Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
Supply Chain Activities constitute multi-modal transportation, customs clearance, and warehousing activities in one or more locations in the entire network. Supply chain activities may be local referring to within the country or regional meaning within a continent or region and global which is essentially intercontinental. Global operations are the order of the day as businesses […]
Over the last five decades, Decision Support Systems (DSS) have come a long way. They have transformed from automated systems for simplifying calculations into highly sophisticated arrangements combining hardware, software and human intelligence for handling large volumes of data, studying different outcomes, indentifying new opportunities and implementing strategies effectively. In fact, decision support systems seem […]
Are Indian Start-ups and eCommerce Firms Living in Fantasy Land? It is a well known fact that India is a favourite destination for yield hungry investors and angel investors keen to fund start-ups and eCommerce firms in the hope that they would be able to garner significant profits at a later stage. Indeed, India is […]
What is meant by the Shock of Gray and its Implications? The Shock of Gray is a term used to describe the ageing of the populations in the West with the retirement of the Baby Boomer generation and the resultant “graying” of the western societies. This phenomenon has several economic implications mainly related to the […]
The United States has one of the largest trade deficits in the world. Many critics have been of the opinion that it is only because of the existence of fiat currency that such huge imbalances are possible. These critics believe that if the world were to return to a gold standard, these imbalances would resolve […]
A couple of decades ago, India was considered to be a third world country with limited economic potential.
When the idea of outsourcing first came up, most executives in the United States thought that Central American nations or Ireland would prove to be a better fit. However, two decades later, India is the ultimate destination for outsourcing software services as well as knowledge processes.
After having achieved dominance in the service sector, India is now looking towards becoming a global manufacturing hub. This intention has been made clear by the “Make in India” initiative that has been launched by Prime Minister Modi. As a part of this initiative, special concessions have been announced for multinational companies to create manufacturing bases in India. This has definitely drawn the attention of many American companies that are looking to reduce the dependence of their supply chain on China.
It would be inappropriate to say that within a short span of time India will compete with the likes of Japan, Germany, and China. However, the process for transforming the manufacturing sector has already begun.
In this article, we will have a closer look at the reason why India is poised to grow into a manufacturing hub as well some of the problems that it is likely to face during the journey.
Companies like Abbott pharmaceuticals have seen India become their third largest market in the world! This is also the case with other companies like Cummins Engineering which has seen a 15% growth in its operations for the past ten years that it has been in the nation.
As disposable income grows, many multinationals want to sell their products to the Indian consumer. The most cost-effective way to do so is to start manufacturing in India. As a result, it is likely that the increased consumption will drive the growth of manufacturing operations in India.
Companies would not want to build their facilities unless they are absolutely sure that their investment is secure. India has the upper hand on its rivals when it comes to security and stability.
India is the most politically secure nation in the vicinity. Pakistan and Bangladesh are facing a problem with terrorism. On the other hand, China is known for being an oppressive regime. India is the most convenient option for corporations to invest their money in.
One of the most obvious problems with the manufacturing sector in India is that the infrastructure is not that well developed. As a result, the cost of manufacturing is very high as compared to global leaders like China. India has started working on that issue with great intensity. It is likely that within a few years, India will also have infrastructure as China does.
Some of the other problems with the manufacturing sector in India are as follows:
The law in India mandates that big companies can only build their facilities on land which has been acquired by the government. Also, since there is a huge black market in India, the market value of a property and its book value tend to be very different. This leads to exploitation of people during the land acquisition process.
The labor laws are very strict in India. Multinationals often find it difficult to comply with them laws. As a result, they end us leasing their workforce from temping agencies. However, temping also has limitations and in the absence of proper labor laws companies are unable to move their research departments to India.
To sum it up, it is likely that India’s manufacturing sector will grow by leaps and bounds. There are some challenges that will come up. However, they are not so severe that India Inc. cannot face them.
Your email address will not be published. Required fields are marked *