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

IBEF:  August 24, 2021

According to Cushman & Wakefield's 2021 World Manufacturing Danger Index, India has surpassed the United States as the world's second most desired manufacturing destination, indicating the growing interest shown by manufacturers in India as a preferred manufacturing hub over other nations, including the United States and those in the Asia-Pacific region.

The rising deal with India can be ascribed to India's working conditions and competitiveness in terms of value. In addition, the country's demonstrated performance in meeting outsourcing requirements has resulted in an annual increase in the ranking.

This year, India and the United States traded places, placing second and third, respectively, putting India one rank higher than last year's rankings, when India was ranked third.

India had risen to third place from fourth place last year and has now risen one more spot to second place after China.

“In the course of its development, India evolved from an agrarian to a service-based economy. The country was on the verge of skipping the manufacturing phase of the transition. However, on the basis of cost and skill, India has a favorable place in the international rankings. Indian manufacturing has also shown remarkable resiliency during and after the second wave of COVID-19. However, in order to boost investor confidence and accelerate the Make in India strategy, we must address land and labor reforms, as well as strengthen infrastructure across industries,” according to Mr. Anshul Jain, Managing Director - India and Southeast Asia.

As economies throughout the world reopened and drove demand for vital commodities, Asia Pacific's largest industrial plants have rebounded strongly.

“Different markets also profited from increased demand for important products such as microprocessors, laptop chips, and prescription medications. With Data and Communication Technology (ICT) manufacturing up 16.8% year over year in January 2021, South Korea has benefited from the hovering value of semiconductors, owing to strong demand and a global scarcity of product,” said Mr. Dominic Brown, Head of Perception & Evaluation, Asia Pacific at Cushman & Wakefield.

Nonetheless, according to Mr. Brown, apparel manufacturers throughout the world are still grappling with poor demand, which is affecting economies like India and Indonesia, which have also been dealing with the virus's second and third waves.

The index ranks the most favourable locations for international manufacturing in 47 countries across Europe, the Americas, and Asia Pacific. The rankings are determined by four important parameters: the country's ability to restart manufacturing, the business environment, which includes the availability of expertise and manpower, market access, labour costs, and political, financial, and environmental risks.

The baseline rating for high manufacturing locations is based on the working conditions and value effectiveness of a rustic. The change in the US and India's ratings is ascribed to plant relocations from China to other parts of Asia due to an already existing basis in the pharmaceutical, chemical, and engineering industries, which continue to be at the center of US-China trade disputes.

Despite being among the top three nations in terms of baseline and value state of affairs rankings, India still has a long way to go in areas like managing the geopolitical risks that come with doing business and its ability to restart its manufacturing sector after a devastating second wave of the COVID-19 virus.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.