As per a recent ToI report, a contract manufacturer for tech giant Apple is shifting six production lines to India. The vendor is also looking to export around $5 billion worth of iPhones from India. The relocation from China is an effort to derisk manufacturing bases by diversifying supply chains. Aug 2, 2020
Around 200 US companies looking to shift manufacturing base from China to India, says USISPF
Japan has announced an initiative to set up a fund of $2.2 billion to encourage companies to move out of China with no compulsion to come to Japan.
What does these 3 instances herald for the Indian manufacturing sector?
The Chinese production powerhouse model thrived on specialised supply chains clusters making production quicker, less expensive and more efficient.
Today India has much larger workforce than other asian nations. ( Vietnam, with less than one-tenth 100-million population is small compared to China’s 1.3 billion).
We have global standard industrial clustered production centres like Coimbatore, bangalore,Chennai,gurgoan,delhi, pune,Hyderabad. The product ranges from pumps, castings, machining,automobile components, high tech engineering and bulk drugs. Our value engineering combine with advanced logistics for local or export markets at competitive costs. Compared to china.
While for most companies, an immediate full relocation outside china may not be feasible. But the China +1 strategy seems to be a practical solution as a solution to derisk manufacturing at a single location, stave off US tarrifs for the American, Japanese and European markets. Now, as operations are relocated and become more fragmented, they are threatening to raise costs, stretch delivery times and expose them to a unpredictable supply chain.
As a result, a new global manufacturing landscape is starting to take shape. India offers automation as another advantage for high value additive manufacturing like defence and energy which need highly skilled technical workforce to match. Unlike Vietnam, India offers skilled, productive workforce that can add high value, not mere packing and shipment. Also the electronics components can come from Japan and Taiwan. Our established large reputed foundries and automated manufacturing facilities already meet global certified quality-controls. So bigger parts for customised plant and equipment can be deleivered on the back of our technological and design capabilities.
Logistics is the new game changer here. Whether it’s to bring in raw materials or export a finished product. India’s logistics infra and 3PL ecosystem is world standard. The improved transport corridors network of roads offer competitive advantages for quick transit between the factory and the pier. The investments in railway, highways, ports and airports development is now paying off to help grow India’s manufacturing economy. In fact, it’s expected to cut back transportation time and costs by 20%. In 2016, China ranked 27th worldwide, compared to India at 35th.
But India needs to move extremely fast on its regulatory framework and ease of doing business. An area where skeptism still exists. China has real resons to keep india occupied on its northern borders. Fortunately the majority of nations favour india,have suffered through an economic disaster due to sly and irresponsible china’s wuhan virus.