By Gyanesh Chaudhary
The COVID-19 pandemic has dealt a major blow to the global manufacturing industry by reducing demand, supply, and challenging labor availability. In such a scenario, where the whole world is still affected by the devastation caused by the COVID-19 epidemic, it is up to countries like India to stand upright and take positive action that will inspire the world to stand up for to use a better and more sustainable future. To achieve this goal, India must focus on building its manufacturing scale as its importance or lack of it has exposed a fatal flaw for emerging countries like India in the current epidemic and subsequent tensions with China (the global manufacturing hub and our largest) Supplier).
The current scenario
The COVID-19 pandemic is suspected of costing India nearly Rs 10 billion in lost sales due to slowing demand and falling production. And recent tensions with China will only add cost costs and create a significant gap in product supply. Why? Because imports from China are significantly higher than exports to the country.
Hence, it is easy to understand that this trade deficit with China is one of the world’s largest trade deficits between two nations and also makes a significant contribution to India’s overall trade deficit. In a scenario where India’s economy is suspected of shrinking 5% in the current fiscal year (S&P Global Ratings), the country urgently needs to reorient its policies to support manufacturing and quickly restore the nation.
Manufacturing accounts for nearly 20% of India’s GDP and is key to creating jobs, creating more investment, starting industrial growth, promoting R&D improvement, supporting the country’s growth needs, creating Export capacities and generate income. This self-sustaining circle can bring about positive changes in India, as it has done for China, and transform it into the “manufacturing giant we know”.
The importance of control
There is a real risk that priority (manufacturing) industries will be centralized overseas. The impact is becoming more noticeable each year as trade tensions with China, the US, etc. rob India of its ability and needs to grow. China is currently India’s largest supplier, accounting for ~ 13% of the country’s imports. And the recent disruptions in China have created uncertainties in various industries, such as the solar industry, that can potentially lead the country to growth.
The need of the hour is to control the supply chain and manufacturing to maintain product availability, maintain production costs, increase demand and create jobs (manufacturing employs ~ 25% of India’s workforce). The Indian government recognized the importance of scaling the manufacturing industry and launched initiatives such as Make in India to build a manufacturing power plant. And as we go through the crises highlighting the importance of manufacturing in restoring India, initiatives need to be enforced that can capitalize on the opportunities offered by investing in manufacturing. The Confederation of All Indian Traders (CAIT) has already published a list of 500 categories of products imported from China that can be exchanged for goods made in India. It is indeed a great way to reduce our import dependency and take advantage of in-country production size.
India’s manufacturing economy is projected to hit $ 1 trillion by 2025 for very good reasons. To do this, however, the country must concentrate on manufacturing. The availability of better and more flexible funding, the inclusion of better technology, the availability of skilled labor, improving efficiency and reducing production costs can make a big difference in terms of growth for India.
However, the reversal of the trend (trend of imports) depends on the fact that costs are competitive when manufacturing policies are favorable, investments are made and taxes and duties on manufacturing are reduced.
India needs to become independent in manufacturing (AatmaNirbhar) to see real growth in the socio-economic landscape. The country has already done this, for example we can talk about India’s growth, from China’s import dependency for aluminum coils and sheets to meeting demand and even exporting through domestic production. We must also focus on the “Vocal for Local” initiative launched by our Hon’ble Prime Minister Shri Narendra Modi. This is in line with the need to promote and raise awareness of domestic brands and focus on their quality in order to make them globally competitive. With the right investments in priority industries and advertising campaigns via media platforms, domestic manufacturing can put up the necessary leg up.
The steel, fertilizers, cement, refined products and energy sectors in India have seen incredible growth as new reforms and policies have been implemented. However, if we are to choose the best choice for manufacturing investment, we should focus on the energy industry, which is designed to help India become self-sufficient on energy, which has a direct impact on the economy.
[The author is the Managing Director, Vikram Solar Limited]
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