Covid-19 represents an opportunity for manufacturing in India
As markets around the globe look to structurally alter their supply chains, India could swoop in to grab a key position as a manufacturer in the medium term, according to the CEO of Deloitte India.
According N Venkatram, who spoke to the Economic Times, the business environment should allow the government and other experts to manage the immediate containment and recovery measures in the short term. Businesses, meanwhile, should start developing plans for the medium to long term, over the next one or two years.
China is a major global trade hub, with its exports at well over $2 trillion, and Covid-19 related disruptions in the country are affecting supply chains across the globe. Provided that India develops its manufacturing and export capabilities over the next year, it could well gain a $1 trillion piece of this pie.
Venkatram points out how markets across the globe are looking to substitute key aspects of their supply chains, and the Indian market could well capitalise on this scenario. For this, India would have to accelerate its efforts to bolster its manufacturing capabilities – a weak spot for India’s economy in recent decades but a tremendous opportunity nonetheless.
Government Initiatives such as Make in India have been aimed at boosting manufacturing capabilities, although experts predict that these initiatives will take a number of years to propel India to a leading position on the international manufacturing stage.
In the eyes of the Deloitte chief executive, this is where the focus should lie in the next few months. “What the government needs to do immediately is to bring in the right policies that will move manufacturing to India. There is a once in a lifetime opportunity for us to look in terms of import substitution in terms of looking at what China is contributing to global exports and how much of that market could be brought to India,” he said.
“The general focus would always be to look at the domestic market and what we need to do for the domestic market – build capability, fix the supply chain logistics etc. and then look in terms of what can be exported that would bring us the mega business. Certain sectors that you focus on would also as part of the supply chain bring back the micro, small and medium enterprises into the system,” he added.
In the short term, however, Venkatram urges that the focus remains on containing the crisis, and protecting the most vulnerable segments in the country.
For future growth, Venkatram stresses that India should refrain from using the same growth metrics as developed countries, as it has a substantial population of underprivileged communities to take care of as part of the growth story. Nevertheless, growing the domestic manufacturing market will create jobs and build self-reliance, which will be far-reaching in its impact.
