India to benefit from trade war


The Prime Minister, Narendra Modi meeting the President of United States of America (USA), Donald Trump, on the sidelines of the G7 Summit, in Biarritz, France, on 26 Aug 2019.


India and US are discussing to move capacities of around 200 US companies out of China and set up an alternative bases in India which has rich talent pool of engineers, a young workforce and a cost-effective labour, says a KPMG report.

The country also offers a huge market, supported by rising disposable income, said the “India: Redefining its Growth Path” released in August 2019.

However, key growth drivers of India’s emergence as a manufacturing hub are likely to be the convergence of digitalisation and manufacturing and the subsequent productivity leap.

India has the potential to benefit from the ongoing US-China trade wars, and leverage on charge that various international companies are looking to make their manufacturing bases away from China.

However, unlocking the full potential of this opportunity would depend on India’s investment in upskilling and reskilling its existing workforce given the dynamic environment and emerging technologies.

According to KPMG’s India CEO Outlook 2019 report, about 88% of CEOs in India are personally leading the technology strategy of their companies.

“We should also look at investments from China where China has key advantages to building manufacturing scale in India,” said Vinodkumar Ramachandran, Partner and Head – Automotive and Industrial Markets, KPMG in India in the report.

Additionally, India’s position as a global manufacturing hub can be fortified through its emergence as R&D hub and knowledge centre, said Ramachandran who is also KPMG’s Global Leader for Industry 4.0.

India produces about US$9.4 trillion in goods and services. Manufacturing, which accounts for around 17% of the country’s GDP, is estimated to contribute 25% by 2025.

The report noted the Indian Government’s development of industrial corridors which would create a favourable environment for industrial development.

The government is bound to further invest in creating clusters of networks, added the report.

The government is improving company laws, working on ease of doing business environment as well as further promoting initiatives such as ‘Make in India’ ‘Digital India’ and ‘Skill India’.

This adds to the favourble foreign investment policy to support the country’s position as a global manufacturing hub.

Sixty per cent of the formal employment in India relies on middle-skill jobs that are prone to automation.

With Industry 4.0 and digitalization gaining momentums, the country is expected to focus on upskilling and reskilling the workforce on emerging technologies such as artificial intelligence, machine learning, internet of things, big data and analytics, observed the report.


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