Instability makes India riskier manufacturing destination
Mar 26 2014 , Mumbai
According to the survey conducted by Cushman & Wakefield, which assessed 30 global manufacturing destinations on parameters, including key aspects like talent, logistics and business environment sustainability, India ranked 24th.
The countries were assessed on conditions, risk and costs.
Overall India ranked 24th, but on the risk front (with business and energy security as core components), the country was at the dismal 30th rank due to instability in the economic and political conditions.
Other Asian markets dominated rankings, with Malaysia emerging as the most favourable manufacturing location in the world followed by Taiwan, South Korea, Thailand and China.
India at 24 is ahead of Spain, Italy, Germany and Belgium with cost advantage giving it a major edge. The country ranked 12th on the cost parameter as labour and construction cost are lower than in Europe.
"One of India's main drawbacks...Has been the land cost and the process of acquisition of land. Therefore to ensure that India's manufacturing sector sees the desired growth, the government would have to take measures to streamline processes in the backdrop of
the new land acquisition bill," Cushman & Wakefield Executive Managing Director, South Asia, Sanjay Dutt said.
But the country has some inherent advantages due to its strategic location allowing access to the markets of south and south east Asia, he said.
"Additionally, India's domestic market and consumption is a key force for growth of the Indian manufacturing sector. India's current economic outlook and political situation may have been a short term deterrent for foreign manufacturing companies,"