India’s ambitions to become global manufacturing hub gathers paces

India’s ambitions to become a global manufacturing hub are gathering pace, with more major brands starting to make their products in the country.

Huawei, a Chinese tech company, last week started manufacturing its Honor smartphones at a plant in Chennai in collaboration with Flex India, a global electronics manufacturer.

Meanwhile, it also emerged that China’s Lenovo was considering manufacturing laptops in India.

These developments are seen as a victory for prime minister Narendra Modi’s flagship campaign, Make in India, which is aiming to boost manufacturing in the country to create jobs and support economic growth.

“The smartphone landscape in India is growing every day and such initiatives by technology leaders will help accelerate the growth of local manufacturing industry in India,” said Ravi Shankar Prasad, the minister of information and technology, during the inauguration of Huawei’s manufacturing facility. The plant will have the capacity to make 3 million units by the end of next year.

Jay Chen, the chief executive of Huawei India, said the start of manufacturing is “an affirmation of our commitment to India and supports the Make in India campaign”.

Apart from electronics, there are signs of traction in other industries too. Saab Group, a Swedish aerospace defence company, is aiming to produce fighter jets in India, The Hindu Business Line, an Indian business newspaper, reported on Monday. The same day, India’s Reliance Group announced a joint venture with the Rafale fighter jet manufacturer Dassault of France.

But India’s manufacturing sector is facing headwinds, according to a recent research note published by Capital Economics.

“High on the list of priorities is pushing through measures to ease land acquisition laws and increase the efficiency of the labour market,” said Shilan Shah, the India economist at Capital Economics.

But he explained that reform in these areas was likely to be hindered by political opposition. He added that sentiment had however been boosted by the passage of the goods and services tax (GST), a new simpler tax regime.

“Once implemented, the GST should help to ease complexities in the domestic tax system and boost domestic trade.”

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