This series is an effort to provide deeper clarity and insights to investors on doing business in India, and address common investor queries on understanding various capabilities, players, and strengths of the Indian manufacturing landscape.
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Read it to know more if you are looking to understand-. This report is the first of the series, and more locations shall be covered in subsequent editions. The most attractive factors that make India a destination of choice for multi-nationals are:. Proactive and progressive leadership has been successfully guiding the nation during the COVID pandemic, and the country is prepared to emerge as the most viable location for Business Continuity Plans. Last five years accounted for over half of the FDI received by India since the liberalization era of the early 90s, propelling India to Top 3 greenfield FDI destinations.
India also attracted large scale investments in labour-intensive manufacturing process of electronics assembly, textiles, and footwear industries. Mumbai Aurangabad corridor houses many IT, pharmaceuticals, textiles and consumer durable units.
Aurangabad is also emerging as an automobile manufacturing and engineering hub. Accounting for almost one-fifth of the industrial investment in India, the city and its industrial areas are well established hubs for automobile, consumer durables and IT and engineering.
It is the most developed automobile ecosystem of India and has a noteworthy concentration of German, American, Korean and Chinese companies. This city is also among the prime markets in India for the development of light industrial parks and warehouses. Pharmaceuticals and food processing are other important sectors.
Gurugram-Manesar-Bawal belt is the largest automobile ecosystem in India, accounting for half of 4-wheeler manufacturing. Shutdowns in China, as a result of the coronavirus, could have knock-on effects around the world. Have you read? China tops the list. License and Republishing. Written by. More on China View all. Global CO2 emissions have been flat for a decade, new data reveals Global CO2 emissions from fossil fuels and cement have rebounded by 4.
China's new carbon market aims to substantially reduce its emissions. Here's how China expects its new carbon market to deliver half the emissions cuts it needs to hit net-zero by Daniel Yang and Lawrence Goulder 09 Nov Belt and Road green investment that delivers on climate action Sha Song 05 Nov One such example is India, which improved its output ranking from 14th in to sixth in In contrast, Spain had dropped in manufacturing performance from ninth in to 14th in The same is true for Russia, as it was ranked second in manufacturing output in but now has dropped to 15th in the world.
Based on our analysis, we make a number of recommendations for improving the manufacturing environment. Our suggestions include:. Poland is the leading country in terms of the percentage of its population employed in manufacturing see Table 2. A total of About There have been significant shifts in manufacturing employment between and see Table 3. In developed countries, manufacturing comprised In contrast, several regions have increased their focus on manufacturing.
Southeast Asia went from India increased from 9. Most countries have been fairly stable in their manufacturing output over the past few decades, but there have been some shifts since During this time period, one nation that improved considerably is India. It raised its output ranking from 14th in to sixth in In contrast, Spain dropped in manufacturing performance from ninth in to 14th in One of the important determinants of how countries perform is their overall manufacturing environment.
To assess this, we looked at five dimensions of the overall environment: policies and regulations; tax policy; energy, transportation, and health costs; workforce quality; and infrastructure and innovation see Appendix for details on measures and information sources.
Based on 20 indicators, we developed a point scale to rank countries on their manufacturing environment. The top-ranked nations were the United Kingdom and Switzerland. For overall policies, we included indicators on pro-business environment, a risk index, corruption, and open trade policies. Workforce quality included measures on K government spending, higher education spending, family income, labor productivity, and labor support.
Based on these 20 indicators, we developed a point scale to rank countries on their manufacturing environment. Table 5 shows that the top nations included the United Kingdom a score of 78 , Switzerland 78 , the United States 77 , Japan 74 , Canada 74 , and the Netherlands At the low end of our scale were Brazil a score of 51 , Indonesia, 53 , Mexico 56 , Russia, 56 , and India These countries lagged the other examined nations on a number of different dimensions.
Table 6 lists the detailed breakdowns of our 20 indicators for each nation. This table shows how each country fared on these measures for the five dimensions. As an illustration, the United Kingdom garnered top scores for its pro-business environment, risk index, lack of corruption, and corporate tax policies, but lower marks on infrastructure, patent filings, and higher education spending.
This was in contrast to Brazil, which did not perform well on its business environment, tax policies, higher education spending, infrastructure, and patent filings. In looking at the nations that did well on our manufacturing index, we found that they took manufacturing seriously and had a number of policies conducive to developing that sector.
