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Current Situation

  • Within the manufacturing sector MSMEs are the hardest hit, with many of them getting close to bankruptcy.
  • At a global level, there is a very clear indication that companies that are doing business in China are now looking to consider other attractive investment destinations.

India’s Opportunity

  • Potentially, India can take the lead and present itself as the most compelling destination to receive overseas investments compared to its immediate competitors.
  • Given the fact that Make in India campaign is on since past five years, and in the backdrop of India reducing corporate tax rates significantly, India’s investment attractiveness should have stood out by itself.
  • Initial trends show that India is getting a very negligible piece of this investment, and the bulk of the shift goes to Vietnam, Indonesia and Malaysia.

Imperatives to cater to:

Carry out essential reforms

The Government facilitated many business processes reforms, collectively termed ‘ease of doing business’ (EoDB).

The far-reaching and business friendly reforms carried out by Telangana called TS-iPASS have been recognised as amongst the best in the country.

Time is also ripe to introduce long pending reforms in labour laws, bankruptcy laws etc., and guarantee consistency in state policies.

Create industrial infrastructure as a mission over next year

The biggest USP of China has been its large-scale industrial parks with the highest quality of infrastructure.

The Centre should work with states to develop large self-contained industrial parks and industrial corridors.

Improve competitiveness of exports

Export markets offer a good opportunity for domestic manufacturing to tide over the present crisis in a short period of time.

We need to carefully identify the main reasons which have pulled down India’s exports in all these years, and offer targeted solutions to each.

Bailout for SMEs

Direct financial assistance for the SMEs in the worst affected sectors, easy and very soft credit for others, along with deferment of statutory dues are some of the way forwards.

Empowered Strategy Group

Methods to revive the manufacturing sector as well as attracting new investments to the country require bold and pragmatic vision as well as a detailed implementation plan.

An Empowered Strategy Group comprising central government representatives, few state governments, industry leaders, bankers, policy experts can be tasked to work on this urgent imperative.

-Source: Times of India

December 2023