India@2047: Manufacturing gained traction but there’s more to do, says Mahindra’s Anish Shah

New Delhi: India’s manufacturing has gained traction, but there is still room for improvement, said Anish Shah, Mahindra Group’s group CEO, at Mint’s India@2047 summit on Friday.

“From a manufacturing standpoint, there is clearly a lot more to be done. We’re still early in this game, so don’t want to leave the impression that we have done everything we need to, but I do firmly believe that we are on the right path,” he said.

When asked about India’s services exports reigning supreme over manufacturing exports, Shah said the scenario is a little better than ‘glass half full’. 

“The critics are right. Manufacturing has not taken off as much. It is 15-16% of GDP (gross domestic product) today,” he said, while expressing optimism.

Shah said the clear goal of having manufacturing-led growth as part of the journey to a developed India by 2047 will help industry set clear targets. “Manufacturing has to grow 16 times to reach this goal,” he said. 

He said India’s manufacturing costs should be lowered, ease of doing business should be elevated, and India’s local products should be globally competitive to make the country a developed nation by 2047.

“Indian quality has to be synonymous with some of the best quality in the world, similar to what Japan has done in terms of setting up perceptions around Japanese quality, and when we look at what’s required first, with the government’s vision, they’re very keen to work with industry to make it happen,” Shah said.

Also Read: The silver lining in India’s exports basket 

On India’s R&D sector, Shah presented a case study of the demand for Mahindra & Mahindra’s vehicles. ” Yesterday, the Thar had 176,000 bookings in 60 minutes. These are numbers in an industry where 3,000 per month is a good financial number to have, and that’s what we would typically plan for, and that is based on the quality of the vehicles, the design, the quality, the fit and finish technology inside it,” Shah pointed out.

“Now we’re still, I’d say, early in the game. There’s a lot more we need to do. We need to be able to take these to export markets. We need to be able to establish ourselves in other countries and succeed in other countries. And as we do that, we will see the power of Indian manufacturing,” he added.

When asked whether global trends such as protectionism and retreating globalisation were concerns, Shah said India’s burgeoning market, with its sheer size, will support the goal of developing India over the next two decades. “We have there is one of the biggest markets in the world will be in India, and therefore, as we get much better at manufacturing, that’s going to allow us to tap into the growing Indian market,” he said.

Also Read: Growing jobs, tepid output: Contrasting story of manufacturing sector in charts

Shah said a key step India needs to take to overcome a manufacturing rut is to indigenize the production of certain imported material. “Take a look at each of the elements of cost and manufacturing. On one end of the spectrum is electricity, on the other end is logistics. (There is) cost of materials coming in, and we have an inverted duty structure in some cases. Can we manufacture those materials in India in some cases at a lower cost? These are the steps necessary to boost manufacturing,” Shah clarified.

Ease of doing business

The industry leader advocated for greater ease of doing business in the country to be a driver of growth, as such policies can help lower costs of manufacturing. “If you want to set up a new plant in India, it takes two years, whereas in certain markets around the world, you can do it in three months because they have a plug-and-play approach. It’s not just about ease; there’s a cost associated with that as well,” Shah said.

He said scaling up manufacturing leads to the creation of more jobs, not just within the plant but across related industries like logistics, which is labour-intensive and generates additional employment. He emphasized that manufacturing also drives the growth of supporting ancillary industries.

As all eyes are on India’s rapidly expanding economy, Shah said the country can do away with the ‘China plus one’ philosophy – and that India stands on its own. “I have never been an advocate of the ‘China plus one’ strategy because I believe India stands on its own. India shouldn’t be seen as a ‘plus one’ in any scenario, and we’re witnessing growing global interest in the country,” Shah said.

“Many companies have already come to India, and if you look at the capability centres and what these companies are setting up here, they’re hiring a significant number of people. I recently attended the Berlin Global Dialogue, where CEOs, primarily from Europe but also from other continents, discussed one common theme: how can we do more in India? The interest is clearly there,” he added.

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