For an economy that’s raced past the $3 trillion mark, manufacturing accounting for only 17 percent of the GDP and representing only percent of the world’s output is an imbalance that needs to be corrected. The good news is that the Government spotted early that India is punching below its weight in manufacturing and has taken bold steps to correct the situation.
The Government recognises that manufacturing is the key to India’s sustained and sustainable economic development. It’s also how we can create the 10 mn jobs needed every year to absorb the human capital flowing into the employment market. Only manufacturing, which includes textile manufacturing companies, can provide such large-scale employment and enable the nation’s positive impact.
Significantly, the policy hasn’t been introduced in isolation – it is being complemented by significant strides in business ecosystem improvements, major infrastructure projects to ensure greater connectivity, logistics hubs and regional industrial ecosystems. In addition, there is a major revamp of bureaucratic procedures and a digital model of governance is being ushered in. Together, these changes make India the ideal manufacturing centre for global corporations.
This ties in nicely with our national ambitions too. By supporting value-added manufacturing, we can reduce dependence on imports and, to this end; incentives such as tax breaks and financial inducements have been put in place – especially for sunrise and labour-intensive sectors. So, India now has tax incentives on capital expenditure in many business areas and the corporate tax rate was reduced in 2019 to benefit manufacturing companies.
Industry has responded by embracing digitisation and integrating technologies to boost efficiency in the national quest for being self-reliant and sustainable. At our textile company, Welspun, for instance, we have embraced Industry 4.0 approach through smart factories, artificial intelligence, real-time monitoring and Blockchain technology. It’s no wonder manufacturing has emerged as a high-growth sector. India has several other strengths that are attractive for global players: a large pool of technically qualified professionals, readily available labour, wage competitiveness and a large domestic market. Among the other factors that make India an attractive manufacturing hub for multinational corporations are:
- Large consumer market: As disposable income grows so will the demand for international brands. In addition to textile manufacturing companies, other businesses looking to tap into the fast-growing Indian market can achieve huge savings by manufacturing in India
- Production-Linked Incentives: Schemes have come as a shot in the arm for established and new-age sectors. So, it’s not just textile manufacturing companies; sectors like automobiles, electronics and pharmaceuticals too will benefit. We also expect India to become a hot spot for electric vehicles and high-tech innovation in the coming years
- Ease of doing business: India has trade agreements with more than 50 countries. So, for foreign companies manufacturing in India, there is the advantage of getting to serve other markets too Welspun has believed in India from the start. And this commitment has powered us to become one of India’s fastest-growing conglomerates with a strong foothold in more than 50 countries, revenues of $2.7 bn, a 26,000+ strong workforce and nine global manufacturing facilities.
There are some challenges to India’s manufacturing push too. These range from a complex land acquisition process to labour laws that could do with reform. India could also boost innovation and set up manufacturing ecosystems that are conducive to the needs of global companies. However, none of these are major hindrances to multinational businesses setting up manufacturing units here.
Energised by the zeal of the Government, I find it heartening to witness the sense of competitiveness among Indian States to attract quality manufacturing investments and to prevent the migration of talent to other states. To this end, industrialised states like Gujarat, Maharashtra, Karnataka and Telangana have investment facilitation agencies and many states have a single-window system to secure permits.
Already, most states have online services for registration across departments such as labour, property and taxation. This has resulted in transparency and quicker investment realisation for manufacturing. Besides these improvements, most industries, including the textile industry in India, are open to foreign direct investment via automatic approval.
For all these reasons, I believe the Indian manufacturing sector has the potential to reach $1 trillion by 2025 from the $694.93 bn it clocked in the first quarter of FY22.