Can India Replace China to Become the Manufacturing Hub for the World?

The coronavirus has caused economic disasters all around the world resulting in unemployment, inflation, and massive losses to several companies.

India too has suffered heavy losses due to the pandemic but we may have gained something too. 

China has been the undisputed manufacturing king for several years due to state-of-the-art infrastructure, cheap and skillful workforce, and an impeccably well-connected supply chain among various things. With the onset of Covid-19 and complete lockdowns taking place in China, companies suffered from production and supply shortages. Companies have realized that they cannot be dependent on a single country for all their manufacturing operations and hence, are looking to set up manufacturing units in other countries. 

This is an opportunity for India to attract foreign direct investments (FDI) and bring companies to manufacture here. India must grasp this opportunity with both hands and take lessons from China’s past on how they achieved this level of success. In 2018, China manufactured 28% of the global manufacturing output, while India was way behind only manufacturing about 3% (Richter, 2020). While there are a few benefits that India already possesses such as a large young workforce and low wages, there are many challenges India will have to endure in order to become the manufacturing hub.

These challenges include but are not limited to: 

1. Competition from other countries
Other developing countries such as Vietnam, Cambodia, Bangladesh, South Korea, Indonesia, Thailand, and Singapore are strong competitors against India that may have a chance to be the next manufacturing hub. Countries like Vietnam and Cambodia have laws that support international investors by providing tax cuts and exemptions. Singapore and South Korea have advanced manufacturing technology making them attractive spots as well. 

2. Training the Indian workforce 
India’s biggest asset is its young workforce, and in order to utilize this asset, the workforce needs to be trained in various skills. International companies often want workforces that can further innovation, be highly skilled in multiple areas, and are easy to do business with. India has been successful in acquiring the international service market but there needs to be an investment to train and educate this large workforce.
3. Infrastructure 
China’s biggest point of attraction is its well-integrated infrastructure that not only produces high-quality products but makes the supply chain process cheaper and more efficient. The Indian infrastructure is nowhere close to its neighbor, but the government needs to invest in the research and development of building these infrastructures. Transportation and supply chain is the key area of focus.

4. Better reforms and ease of doing business
Initiatives such as Make in India, Atmanirbhar Bharat, and several incentives for emerging technologies such as Drones, Additive Manufacturing or 3D Printing, and Electric Vehicles, Space Programmes are promoting manufacturing and Make in India activities. 

India has the opportunity to be a success, the trade war between USA and China and the current pandemic situation are definitely going to motivate companies to look for alternatives for manufacturing. There is also an equal need in improving the skill set of our large young workforce. Training them in areas such as Product Design, Engineering Fundamentals, and Manufacturing Technologies is required for our success. India has the potential, they just need to act fast and smartly in order to maximize this chance. 

Richter, F. (2020, February 25). These are the top 10 manufacturing countries in the world. Retrieved July 27, 2020, from