India to Rule Manufacturing Territory
By siliconindia   |   Monday, 12 September 2011, 23:20 IST
Printer Print Email Email
Bangalore; India is raised to win back the manufacturing territory as the giant north-eastern neighbour loses some of its competitive edge due to rising labour costs , reports The Economic Times. In segments like electrical goods, household goods, clocks and many textile items, Indian manufacturers have got back some of the market they had lost to cheaper Chinese imports and are now looking to challenge the dragon in foreign markets. "As China loses its edge, buyers have started looking at India for competitive prices," said John Baby, CEO, Funskool India, a leading manufacturer of toys. Imports of electrical goods from China into India dropped 26% last year, as cost pressures made them less competitive in the price-sensitive Indian market. Worker wages have appreciated more than 100% between 2003 and 2009 in China compared with a more sedate rise of around 40% during the same period in India. Indian manufactured goods ranging from mobile phones to garments and toys are gaining greater global acceptance as their Chinese counterparts become more expensive. The steady appreciation of the yuan-3% this year itself-has further made Chinese goods costlier. This difference opened doors for India to push its electronic goods, garments and other labour-intensive products into global markets. India's export of electronic goods rose 56% while its import of Chinese electronic goods fell 32%in the last two years. "Some customers have started buying less from China due to its rising costs. This has brought incremental business to us," said Sudhir Dhingra, chairman and managing director of Orient Craft, one of the largest Indian garment exporters. Even big MNCs are planning to expand production in India to cater to domestic and foreign markets, as rising Chinese costs make India more attractive. "India may become the next best thing for low-end goods as MNCs will start to move to India due to rapidly rising wages in China," said Dhar, who heads Research and Information Systems in Developing Countries. "Owing to the growing potential of the Indian market, we have been expanding our production capacities and manufacturing investments. Going forward, linked with the development of the vendor eco system in India and its cost competitiveness, we are looking at making India the global manufacturing hub for the region," said JS Shin, CEO, Samsung, southwest Asia. Experts believe this is an unprecedented opportunity for India, as no other country has comparable human resources.

siliconindia