Weathering The Storm Of Economic Uncertainty:How Can Manufacturers Achieve Growth When Others Are Not?

The challenges and economic pressures on the manufacturing sector are distinctive to this part of the economy. However, companies should be making the most of the ‘Make in India’ initiative and use the opportunities provided to emerge on top.

India has become the world’s fastest growing large economy. India’s gross domestic product (GDP) grew 7.6 per cent in 2015-16, up from 7.2 per cent a year ago1. Although the global economy is witnessing some unpredictability, India is relatively well positioned to weather the global uncertainity. India’s economic growth is expected to accelerate, with estimated GDP growth at 7.8 per cent in 2016-2017 and 7.9 per cent in 2017-20182. However,there is uncertainty aboutthe momentum and there are ample of risks.

The manufacturing sector in India has emerged as one of the high growth sectors and is key to realising economic growth in the country. With the launch of the Indian Government’s ‘Make in India’ programme(2014) and its large-scale policy reforms, the outlook for the Indian manufacturing sector was upbeat over the last year. While this positive vibe continues, the appearance of roadblocks on the domestic front and a demand slowdown globally and in emerging markets have caused uncertainty and forced manufacturers to rethink their strategy.

Barriers to growth

Some of the barriers that have been affecting the growth of the Indian manufacturing sector for decades include the lack of domestic demand, competition from foreign markets, high input costs, supply chain bottlenecks and decreasing profitability. In addition to this, other challenges– such as bureaucratic hurdles, policy paralysis, and logjams in the implementation of key reforms,can be resolved with government intervention. With the Indian government promotingthe ‘Make in India’ programme at a global level, some of these issues have been addressed;though many are yet to be resolved.