With global companies adapting their manufacturing and supply chain strategies as part of Cavid 19, India has a unique opportunity to become a global manufacturing hub and can play a significant role in reshaping supply chains according to a new study by the World Economic Forum (WEF).
In the study “Shifting Global Value Chains: The India Opportunity”, the WEF says that India could contribute more than 500 billion dollars in annual economic impact to the global economy by 2030.
Noting that the country has three primary assets to capitalize on this unique opportunity, the white paper says they are
- potential for significant domestic demand
- Indian Government’s drive to encourage manufacturing
- a distinct demographic edge, including considerable proportion of young workforce
The Forum writes that these factors would position India for a larger role in GVCs. It says that a thriving manufacturing Sector would also impart additional benefits and help the country deliver on the imperatives to create economic opportunities for nearly 100 million people likely to enter its workforce in the coming decade, to distribute wealth more equitably and to contain its burgeoning trade deficit.
The white paper also maintains that increasing the share of global manufacturing could be a key foundation for socio-economic success in the coming decade. For achieving this, the WEF puts forth five possible transformation pathways’
- From the national scale to the global scale; Committing to coordinated action by the private sector and Government of India to help build domestic manufacturing companies that can compete globally
- From cost arbitrage to capability advantage; Looking beyond cost to build competitive muscle through workforce skilling innovation quality and sustainability
- From measured to accelerated integration in global value chains; Increasing the pace of integration by reducing trade barriers and enabling competitive global market access for Indian manufacturers
- From financial incentives to agile execution on the ground; Building on the emerging success of the Production Linked Incentive scheme to focus on reducing the cost of compliance and establishing manufacturing capacities faster
- From infrastructure inputs to infrastructure outcomes; Focusing infrastructure development on cost savings, speed and flexibility
Head of Shaping the Future of Advanced Manufacturing and Production World Economie Forum Francisco Betti says that business and government leaders need to work together to understand ongoing disruptions and opportunities to make India a global manufacturing hub. The country should also develop new strategies and approaches aimed at generating greater economic and social value, he added.
The study points out that the 500 billion dollar estimate in annual economic impact is based on India’s real GDP of 2.869 trillion dollar in 2019, a GDP forecast for 2030 of between 8 and 9 trillion dollar despite the pandemic, which translates into a growth rate of approximately ten per cent and the share of India’s manufacturing sector to GDP of around 14.16 per cent.
This White Paper aims to serve as an initial framework for deliberation and action in the manufacturing ecosystem. The World Economic Forum, in collaboration with Kearney will continue to develop this agenda by working closely with the manufacturing community in India to generate new insights, help inform discussions and strategy decisions, facilitate new partnerships, and provide a platform for exchanges with the global community.