Can India Become A Major Manufacturing Hub for Multinationals?

Nick Mutt September 12, 2008

Recent HSBC Asian Economic Insight report states, "Infrastructure, Better tax levels, Cost of capital, SSI reservation policy, Labor productivity have improved in India to increase competency in manufacturing."

India is undergoing structural transformation with manufacturing increasing its role in the Indian economy. Manufacturing sector now accounts for about a fifth of India’s GDP, contributes 50 per cent of FDI, 75 per cent of exports, and employs 11 per cent of the workforce.

There are the few factors to enable India as a major manufacturing hub for multinationals:

• Telecom costs have been reduced significantly because of the New Telecom Policy and competition in this sector

• Increased participation of the private sector in the power sector

• Improvements in tax and tariff structure. The Indian government is committed to reducing the peak rate of import duty each year to bring it in line with East Asian levels.

• Investment in leading edge technologies for enhancing efficiency and services

• Vision towards becoming the market leader in the chemical processing, oil & gas, F&B processing, refining, pharmaceuticals, biotechnology, life sciences and R&D sectors

• Leading growth markets for measurement and automation technologies.

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Tags: Manufacturing Hub , Major Manufacturing Hub , Manufacturing Hub For Mul , Major Manufacturing Hub F