The Coming Indian Manufacturing Boom

Quick, from a Spend Management perspective, what's the biggest difference between India and China? If you guessed that India was largely services focused and China had more of an industrial bent, you'd be wrong. India, in fact, is headed down the manufacturing path as well. A recent summary of a CGE&Y paper in Supply Chain Management Review captured some anecdotes that show why. According to the story, "A survey of more than 340 manufacturing companies around the world confirms that India could rival China as the most sought-after location for manufacturing within five years."

Why might India become more attractive than China? The summary notes that, "Among its findings, the survey showed main manufacturing centers in China are already becoming more expensive than those in surrounding nations. And in eastern coastal China, labor and real estate costs have gone up due to concentrations of various operations there, and much-needed infrastructure means moving to other parts of the country might not be easy."

Certainly, India is not without it challenges. One, in fact, doesnt make the headlines, but is certainly a subtle one that is in the back of the mind of many folks I speak with who go there on a regular basis. And that's the reputation India has for making Westerners sick when they visit (especially compared with China, where food poisoning seems much less prevalent today than it was a decade ago). But more important, we all know India needs to overcome the corruption and bureaucracy that has hindered its infrastructure build out. Still, knowing that you can visit for a week without getting a case of Delhi-belly would make companies feel more comfortable spending more time over there (which is so critical in a direct materials sourcing environment).

Jason Busch

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