India yearns to be manufacturing dynamo
January 24, 2023 - As China’s rivalry with the U.S. grows, and economic growth slows, India could become the next global manufacturing powerhouse.
The widening rift between the United States and China is providing India with a golden opportunity to jump into the game and possibly emerge as a new manufacturing dynamo.
India has tried and failed to do this in the past, but there is a key difference this time – New Delhi is putting its money where its mouth is by spending nearly 20% of its budget this fiscal year on capital investments and infrastructure that could attract manufacturers.
Since Prime Minister Narendra Modi’s election win in 2014, aided by his “Make in India” campaign, India’s highway network has become 50% longer and domestic air passengers have roughly doubled.
Traditionally, gems, jewellery, textiles and wood were among India’s key exports, but now two thirds of the country’s exports consist of manufactured goods, including engineered items, chemicals and pharmaceuticals.
United States Treasury Secretary, Janet Yellen, highlights that U.S. companies, including Microsoft and Apple, have been expanding in India – with the latter’s outbound shipments of India-made iPhones doubling in value to $2.5bn from April to December 2022.
India’s exports have surged from $300 billion a year (2016-2020) to $422bn per year, and according to McKinsey, has the potential to increase its gross value added (GVA) metric by $320bn by 2027.