India
Next hub for low-cost manufacturing
Next centre for electronics assembly
Strengths (pull factors):
Labour - Mixture of low-skilled and high-skilled labour
Large base of well-educated university graduates
Fluent in English
Lower labour cost
The hourly labor cost in India for manufacturing averages 92¢, compared with $3.52 in China
Market size
Huge potential market (1.2 billion consumers)
Favourable government policies
Policy environment --> more supportive of manufacturing - E.g. The Indian government launched the “Make in India” campaign in 2014 --> aims to increase the level of manufacturing in the country
India overtook China in 2015 as the country receiving the most foreign direct investment globally and companies have reported improving administrative efficiency at the federal level
Relatively stable political environment
Reliable supply of energy
Challenges:
Workers need to be able to at least read and write to operate machinery. India scores low on general skills attainment, ranking 105th in the world according to the UN’s Human Capital Index 2016
India’s infrastructure is woeful, in particular transport and energy supply, where it ranks lower than most other emerging economies
Government inefficiency is also a major stumbling block – delays in land acquisition and environmental clearances have stalled more than 270 projects across the country
Push factors of China:
Rising labour costs
Chronic blackouts
The Chinese government is encouraging its companies to take the opportunities brought by the “Belt and Road” initiatives, and to invest overseas, a move which also helps absorb excessive industrial capacity back home
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