The COVID-19 pandemic has not only had a profound impact on global health but has also wreaked havoc on the world economy and businesses. It disrupted manufacturing and Global Value Chains (GVCs), affecting various stages of production across the globe. Additionally, the pandemic expedited fundamental shifts in GVCs, driven by three significant megatrends: emerging technologies, the environmental sustainability imperative, and the reconfiguration of globalization.
In this rapidly evolving context, as global companies adapt their manufacturing and supply chain strategies to enhance resilience, India finds itself uniquely positioned to emerge as a global manufacturing hub. India possesses three key assets that can be leveraged to capitalize on this distinctive opportunity: substantial domestic demand, the Indian Government’s drive to promote manufacturing, and a demographic edge with a significant proportion of young workforce.
These factors position India favorably for a more prominent role in GVCs. A thriving manufacturing sector would not only bring added benefits but also aid India in fulfilling crucial imperatives, such as creating economic opportunities for the approximately 100 million people expected to join the workforce in the next decade, promoting more equitable wealth distribution, and curbing its burgeoning trade deficit.
According to the World Economic Forum’s new White Paper titled “Shifting Global Value Chains: The India Opportunity,” produced in collaboration with Kearney, India has the potential to reshape GVCs and contribute over $500 billion in annual economic impact to the global economy by 2030. The White Paper outlines five potential paths for India to unlock its manufacturing potential.
The insights presented in the White Paper reflect the viewpoints of leaders from various industries in the region. The five potential solutions include:
- Coordinated efforts between the government and the private sector to foster the development of globally competitive manufacturing companies.
- Shifting the focus from cost advantages to building capabilities through workforce skilling, innovation, quality, and sustainability.
- Accelerating integration into global value chains by reducing trade barriers and facilitating competitive global market access for Indian manufacturers.
- Concentrating on reducing the cost of compliance and expediting the establishment of manufacturing capacities.
- Prioritizing infrastructure development based on cost savings, speed, and flexibility.
Francisco Betti, Head of Shaping the Future of Advanced Manufacturing and Production at the World Economic Forum, emphasized the need for collaboration between business and government leaders to understand the ongoing disruptions and opportunities, developing strategies to create greater economic and social value.
Viswanathan Rajendran, Partner at Kearney, highlighted the pivotal role a thriving manufacturing sector could play in India’s economic growth and prosperity in the next decade. He noted that the ongoing rebalancing of Global Value Chains post-COVID presents India’s government and business leaders with a unique opportunity to transform and accelerate the trajectory of the manufacturing sector.
The White Paper serves as an initial framework for deliberation and action within the manufacturing ecosystem. The World Economic Forum, in partnership with Kearney, intends to further develop this agenda by collaborating closely with the manufacturing community in India. The goal is to generate fresh insights, inform discussions and strategic decisions, foster new partnerships, and provide a platform for exchanges with the global community.
