Covid lead to great opportunities for manufacturing companies


Speculations over possible economic scenarios have taken center stage since the imposition of lockdown in various parts of the world aiming at restricting the wide spread of coronavirus in the last few months. On one hand there are news on emotional & economic backlash against China over its perceived culpability for the COVID-19 pandemic, on the other hand there are news about Chinese companies moving aggressively for complete buyout of European brands like Volvo & Hasselblad, Chinese own major part of the global medical supply chain for products that are critical for all nations at this point of time. China is back to business by containing the virus through technology-powered, authoritarian surveillance. The fact is that the economies that will manage the COVID 19 efficiently will have an edge over others in post COVID scenario. All said and done, the economic  situation post COVID 2019 is unpredictable and hazy.

A glimmer of hope is emerging from manufacturing companies in India as global businesses seek to develop additional supply chains beyond China. One of the key area that looks interesting a global customer base is electrical & electronics manufacturing. India exports electronic products worth $9 billion each year, while its domestic market is estimated at $120 billion. This vast field, includes electronic component manufacturing in multiple sectors like mobiles, auto, medical, consumer appliances and aerospace & defence. Companies like Teledyne, Amphenol and Johnson & Johnson have shown interest in India, also the Indian government announced in March a production-linked incentive (PLI) scheme for the electronics sector with an outlay of over ₹40,000 Cr to boost the sector.

While things look positive for Indian in this field, the situation is much more complex as it appears at the outset. The present crisis has shown vulnerabilities of Indian manufacturing sector. China is the biggest importer for India and accounts for 14%+ of total imports (approximately $ 68 Bn in 2017-18). There is a need to develop complete ecosystem for manufacturing of these components. The ecosystem should be able to offer complete solution to the customer from support in design & development, raw materials, critical special processes and manufacturing.

Development of ecosystem and investments in Indian manufacturing sector is a time consuming exercise. It takes multiple years to develop alternate supply chain and shift the production. The success factors include ability of Indian suppliers to meet cost expectations & quality standards, ramp up production, government policies & schemes and steepening of learning curve. While India has better infrastructure and ecosystem in the field of mobile manufacturing and consumer electronics, there is an opportunity to create a stronghold on medical, auto, aerospace & defence sectors.

In addition to electronic manufacturing, there are some positive signs in Textiles and Chemical sector also. The need of the hour is to look more aggressively at these business opportunities. While centre & state are prioritizing on handling COVID 2019 situation for the time being, they should also focus on economic agenda post COVID19 scenario and do their best to attract foreign investments while working strategically to build an environment of collaboration & co-operation between organizations.

—– Article by Mr. Vikas Manral
Mr. Vikas Manral is a thought leader from global manufacturing industry, presently leading a growth start-up (SolBuggy Connect Pvt Ltd) helping manufacturing MSMEs in India to become competitive globally.