacturing Hub?


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Can India Overtakes China

The 2020 coronavirus pandemic has led several industries across the world to realize the dangers of overly relying on any one country for all their manufacturing needs. Almost a decade ago in 2010, China emerged as the largest manufacturing destination in the world, overtaking the United States. However, it was way back in the 1980s that China and its economy began to crystallize into what it is today – the world’s factory.

The rise of China began when it started producing low-end products at highly competitive price points. From these humble origins, China soon became a dazzling manufacturing hub that produced every product under the sun, including electronic gadgets and pharmaceutical drugs. Large companies from all the developed nations set up manufacturing divisions in the country. In 2018, China alone accounted for about 28 percent of the world’s manufacturing output.

The Impact of the Coronavirus Pandemic

The Covid-19 pandemic, which originated in the Chinese city of Wuhan, has begun to cause a major shift in this status-quo. The Chinese government mandated a lockdown in order to contain the spread of the virus, which in turn led to a major supply shock in the rest of the world. Many companies found their stocks diminishing rapidly, with no way to replenish their empty warehouses.

This has led major businesses to consider finding new manufacturing centers in order to minimize risk and diversify their supply chains in the future. As the pandemic continues, more and more industries are realizing the drawbacks of becoming heavily dependent on a single nation for all their manufacturing needs. They are, thus, looking for new geographic areas to expand their facilities and create new supply chains.

An Opportunity for India

If India can create a business-friendly manufacturing environment to attract these global companies seeking an alternative to China, then it can reap rich rewards while making optimum use of the opportunity presented by the paradigm shift. Offering lucrative deals and tax concessions to major players in the manufacturing space can be one way of making the most of this opportunity.

If sufficient manufacturing units are set up in India, it will lead to employment generation, FDI enhancement, and GDP growth – all things that the country is in dire need of after the economic blow of the pandemic-induced lockdown.

Also Read: 6 Unusual Phenomena that Baffled Indians during Coronavirus Pandemic

Reports suggest that many global companies have already initiated discussions with Indian authorities about business opportunities in the country. Some of the industries seeking to relocate their manufacturing operations to India include medical devices, electronics, textiles, and pharmaceuticals. If India can capitalize on this opportunity, the economic rewards will be extensive and long-lasting.

Building a Sustainable Manufacturing Ecosystem

The prolonged tariff war between the US and China had already prompted many businesses to consider moving some of their manufacturing centers away from China. The Covid-19 pandemic, therefore, has only hastened a process that was already underway, with many companies rushing to diversify their supply chains and find manufacturing hubs away from China.

To take advantage of these factors, India must act proactively to create a favorable manufacturing ecosystem in the country and incentivize innovation and skill-development among the workforce. Reliable power and infrastructure, efficient and trained manpower, and laws for intellectual property protection are some of the things that need to be in place before India can present itself as a viable replacement for its larger neighbor.

World-class infrastructure, governmental support, low labor costs, and extensive logistical support were some of the elements that prompted China’s rise to manufacturing prominence 30 years ago. These are exactly the things that are needed in India today. A favorable ecosystem, created with a cluster of skilled labor, buyers, sellers, and up-to-date technology can help India reach the heights that many of its East Asian neighbors have already achieved.

The Importance of Skill Development

India has the population to provide sufficient manpower to most industries, if the proper training can be disseminated. The specialized skills needed to manufacture products such as electronics and drugs make quality education and training a requirement among members of the workforce. Innovation in the domains of technology, education, and knowledge transfer is essential if the country is to make the dream of manufacturing growth a reality.

Information technology, automation, and robotics are now being used by manufacturers to make the process of production more efficient and cost-effective. Therefore, India needs to train workers who can understand and operate the complex machinery and equipment that are used in modern factories. The manufacturing sector can then be leveraged to provide jobs and livelihoods to millions of young Indians.

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Nupur Chowdhury
Nupur Chowdhury is a writer, blogger, novelist, and professional web content creator. In her free time, she can be found reading pulp fiction, binging on TV shows, or playing with her cat – sometimes all three at once. You can check out her blog for all the awesome updates! You can also connect with Nupur on Twitter and Facebook.