How can Indian manufacturing sector be more confident

How much impact will the US President Donald Trump’s tariffs, have on the economies of the global economy overall will probably be quantifiable only after some time – perhaps a year or more. Even countries that do not trade with US will be impacted in a major way. This is because manufacturing nations cut off from the US market, specially china, will inevitably seek alternative geographies to compensate for part of the shortfall.

Mr Trump’s stated goal is to use tariffs to bring manufacturing back to the US and make the country’s industrial base stronger.

In fact, it is time for all nations to look at the actual global competitiveness of their manufacturing (and services) in the new economic era.

It is in manufacturing that China particularly stands out, while India has faltered despite multiple attempts to become a global hub for manufacturing that can compete on cost and quality.  India’s problem has been that its manufacturing has never quite managed to be globally competitive in most industries, despite programmes announced by different Indian governments over the decades. 

India’s gross domestic product (GDP) growth has been more domestic private consumption-led than export-led.

Why has India failed to become a dominant force in global manufacturing in any sector, despite to the large market it offers for global manufacturers?

The blame can be laid on both the Indian governments (Union as well as state governments) and Indian business houses, who have typically lacked scale thinking and global ambitions.

Most big domestic manufacturers have shown little ambition to be world beaters, choosing the easier path of selling in India and lobbying to protect their domestic turf.

This is why, while we have huge global-scale business conglomerates with fingers in multiple sectors, they mostly focus on the domestic customer base rather than striving to become export powerhouses. Their argument is somewhat correct, that if foreigners are trying to enter the Indian market, then why should they do not take advantage of it.

Despite slogans and announcements, manufacturing is not easy in India. From land acquisition to the time taken for various clearances to the logistics costs and tax dispute resolution, India has proved hostile ground for both domestic and global manufacturing firms.

The Union and state governments need to work closely together to fix the many issues within their control to make Indian manufacturers more confident.

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