India’s G20 presidency presents an opportunity to strengthen the country’s collaboration and economy. With the world’s most powerful countries represented, the G20 forum provides a premier platform for international economic cooperation, accounting for 85 per cent of global GDP and 75 per cent of global exports.

India’s presidency has successfully included the Global South industrial economies’ growth strategies, positioning itself as an attractive manufacturing hub. The timing of the presidency is ideal for India to exercise greater influence on global policies and the economic sector.

The Business 20 (B20) is a G20 dialogue forum that has conducted a year-long series of summits, which saw the participation of Indian and global industry leaders. One of the significant outcomes of the G20 is ‘India-Middle East-Europe Economic Corridor’. A cost-effective cross-border ship-to-rail transit network will connect India to the Arab countries, the EU and the US. This could translate into trade and investment opportunities for Indian businesses.

India is making strides towards becoming a leading global manufacturing hub, but there is still room for improvement. India is becoming a preferred choice for companies seeking alternative manufacturing or sourcing bases to China. With Indo-US deals taking centrestage and other global corporations following suit, India’s manufacturing sector has the potential to reach $1 trillion by 2030, making it the fourth largest in the world. Currently, it is the fifth largest.

India’s economic growth relies heavily on industries such as automotive, engineering, chemicals, pharmaceuticals, renewable energy, and consumer durables.

Manufacturing boosts growth with employment. However, despite its potential, the manufacturing sector has only been contributing 13-17 per cent of GDP over the past four decades.

Merchandise exports

India’s manufacturing sector has struggled to increase its share of global export of merchandise to 2 per cent. Its share has remained below 2 per cent since 1948, hovering between 1.5-1.8 per cent between 2010 and 2022. China, on the other hand, has maintained a significant lead over India with a share of 10-15 per cent in global export of merchandise since 2010.

China’s advantage in labour-intensive manufacturing at scale, backed by low labour costs and investment in trade-related infrastructure, has enabled it to move towards cutting-edge sectors like robotics and aerospace.

China’s export-oriented approach focused on industries with higher export potential and invested in skilling its labour force, allowing for easier technology absorption and movement up the global value chain. In contrast, India struggled to achieve the desired level of skilling, leading to export inefficiency. India’s weak infrastructure is a significant bottleneck for the manufacturing sector. India’s surface transportation systems cannot meet the expectations of modern high-speed logistics.

The fusion of intelligent digital technologies into manufacturing and industrial processes, known as Industry 4.0, presents an exciting opportunity for a new industrial revolution.

The manufacturing industry is poised for growth, especially with the Make in India initiative at an inflexion point. To build a successful ‘Made in India’ brand, several things need to happen. The government should continue to build physical infrastructure and promote ease of doing business while also funding Industry 4.0 through start-ups. The manufacturing sector needs an inspirational leader to drive Industry 4.0 as a movement.

Manufacturing sector leaders should think globally and focus on all aspects of Total Quality Management, including quality, cost, delivery, safety, morale, and the environment. They should invest in R&D and innovation and build partnerships to de-risk.

Creating and owning designs and intellectual property will be critical, as will investing deeply in Industry 4.0. Driving cultural change to embed it and build a sustainable footprint will be essential, as learning is a lifelong process and diversity enhances it.

India’s G20 presidency would position its manufacturing sector globally. With a government target of $500 billion in merchandise (goods) exports for FY 2023-24, the manufacturing sector must focus on the untapped export potential in existing tariff lines.

The writer is Vice-Chairman, Punjab Economic Policy and Planning Board, and Chairman of Assocham Northern Region Development Council