Let’s get this out of the way at the outset: India lags China by a fair distance when it comes to manufacturing prowess: The latter is way ahead in terms of productivity, and manufacturing’s contribution to (a much larger) economy is a little over 25 percent as against just under 15 percent for India.
The gap has prompted a section of gurus to suggest that India should stick to what it does best to propel economic growth—services, which accounts for over half of GDP.
They’re not wrong. Yet, a clutch of recent developments may perhaps signal that India shouldn’t be giving up on the growth engine of manufacturing, but instead stoke it further.
Let’s start with the recent decision of Apple Inc to search for production avenues outside of China. Around mid-May, The Wall Street Journal reported that the maker of iPhones, iPads and MacBooks had told some of its contract manufacturers that it wants to increase production outside China because of the strict anti-Covid measures in that country. A month earlier, the Cupertino-headquartered company had stated that it began making the latest iPhone 13 in India, out of a Foxconn factory near Chennai.
That’s one trigger for Forbes India deciding to shine a light on Indian manufacturing in this fortnight’s issue. As Manu Balachandran writes in ‘An i on India’: About 70 percent of the Apple smartphones sold in the country are made in India. And India could account for as much as 7 percent of Apple’s global manufacturing by the year-end, up from 3.1 percent in 2021. A reality check: Over 90 percent of Apple products are still made in China.
Still, electronics may well be India’s best chance to hit the manufacturing big time globally. Earlier this year, the Ministry of Electronics and Information Technology put out the second volume of a vision document that charts the roadmap for India’s transformation into a “$300 billion electronics manufacturing powerhouse” by 2026, up from $75 billion in 2021.
Playing a crucial role in helping meet this target is a select bunch of Indian manufacturers, two of whom Forbes India has profiled in this issue. One is Optiemus, an electronics manufacturer that’s been ploughing a lonely furrow for the past couple of decades. From a retailer and distributor of mobile phones to now manufacturing wearables and hearables at scale, Optiemus has indeed come a long way. As Managing Director A Gururaj tells Rajiv Singh: “When I talked about electronic manufacturing in India in 2003, people didn’t take me seriously at all. Look at what is happening now.”
On the Forbes India cover is a man who set up his first manufacturing unit back in 1993. Today, Sunil Vachani’s Dixon Technologies has 17 factories that make everything from mobile phones and domestic appliances to lighting products and security systems for global brands such as Philips, Panasonic and Haier. In the process, Vachani has built an electronics powerhouse that is valued at over ₹20,000 crore and with annual revenues of over ₹10,000 crore in FY22. As Vachani tells Naini Thaker, who penned the cover story after meeting the founder at his Noida factory: “Every time someone thinks of outsourcing for electronics, they should think of Dixon.” For more, turn to ‘The Makings of a Manufacturer’.
Does all this action, coupled with record foreign direct investment inflows, suggest India is on its way to becoming a global manufacturing hub? Perhaps. But then why have some big multinationals given up on India? The answer may have less to do with the domestic market and more with global strategic priorities. Neha Bothra breaks it down in ‘Exit MNCs, Enter FDI’.
(This story appears in the 15 July, 2022 issue of Forbes India. To visit our Archives, click here.)