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India set to become global manufacturing hub

With the emergence of a vast domestic market and relatively low-cost workers with advanced technical skills, India is on the verge of becoming a manufacturing powerhouse within the next five to 10 years.

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With the emergence of a vast domestic market and relatively low-cost workers with advanced technical skills, India is on the verge of becoming a manufacturing powerhouse within the next five to 10 years.

More and more multinationals are setting up manufacturing operations in India. Ford, Hyundai and Suzuki all export cars from India in significant numbers. LG, Motorola and Nokia all either make handsets in India or have plans to start, with a sizeable share of production being exported, according to a new report.

<b1>ABB, Schneider, Honeywell and Siemens have set up plants to manufacture electrical and electronic products for domestic and export markets.

The new report, entitled "What's Next for India: Beyond the Back Office," by The Boston Consulting Group and Knowledge@Wharton, says India has been behind in manufacturing sector mainly due to poor infrastructure, bureaucratic red tape and restrictive labour laws.

"Over the past five or six years, many firms have restructured their manufacturing operations and implemented world-class practices," says Arindam Bhattacharya, a partner in BCG's New Delhi office.

"Slowly but surely, they have started building a globally competitive manufacturing base in industries like pharmaceuticals, auto components, cars and motorcycles."