- For a very long time the world has tremendously benefited from China’s emergence as a manufacturing hub. It has been commented by many that China has exported deflation for a long time to the world. Trade relations with China has helped the world access lower cost manufacturing which cannot be replicated at a scale and economics, delivered by China.
Today China accounts for 31% of the global manufacturing. US comes a distant second at 17%. India’s manufacturing abilities are yet to be demonstrated at the global scale for high value engineered items.
Manufacturing prowess of China has made the world live in a multi polar economic environment. However, the recent move on bilateral, regional and linear self contained ability across key manufacturing will create challenges in the short to medium term; specially for a country like India.
The semiconductor ecosystem that India has decided to develop within the country is one such critical case. India has announced support̉ of $10bn semiconductor incentive policy where the government will fund 50% of the capex. However, till date no viable proposal has been approved. Proposal from Vedanta and Foxcon has been asked to be revisited since the investors have not been able to find an appropriate technology partner.
Such cases of lack of access to technology will continue to emerge as more and more countries attempt on becoming self reliant. In more ways, this is also a high cost alternative, inefficient and may eventually aid inflation. The world had developed a niche on identifying efficiency pockets, which now is being attempted to be rewritten.