Wednesday, January 20, 2021

Report - Cushman & Wakefield

Laggard zone


India has been ranked 24th in the global manufacturing locations list for its infrastructure cost


In a recent survey done by Cushman & Wakefield, leading global real estate solutions provider, India has emerged as the 24th most preferred global manufacturing destination in the world.  The report titled ‘Where in the World: Manufacturing Index 2014’ ranks 30 global manufacturing destinations across the world on factors that are likely to affect the successful operation of production facilities in these countries with the largest manufacturing output, as defined by UNCTAD (United Nations Trade and Investment). Asian markets dominated the survey with all top five positions being occupied by Asian countries. Malaysia tops the survey of being the most favourable manufacturing location in the world followed by Taiwan (2nd), South Korea (3rd), Thailand (4th) and China (5th). The survey took three broad parameters of Conditions, Risk and Costs into consideration whilst ranking the locations. India’s overall ranking of  24  puts it ahead of countries like Spain, Italy, Germany and Belgium with cost being its major advantage on the global map of manufacturing.


In India, cost aspects specifically labour and construction cost are still lower than its European counterparts. India ranks 12th globally in the cost category, due to the availability of the  cheap labour, electricity   property registration fee and overall construction cost, ahead of developed economies such as USA and Canada. However India scores a dismal 30th (last on the ranking table) on the parameter of risk that includes business and energy security as core components due to instability in the economic and political conditions.  India also scores low on conditions (24th) that include key aspects like talent, logistics, business environment and sustainability. In
the report, three principal areas – costs, risks and conditions – are analysed and broken down again into more than 30 sub-categories.  Factors including logistics; the likelihood of natural disaster; economic risk; and energy and labour costs are all taken into consideration and individually weighted to create an illustration for comparison. The index takes the example of a company with highly mechanised operations, which generally requires unskilled labour, operating within a multi-regional market for a single finished product. These type of companies typically target a growing urban population and consider sustainability to be an important factor. All of the countries have been ranked using this example as a benchmark and the category weightings reflect these requirements.


Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield  said “One of India’s main drawbacks as a manufacturing destination has been the land cost and the process of acquisition of land.

Therefore to ensure that India’s manufacturing sector sees the desired growth, the government would have to take measures to streamline processes in the backdrop of the new LARR bill. India has some inherent advantages as a manufacturing destination due to its strategic location on the global map allowing access to the markets of South and South East Asia. Additionally India’s domestic market and consumption is a key force for growth of the Indian manufacturing sector. India’s current economic outlook and political situation may have been a short term deterrent for foreign manufacturing companies to enter into India.”

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