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Keji Mao
Keji Mao

For India to become the next manufacturing powerhouse, it must first learn from China – with or without the coronavirus

  • The crippling disruption to Chinese supply lines has inspired talk of India capitalising on Covid-19 to boost its ‘Make in India’ push. But the challenge of setting up a suitable supply network, with the skilled workforce to operate it, is daunting even before India went into a lockdown of its own

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New scooters are lined up in a yard at an assembly line in a Honda manufacturing plant in Vithalapur, in the western Indian state of Gujarat, in June 2016. Photo: Reuters
Keji Mao

China’s economy has suffered an unexpected double whammy. The trade war unilaterally launched by US President Donald Trump first sent businesses on a frantic search for alternative supply chains, and now the Covid-19 pandemic has further disrupted global supply chains.

These disruptions, together with talk of “decoupling”, have seen many look at alternative manufacturing destinations outside China. It was against this backdrop that India, superficially the closest comparison to China in terms of population and economic potential, came into play. 
India could emerge as the next manufacturing powerhouse, to replace China. Yet, at the same time, it appears to be one of the worst-stricken economies in terms of supply chain disruption, especially now with a national lockdown in place to contain the spread of the coronavirus.

Can India seize the opportunity to give China a run for its money in global manufacturing? The answer hides in a paradox: India needs China before it can replace China.

When Prime Minister Narendra Modi launched the “Make in India” campaign in 2014, it was a policy melange that hardly differentiated between the industrial sectors in which India had comparative advantages and those where it had none. As a result, under “Make in India”, the share of manufacturing in terms of India’s gross domestic product even fell – from 15 per cent in 2014 to 14 per cent in 2019.

Indian Prime Minister Narendra Modi addresses the nation on TV on March 24, the day India entered a nationwide lockdown for 21 days to try to control the spread of the Covid-19 disease. Photo: EPA-EFE
Indian Prime Minister Narendra Modi addresses the nation on TV on March 24, the day India entered a nationwide lockdown for 21 days to try to control the spread of the Covid-19 disease. Photo: EPA-EFE
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