Make in India

Why 'Make in India' will bring security manufacturing to India

The Indian government has been trying to promote its "Make in India" campaign ever since its current Prime Minister Narendra Modi came to power. After its launch last year, the campaign has slowly been gaining momentum, with promotional campaigns in international and regional media. And in September this year, the project turned one year old.

Although the initial roll out was slow, the campaign has managed to rev up sentiments among businesses in the country. This is true about the security industry as well. The best part, they point out, is that the campaign is no longer just on paper and there is definite action on the ground.

"There are many foreign manufacturers who have already come and will come to India to set up their plant," said Sagar Gosalia, Sr. VP for Marketing and Sales at Matrix Comsec. "Bosch, a Germany-based company, has set up its manufacturing plant in India for security products."

So what is it that makes India attractive as a manufacturing destination that might even challenge China in the future? According to Pawan Desai, CEO of Mitkat Advisory there are four main reasons.

  • Massive Domestic Demand: India is a big developing country with a huge population, second only to China. This itself makes it one of the biggest and fastest growing markets in the world.
  • cheap Labor: One of the major factors that made China a manufacturing hub was its low labor costs, but this has changed over the recent years as the country’s economy has developed and wages have risen. India has come into the picture as labor costs in the subcontinent are still low. To make it even more attractive, it’s not just labor but land costs for setting up manufacturing plants are also low.  
  • Talent Pool: Despite having a smaller population than China, India has the world’s largest number of young people, according to a United Nations report. This combined with an educational system that gives importance to engineering and technical subjects has created a good number of able individuals who can work at various levels – from white collar managers to blue collar technicians. There are also ample resources for R&D.
  • An Alternative to Ailing China: What makes all the above mentioned points relevant is the fact that China's economy is no longer as powerful as it once was. The recently released weak export/import figures were just one of the many indicators that the world's second largest economy is slowing down. And as manufacturing in China is becoming increasingly clouded with concerns, India is becoming an ideal nearby alternative for the major companies.

But perhaps the most important factor that foreign companies are looking towards is a change in government policies that would make the country more business-friendly. This has not been too disappointing either.

Gosalia pointed out that the government has allowed 100 percent Foreign Direct Investment (FDI) in electronics systems design and manufacturing sector, which has encouraged foreign players to invest in the country. According to the Financial Times data service India had overtaken China and US to take the place of No. 1 FDI destination in the first half of 2015.

Several concerns do exist about the future of "Make in India" drive, as foreign companies still find it difficult to do business in India. But at this point, it would be safe to say that there is a strong interest from overseas to invest in India, and more companies are finding it the right time to enter the subcontinent's market.

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