Revving Up Foreign Manufacturing In India: The Power Of Gati Shakti
The Gati Shakti (Speed Is Strength) Mission dovetails elegantly with PM Modi’s “Make in India” policy. But – what is it and how is it relevant to a UK manufacturer?
Gati Shakti is a digital platform that brings together Government of India Ministries for integrated planning and coordinated implementation of infrastructure connectivity projects. Its goal is to facilitate the last mile connectivity of infrastructure and reduce travel time for people and goods. It’s a key ingredient to India’s global manufacturing hub ambition.
By creating this multi-modal platform, sixteen Government departments now have a process to remove previous bottlenecks, digitising a previously cumbersome approval process. It ensures planning is holistic, sustainable and collaborative across departments avoiding costly, siloed decision-making.
The mission’s name is no coincidence. The logistics sector is a key beneficiary. The sector will improve its speed of service to exporters and importers alike. Transportation enhancements automatically cascade into strengthening supply chains, so UK manufacturers may benefit from:
- Reduced transportation costs: Pockets by sector and location of India already mimic Western logistic costs of 8% and as low as 6%. However, the strategy to improve infra for freight movement and enhance rail accessibility will reduce average Pan-India transport cost of 12% to 18% improving trade profitability.
- Streamlined supply chains: Efficient transportation networks mean faster lead times. Excess inventory need reduces. Storage costs also decrease, improving cashflow – which frees up funds for other initiatives.
- Improved operational efficiency: Enhanced connectivity and reduced transportation can help manufacturers improve production lead times and their order fulfilment process, resulting in satisfied customers.
However, assessing India’s suitability as a manufacturing hub on one indicator alone is neither possible nor advisable. It is much better to determine the key factors relevant to you. In our experience, clarity comes from:
- The Helicopter View: Review key macro-indicators of policy, regulatory, fiscal and economic conditions. Develop a snapshot view of the India value chain in your segment to identify potential red flags. We have a lot of experience so, if need be, feel free to request a free consultation.
- Location, Location, Location: In India, you are spoilt for choice, but this variation means that getting it right matters even more. Comparing and contrasting multiple unfamiliar locations remotely can be daunting. The way we approach this is simple. Establish your key criteria such as supply chain capability, talent availability and connectivity. India does not always have reliable secondary research data, so take some local guidance.
- Understanding Legal Structures: To manufacture, you will need an India subsidiary. Set-up is not as complex as some suggest but before you start, you should ensure the Legal Entity choice is the best fit for your strategy.
- Managing Compliance: What may surprise you once you are set-up, is the array of different partners you benefit from and need to help you manage everything from ongoing compliance through to your workforce.
- From Inception To Production: Common to every factory set-up, you need to select vendors to fit-out the factory and to secure Government regulatory approvals. Rest assured, as the Government of India’s Access India Knowledge Partner, we know who to introduce you to!
The range of manufacturing businesses that can succeed in India is vast. Over the past few years, we have advised over one hundred companies across many sectors, from pet food to chemical companies. When implementing, the common success denominator is sound planning. Developing and using local intelligence to adapt is fundamental too.
Ongoing removal of red tape, ongoing dialogue towards an FTA, coupled with the potential of India’s domestic market are just some of the reasons UK manufacturers should prioritise capitalising on India today.
For further support and to fast-track your manufacturing enquiry quote ‘MAN-IND’ here.