Policy Initiatives to Shape India into Global Manufacturing Hub

Disruption in the global supply chain has opened up opportunities for large-scale manufacturing in India, aided by significant government measures such as production linked incentive schemes and low corporate tax rates for new manufacturing, among others.

However, structural issues such as cost of land and electricity, lack of infrastructure and shortage of skilled manpower could play spoilsport if not addressed, says the industry.

“MNCs that manage supply networks have acknowledged the necessity to hedge against future events and have decided to geographically disperse their supply chains,” said Amitabh Kant, CEO, Niti Aayog. “As a result, India has reaped significant benefits. ”

The government has unveiled a $27-billion PLI scheme for13 sectors to help integrate Indian companies into the global value chains. PM Gati Shakti National Master Plan is expected to bring down logistics costs significantly. Additionally, corporate tax rate for new manufacturing has been reduced to15%.

Vikram Kirloskar, chairman (manufacturing council), CII, said, “Government measures can give you added incentive, but it is upon manufacturers to improve upon scale and quality. ”

The government and businesses also acknowledge the need for improvement in the enabling framework. “In the medium term to long term, India will have to address its structural issues,” Kant said. In the short term, Kant believes enhancing ease of doing business is extremely important.

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