Speculations over possible economic scenarios have taken center stage since the imposition of lockdown in various parts of the world aiming at restricting widespread coronavirus in the last few months. On one hand, there is news on emotional & economic backlash against China over its perceived culpability for the COVID-19 pandemic, on the other hand, there is news about Chinese companies moving aggressively for a complete buyout of European brands like Volvo & Hasselblad, Chinese own major part of the global medical supply chain for products that are critical for all nations at this point of time. China is back to business by containing the virus through technology-powered, authoritarian surveillance. The fact is that the economies that will manage the COVID 19 efficiently will have an edge over others in post COVID scenario. All said and done, the economic situation post-COVID 2019 is unpredictable and hazy.
There is a ray of hope emerging for India, as global companies look for developing alternate supply chains beyond China. One of the key areas that looks interesting for the global customer base is electrical & electronics manufacturing. India exports electronic products worth $9 billion each year, while its domestic market is estimated at $120 billion. This vast field includes electronic component manufacturing in multiple sectors like mobiles, auto, medical, consumer appliances, and aerospace & defense. Companies like Teledyne, Amphenol, and Johnson & Johnson have shown interest in India, also the Indian government announced in March a production-linked incentive (PLI) scheme for the electronics sector with an outlay of over ₹40,000 Cr to boost the sector.
While things look positive for India in this field, the situation is much more complex as it appears at the outset. The present crisis has shown vulnerabilities in India’s manufacturing sector. China is the biggest importer for India and accounts for 14%+ of total imports (approximately $ 68 Bn in 2017-18). There is a need to develop a complete ecosystem for manufacturing these components. The ecosystem should be able to offer complete solution to the customer from support in design & development, raw materials, critical special processes and manufacturing.
The development of ecosystems and investments in the manufacturing sector is a time-consuming exercise. It takes multiple years to develop an alternate supply chain and shift the production. The success factors include the ability of Indian suppliers to meet cost expectations & quality standards, ramp up production, government policies & schemes, and steepening of a learning curve.
While India has a better infrastructure and ecosystem in the field of mobile manufacturing and consumer electronics, there is an opportunity to create a stronghold on medical, auto, aerospace & defense sectors.
In addition to electronic manufacturing, there are some positive signs in Textiles and Chemical sector also. The need of the hour is to look more aggressively at these business opportunities. While the center & state are prioritizing handling COVID 2019 situation, for the time being, they should also focus on the economic agenda post COVID19 scenario and do their best to attract foreign investments while working strategically to build an environment of collaboration & co-operation between organizations.
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