STILL DEPENDENT ON CHINA FOR RAW MATERIALS
India’s large and affordable labour pool is drawing foreign firms, and the government hopes to use this advantage to create millions of new jobs.
But even as it markets India as an emerging manufacturing hub, the industry’s success is still largely dependent on raw materials from China, said observers.
Despite heavy restrictions on Chinese investments after a border standoff along part of their Himalayan frontier in 2020, India has continued to allow the import of industrial goods from China.
Recently, the Modi government indicated it may consider allowing Chinese investments to give the sector a boost.
“Economies of scale has always been a challenge in India,” said Kharbanda. “We would love to be able to import more materials from China more easily, to help us meet the global requirements that we have.”
For years, the Modi administration has struggled to tackle record unemployment levels.
A robust manufacturing sector, which now employs 11 per cent of the workforce, could help to add millions of jobs, experts pointed out.
They noted that India’s manufacturing targets can be best achieved if it makes a pivot of supply lines to the country more permanent.
“We have to look into developing an ecosystem where parts and components are also manufactured in the country,” said Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations.
“Today, most of the large companies are procuring from India. They have not set up their base in India, because once they are settled in India, they will probably help us in developing an ecosystem for that,” he added.