We look at three different countries the United Kingdom, Switzerland, and the United States to see what they are doing to help manufacturing. Beyond the currency angle, though, manufacturing there retains a strong presence because of its important role in the export economy. Over 70 percent of all U. The U. In the medium to long term, the U. This is promising as 89 percent of manufacturers say they seek to build long-term customer loyalty overseas.
National leaders will have to keep their eye on that fact in order to keep costs reasonable for production.
Specifically, the automotive industry and aerospace industry in the U. Contrary to the general trend across Europe, the automotive industry has achieved record growth and the country is positioned to hit an annual production target of two million vehicles by Ninety percent of all aerospace goods made in the U.
The industry is well positioned as some of the most intricate aerospace parts like wings, engines, avionics, and systems for civil aircrafts are made within the country. As Brexit negotiations unfold, the future of the industry likely will experience considerable turbulence if free-trade is stifled in any major way through rules or tariffs.
The country has transparent and fair processes, strong judicial effectiveness, and considerable economic and political stability due to its long-held international neutrality. Although the Swiss franc is currently a very strong currency, there is very little currency inconvertibility or transfer restriction risk and investors are free to convert and transfer funds in and out of Switzerland without the fear of restrictive policies.
Additionally, Switzerland prioritizes being a strong trading country; the combined value of imports and exports equals percent of its GDP and its applied tariff rate averages 0 percent.
Although Swiss costs of production and a strong franc do pose some risks, the country has capitalized on its workforce advantages as well as its stable political environment to build one of the strongest manufacturing industries in the world.
The workforce talent and manufacturing quality in Switzerland are top-flight. The country has a large stock of highly skilled workers, and the value-add to their economy through their manufacturing industry is one of the highest in the world.
Because their economy is developed and stable, they are home to some of the biggest pharmaceutical and computer product giants globally such as Novartis and Hoffman-La Roche.
The United States manufacturing sector has benefited from a talented workforce, advanced technology, and pro-business policies. Moreover, the gap in labor costs found in the United States in comparison to other countries has started to drop and likely will continue to drop as the cost of industrial robots falls. Disruptive technologies like additive manufacturing, 3D-printing, advanced robotics, and the utilization of the Internet of Things and Big Data are revolutionizing U.
John Deere, for example, has added sensors to some of its models and the company sells the data retrieved from these sensors to farmers in order to offer new insights and improve agricultural practices. For manufacturing growth to continue, the country should avoid tariff wars or overly restricted trade policies. The development of programs like the National Network for Manufacturing Innovation NNMI represent some of the biggest drivers in this advanced technology development.
NNMI brings together manufacturers, university engineering schools, federal agencies, non-profit organizations, and regional organizations to invest in novel manufacturing technology. Nine manufacturing innovation institutes that are funded by the Department of Defense or the Department of Energy are a part of NNMI and their research areas cover technology developments from 3D printing to lightweight metals manufacturing.
Advanced manufacturing technology development can be found throughout the United States. In Indiana for example, Rolls Royce, which makes jet engines, employs thousands of engineers.
Zimmer Biomet makes surgical products in Warsaw, Indiana, a city that has become a national hub for orthopedic products. Canada and Mexico bought one fifth of all U. In this section, we examine several countries that did not perform very well on our index, looking at what problems they face and how their policies inhibit manufacturing development. We discuss the low-performing countries of Brazil, Indonesia, and Mexico to discern the barriers to manufacturing output.
Generally speaking, corruption makes investors fearful of pouring money into business operations in a country because of long-term uncertainty, and this in turn dampens prospects for long term investment and business growth. This fear is warranted in the case of Brazil as the amount of money lost due to corruption continues to rise. Fifty-seven percent of the foreign bribery cases in Brazil from to were found in the manufacturing, extractives, construction, and transport sectors.
Every country seeking to improve their manufacturing sector should decrease corruption because Brazil has shown how the ripple effects of such corruption hampers manufacturing growth. In the third quarter of , this figure dropped to 21 percent, which was the lowest percentage since Specifically, Indonesia is hampered by anemic labor productivity.
In order to become more globally competitive, Indonesia needs to develop its workforce and advance its manufacturing sector. Its leaders should incentivize manufacturing firms with low productivity to either exit the industry or improve their productivity through technology and higher skilled labor. The existence of unproductive manufacturing firms can be partially explained by low wages in Indonesia.
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