As other markets stumble and slow, India has emerged as the bright light of economic growth around the world. Global manufacturers cannot afford to ignore India any longer.
In part, this is because domestic consumption is on the rise. Supported by growing consumer affluence and strong economic growth, India’s domestic market has become one of the largest in the world. And as the government invests further into infrastructure such as roads, rails and ports, the domestic market is only expected to grow.
It is also because India is proving itself to be a valuable hub from which to sell to smaller – yet growing – markets in the region, as well as larger – yet less cost effective or less stable – emerging markets. Simply put, manufacturers see India as both a low-cost regional manufacturing center and as a vital customer market.
While uptake of Prime Minister’s Make In India campaign has been somewhat slower than hoped, it is clear that CEOs at multinational manufacturers are hearing the message. The quantum of announcements and signed MoUs is encouraging, even if it has not fully translated into substantial financial investments. Investment is likely pick up pace over the coming months and years as India’s government moves forward to enact and simplify foreign investment requirements and manufacturing regulation.
However, as an increasingly important and integrated part of the global supply chain, India’s manufacturers are now starting to recognize that they are not immune to the economic shocks and disruption of other markets. For growth to be sustainable, therefore, India’s manufacturers – and those foreign players that rely on India’s shop floors – will need to rethink their risk exposure and manage their risks appropriately.
At a time when manufacturers around the world are dealing with deep uncertainty, India is emerging as a strong and reliable bet.
Q: What is the greatest threat to growth for manufacturers in India today?
S.V. Sukumar: Poor infrastructure.
Q: What are Indian companies doing differently do drive growth?
S.V. Sukumar: Applying D&A across the enterprise.