It has been discussed at length how India is at the edge of becoming the world’s next manufacturing hub. The Economic Survey 2022-23, in one of its observations, mentioned that India has a unique opportunity to become a global manufacturing hub this decade as foreign companies are adapting their manufacturing and supply chain strategies to build resilience.
The survey said there are a couple of major risks in the global market, following compounding crises from the US-China trade war, the Covid-19 pandemic, and the war in Ukraine. This made India a global choice for the next manufacturing hub.
However, Godrej & Boyce Chairman Jamshyd Naoroji Godrej thinks that India should address some issues first to iron out the challenges in the manufacturing sector.
“There is a poor realisation at different levels. Not just at the Centre or state level. It is at the local level and village level too. There is a very little realisation of how complex manufacturing is. It is not like a service industry, like software, where as long as you have a place for people to work and have well-qualified hands, they can sit anywhere and do it. Manufacturing requires highly efficient factories; there are a lot of interdependencies between suppliers and manufacturers. The supply chain has to work efficiently,” Godrej told BT TV’s Udayan Mukherjee during an exclusive interaction.
Talking about Vietnam’s model of manufacturing, Godrej said: “The reason why countries like Vietnam moved ahead of India was that they took care of the entire entry and operational part of the manufacturing along with the local bodies and the government. India has not done that yet. In Vietnam, when you have an industrial park, the park authorities actually take care of every type of clearance, and permission, that one needs. It is a literally one-stop shop. It is very efficient. India has still not understood the softer aspect of running a manufacturing hub, industrial park, and all. That is very crucial for efficiency.”
Vietnam is one of the leading manufacturing hubs when comes to tech and apparel. Some of the biggest brands like Nike, Adidas, and Samsung have their manufacturing units there.
Talking about bringing a change in the scene, Godrej said that there should be one body or council, which should be responsible for the entire functioning.
“The central, state, and local all bodies have to give up their powers and designate one authority, which will take care of all of this on their behalf. This should be done so that the industrial body is not running around to get permissions and all. This is the most crucial point about manufacturing. If we can fix this problem, there will be an explosion in the manufacturing sector,” Godrej said.
The Economic Survey 2022-23 stated that India's manufacturing sector accounts for about 15-16 per cent of the country's GDP and there is an aim to increase it to 25 per cent in the coming years.
The survey, which was tabled before the Union Budget 2023, highlighted that the three primary assets to capitalise on this unique opportunity are the potential for significant domestic demand, measures by the government to encourage manufacturing, and a distinct demographic edge.
It mentioned that to further enhance India's integration in the global value chain, 'Make in India 2.0' is now focusing on 27 sectors, which include 15 manufacturing and 12 service sectors and that include furniture, agri produce, textile, robotics, televisions and aluminium.
Watch the full interview
Also read: Former RBI Governor Raghuram Rajan, who foresaw 2008 crisis, expects more bank troubles