India Inc India Inc: Tuesday, 18 November 2014 05:13

How UK businesses can respond to ‘Make in India’

by David Pollock

Make in India, the Government of India's ambition to achieve higher quality manufacturing in India and establish India as a global manufacturing hub, requires international companies to make longer term strategic and financial commitments to India with all the advantages to India which more FDI will bring.

International companies usually give strategic priority to investment and manufacturing in countries like India which offer not only a very large and growing domestic market for their products but also export potential.

However India has often presented until now well-known hurdles to such significant investment.

The Indian Government has recognised that for Make in India to succeed it must take real actions to support FDI by making doing business in India easier:

  • to remove delays in bureaucratic approvals at the Centre and at State level
  • to improve infrastructure, especially availability of land and reliable supply of power
  • to simplify labour laws
  • to remove uncertainties over taxation
  • to improve the availability of skilled manpower

Some States will prove more attractive than others for FDI and local manufacturing. It is likely that the new attitude will encourage States to compete for more FDI by making doing business more attractive for international companies and by improving their local infrastructure and skill base.

How should UK companies respond to this improving climate for business?

Government of India has identified 25 sectors as priority for Make in India –

UK companies are sometimes unfairly viewed as almost exclusively providers of services in India. In fact UK companies do have leading edge technology and precision manufacturing to meet India’s needs in many of these 25 priority sectors.

UK companies can contribute significantly to Make in India through:

  • their leading edge products & services
  • their advanced technology and IP 
  • their manufacturing processes and execution know-how
  • their sales networks in other countries for exports from India

We have been assisting a range of UK advanced technology companies to assess and exploit strategic and commercial opportunities in the Indian market in sectors including smart metering, spectrum monitoring, corrosion monitoring and high brightness LEDs for solid state lighting.

We have identified three different objectives for UK companies in applying Make In India to their own business:

  • Manufacturing specific components in India as part of their international supply chain for sale in India and for export (such as precision auto components)
  • Manufacturing in India an innovative variant of an existing product to satisfy Indian market needs and meet Indian price points (such as a medical device)
  • Manufacturing in India a revolutionary product from a new technology created in UK because the scale and growth of the relevant Indian market need justifies a new commercial approach (more another time on this) 

The particular opportunities and challenges involved in achieving these different objectives for Make in India vary.

However we consider that all three objectives are achievable for UK companies - with the right understanding of the relevant Indian industry value chain and, in most cases, by investing in partnership with the right Indian company to assist in execution “on the ground”.

We have already assisted UK companies to identify and agree suitable strategic partnerships both with major Indian corporates and with smaller industrial groups.

Looking ahead, the Smart Cities initiative could over time also help to catalyse more of our third category of “revolutionary” Make in India activity through a significant leapfrogging in technologies such those based on energy efficiency.

David Pollock is a co-founder and director of AcceleratorIndia Limited, a cross-border business development company which partners with UK companies to help them capture the India opportunity

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