Though India is struggling to cope with the economic fallout from the Covid-19 lockdown, the government hopes to turn the country around after the pandemic subsides by turning it into a global manufacturing hub. It is looking at ways to position itself as an alternative to China, as many companies are looking to reduce their dependence on the economic behemoth for vital supplies.
The Commerce and Industry Ministry are in the process of identifying key sectors such as capital goods, leather and chemicals to focus on. Officials believe the country has the potential to become a global manufacturing hub for modular furniture, toys, food processing (ready-to-eat), agro-chemicals, textiles (manmade fibers), air conditioners, capital goods, pharmaceuticals, and auto components, Business Standard reports.
The government is also engaging trade bodies such as the Confederation of Indian Industries and Associated Chambers of Commerce and Industry of India for this purpose. Commerce and Industry Minister Piyush Goyal recently said there will be discernible changes to global supply-chains in the post-Covid era, and Indian industrialists and exporters should take advantage of it.
It is also encouraged by the fact that Japan’s government is paying Japanese companies to shutter their manufacturing plants in China. American companies such as Apple are also planning shutdowns.
The government wants to promote manufacturing and create more jobs in the sector, which contributes about 15% of the country’s GDP.
In March, the output of eight core infrastructure industries shrank by a record 6.5% due to a significant dip in the production of crude oil, natural gas, fertilizer, steel, cement, and electricity amid the coronavirus lockdown. Exports contracted by a record 34.6% in the same month.
The government is also planning to provide fiscal incentives and capital subsidies for reviving pharmaceutical ingredients units to reduce dependence on China and make India a hub for bulk drugs, Economic Times reports.
Though India is the largest exporter of generic drugs in the world, it depends on China for 70% of its pharmaceutical ingredients. China currently controls 55% of the global market for these ingredients.
The plan includes creating a suitable ecosystem with fiscal and procedural support to pharma companies to restart these units. In the long term the government may set up bulk drug parks to achieve self-sufficiency. Industry experts believe providing low-cost power, subsidies and reducing the time for approvals can help revive the sector.
There are also reports that the government is studying the viability of reviving loss-making state-owned drug makers Hindustan Antibiotics Ltd. and Indian Drugs and Pharmaceuticals Ltd.