India has been trying to become a manufacturing alternative to China, but has made little progress. The country has been offering incentives to companies producing goods in strategic sectors, budgeting over $26 billion, and trying to attract foreign investments. However, the role of manufacturing in India has shrunk, relative to services and agriculture, from 15 percent of the economy to less than 13. The country’s factories are not ready to meet the demands of global manufacturing and face difficulties such as access to technology, skilled workers, and lack of good financing from banks.
The government has made efforts to improve the business environment, but many difficulties continue to plague the industry, such as inconsistent government policy, red tape, and a complex and slow justice system. Small businesses in India fear big companies due to the risks of being entangled in the court system, which is slow and unpredictable.
Despite these challenges, some progress has been made, such as an abundance of power in industrial parks and the replication of China’s production systems in some parts of the country. The state of Tamil Nadu is home to a cluster of Apple suppliers that produce about 20 percent of the world’s iPhones, and production in the country is expected to increase.
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