Indian Prime Minister Narendra Modi said last week that the government "wants the share of manufacturing in GDP to reach 25 percent in the near future" in a speech during a week-long "Make in India" fair designed to attract foreign investment. This is the boldest target since Modi launched the "Make in India" initiative back in 2014 with the aim of turning India into a world manufacturing hub.  

Doubts have been expressed about whether India can replace China as a world factory. But in fact, "replacement" is not the right word to describe the competition between India and China, because even if India's manufacturing industry has developed to a certain level, the two countries are increasingly focusing on different areas.   

Nonetheless, the "Make in India" initiative will inevitably turn India into an emerging power in the global manufacturing landscape, and India's influence on the world economy is already far greater than that of some other BRICS countries that rely on commodity exports.

India enjoys some comparative advantages in developing its manufacturing industry, such as relatively advanced technology, a huge domestic market and an abundant supply of labor.

In some low-end areas, the "Make in India" program enjoys cost advantages. For instance, an Indian company launched a $4 smartphone during the "Make in India" week. Although some have said this move was mostly hype, it would be highly unlikely for a Chinese manufacturer to make the same offer. And India's cheap cellphones have begun to occupy the low-end market in neighboring countries such as Bangladesh and Myanmar.

India's potential competitiveness in high technology shouldn't be underestimated. In the post-global financial crisis era, the global trend of intelligent production will further enhance India's competitive advantage in information technology. Take India's auto industry. India introduced international auto manufacturers into its local market earlier than some other countries, and this helped it to use international experience and advanced intelligent design to lower production costs. For instance, the Nano model manufactured by India's Tata Motors only costs around $2,000. India's effort to develop new high technologies such as nanomaterials is also very impressive. Such advantages, if combined with the country's enormous domestic and international market, will at some point generate huge production capacity.

Similar to the rise of "Made in China," "Make in India" will emerge as a new phenomenon in the development of the global economy. As China gradually loses its low labor cost advantage and gives up some of its market share in international exports due to its efforts to cut overcapacity, India will inevitably embrace new opportunities in developing its manufacturing industry.

In the post-crisis era, redistribution of manufacturing capital on the global scale has provided solid support for India's manufacturing development. Also, adjustments in India's policy for foreign direct investment (FDI) such as increasing the FDI limit for some industries, and moves to simplify administrative procedures could also be beneficial for the "Make in India" program. India's economy is expected to grow by 7.6 percent in the fiscal year ending March, outpacing China's 6.9 percent growth in 2015. Given the signs of good economic performance in India, international capital has begun flowing to the country.

Currently, the momentum for international capital to invest in Indian manufacturing is getting stronger, and multinational companies such as Panasonic Corp, Samsung Electronics Co, and LG Electronics Inc have all established factories in India. Meanwhile, India is also seeking more investment deals from China, and more and more Chinese manufacturers have begun to explore business opportunities in India.

However, despite India's grand plan, there are still some vulnerabilities in its manufacturing industry. The government needs to improve supporting facilities, including solving the power supply shortage, and enhancing the infrastructure environment for manufacturing. In addition, reforms in its complicated taxation system should also be considered.

India's manufacturing sector is still at an early stage, and it is still comparatively weaker than China's manufacturing industry. But in the foreseeable future, China is expected to experience a certain degree of competition from the "Make in India" program regarding certain low-end manufacturing industries, or some other specific sectors. But China is already cutting back on its low-end manufacturing and rapidly expanding its high-end manufacturing capabilities as part of the process of dissolving overcapacity.

Also, as "Made in China" products are already recognized by the international market, those produced in India still have a lot of catching up to do.

India's potential in manufacturing should be recognized, but the core competitive advantages of Chinese manufacturing should also be rationally understood. The experience of global manufacturing powers like Germany and Japan has shown that gaining core competitive advantages in particular areas can take decades.

Source of documents：Global Times