We have a vision of becoming USD 5 trillion economy. The success of translating vision into reality largely depends on our ability to transform India as a Global manufacturing hub. Most people argue that timing is suitable, due to ongoing geopolitical and trade rift between US and China, which may eventually lead to shift in Global Supply Chains from China to other countries.
China’s Emergence as a Global Manufacturing Hub, emanates from its Geopolitical Advantages
In our discourses, we miss to contemplate one of the key factors which led the emergence of China as a global manufacturing hub. China enjoyed the most favored nation status with the US, arising from Mao-Nixon accord of 1972 which subsequently helped China in facilitating entry into IMF & the World Bank. This move was purely Geopolitical, arising from strategic policy direction within the United States to contain China from falling into the Soviet block and these measures were instituted as a means to incentivize China. US Government further facilitated integration of China in WTO, for keeping a check on the behavior of Communist Government and promoting democracy through free trade.
Economies of scale were achieved due to technology transfer by US and control on input cost (including labour). Low labour cost for decades was possible, only due to Communist nature of the regime. All these factors resulted into a permanent Competitive Edge. From the hindsight, we can estimate that the assumption for incentivizing china has proving costly for the US. China has become manufacturing as well economic powerhouse, which has far exceeded the narrow view of the policy makers in United States
India Needs to Play Game Differently – Game starts with Technology
India lacks comparative Geopolitical advantage; which China had enjoyed. Learning from the Chinese experience, US Policy maker would now not let any Asian economy to grow too big, which may pose any potential challenge to US, in the future. Lack of Geopolitical advantage, necessitates expansion of India’s manufacturing base on the technological competency and merit of its Industries. Further If India wants to move its manufacturing chain towards more advanced product and not just contract manufacturing, it may need to focus on adopting world-class cutting-edge technology and patents. Technological advancement will promote and open the global market for Indian designed and patented products, enable Global contract manufacturing hub, and will also attract Global Corporations for setting up their manufacturing base in India.
This is the time to focus inward for creating ecosystem of technology and incentivizing the Indian firm for adoption of technology. 3D and 4D printings are acquiring the center stage of cutting-edge manufacturing technologies. Scientist and manufacturer are finding newer ways for solving complex production issues using the 3D Printing technology. It has application that spans across all the industries and product types. To name a few, 3D printings is revolutionizing Automotive Industry, Apparel, Food, Pharma, Housing, bone tissue engineering Defense etc. 3D Printing can support the mass scale production of complicated design at a cheaper cost. Its usage in defense will help India in advancing its defense capabilities and will create Global market for Indian Defense Products. The Production Linked Incentive Scheme and measures undertaken for promoting Ease of Doing Business (EODB) are great steps in making India a factory for the World. However, it’s the time for Indian policy maker needs to think for boosting technological ecosystem and wider adoption of advance manufacturing technologies by the Indian firms, for developing a long-term competitive niche.