An existing workforce of some 400 million workers, India is also poised to reach a development ‘sweet spot’ – with millions of young Indians pouring into the domestic workforce over the next decade. By 2025, it is estimated the available Indian workforce will have overtaken that of China and reached some 900 million Indians.
Across the Asian manufacturing destinations, the average minimum salary comparisons depict that Indian workforce, adding in the mandatory social welfare costs, is available at 22 percent of the price of their Chinese counterparts.
The global manufacturing, over the next two decades, will experience a positive raise due to an inexpensive and young workforce in India. If the new government formulates right investment policies, cut down on bureaucracy, reduce barriers on foreign investment and introduce a balanced tax regime, then this workforce can be utilized for greater good. In turn, will create a large chunk of the global supply chain move to the country and will boost an Indian economy.
The Indian wage statistics also projected emergence of middle class consumers throughout Asia. The middle class consumer base of China is expected to rise while that in ASEAN – with which India has a Free Trade Agreement – is also expected to rise during the same period. India’s middle-class consumer base is also expected to rise, albeit it at a slower pace, as the country needs to absorb the large numbers of Indian workforce entering the employment pool. It can be inferred as a good news for India. India’s FTA with the ASEAN nations has reduced import duties to zero on 90 percent of all products traded between these two. Preferring India as a manufacturing base to reach out to the growing ASEAN consumer market is a sound strategy.
The significant factor is that India needs to invest a huge amount to fix its infrastructure development issues. While China’s workforce costs will continue to increase, India’s infrastructure gap will narrow over time. The scenario indicates NOW as the right time for global manufacturing businesses to start examining India. The latest example is of the American auto manufacturer Ford who recently established its Asian manufacturing hub in Gujarat. The new set-up has a tremendous demographic opportunity to steer India’s economy over the next two decades. India has a good chance to show that it can be the workshop of the world and can export “Made in India” labels around the globe.