India emerges as second most attractive manufacturing hub globally, says report

India emerges as second most attractive manufacturing hub globally, says report

• By Staff Writer

India has emerged as the second most sought-after manufacturing destination across the world indicating the growing interest shown by manufacturers in India as a preferred manufacturing hub over other countries, including the U.S and those in the Asia-Pacific region, showed Cushman & Wakefield’s 2021 Global Manufacturing Risk Index.

The rising focus on India can be attributed to India’s operating conditions and cost competitiveness. Also, the country’s proven success in meeting outsourcing requirements has led to an increase in the ranking year on year.

This year, India and the US switched places--second and third---taking India one rank above the rankings released last year, when India stood at the third place.

India in its growth story transitioned from an agricultural economy to a services economy. The country nearly skipped the manufacturing leg of this transition. Yet on the back of cost and talent, India finds itself favorably placed in the global rankings. Indian manufacturing has also shown great resilience during and post the second wave of COVID-19. But to have greater investor confidence and unleash the Make In India agenda, we will have to address land and labor reforms and also upgrade infrastructure across sectors,” said Anshul Jain, Managing Director – India and South East Asia.

Asia Pacific’s largest manufacturing centers have rebounded strongly as economies across the globe have reopened and driven demand for key products.

Other markets also capitalized on heightened demand for key products such as microprocessors, computer chips, and pharmaceuticals. South Korea has benefited from the soaring value of semiconductors, stemming from strong demand and a global shortage of product with Information and Communication Technology (ICT) manufacturing up 16.8% year over year in January 2021,” said Dominic Brown, Head of Insight & Analysis, the Asia Pacific at Cushman & Wakefield.

However, according to Brown, apparel producers around the region continue to struggle with low levels of demand impacting markets such as India and Indonesia, which have also been managing significant second and third waves of the virus.

The index assesses the most advantageous locations for global manufacturing among 47 countries in Europe, the Americas, and the Asia Pacific. The rankings are determined based on four key parameters including the country’s capability to restart manufacturing, business environment including the availability of talent and labor, access to markets, operating costs, and the risks such as political, economic, and environmental.

The baseline ranking for top manufacturing destinations is determined on the basis of a country’s operating conditions and cost-effectiveness. The switch in the US and India’s ranking is attributed to the plant relocations from China to other parts of Asia due to an already established base in pharma, chemicals, and engineering sectors, that continue to be at the center of the US-China trade tensions.

Despite being amongst the top three countries in the baseline and cost scenario rankings, there is a long road for India to traverse when it comes to areas like managing the geopolitical risks involved in running the business and its ability to restart its manufacturing business after a devastating second wave of the COVID19 virus.