It may seem strange to talk about a nation with one-fifth of the world's population being under the radar, but many observers make that case for India. Long known as a powerhouse for IT outsourcing and engineering services, India is receiving increasing attention as a manufacturing destination. With a fast-growing economy, emergent domestic market, well-educated workforce and independent judiciary, India presents an attractive destination in the global marketplace.
Of course, the yardstick that India is always measured against is China. While the Chinese manufacturing sector dwarfs that of India and enjoys a much more advanced infrastructure, experts note that China's failure to solve some persistent problems is having an effect. "People are getting tired of China, and the issues with product quality failure, counterfeiting and IP problems," says Noha Tohamy, vice president of research for AMR Research. "It is human nature to start looking for the next best thing."
More companies are adapting a "China Plus" strategy, observes Dalip Raheja, president and CEO of the Mpower Group, where they produce in China but also make sure they are manufacturing elsewhere as a way to spread supply chain risk. "The bottom line is, there is a huge opportunity for companies to start manufacturing in India," he says.
The economic ties between the U.S. and India are considerable and likely to grow dramatically. India is the world's 12th- largest economy, and recently has experienced GDP growth of 8% to 9% annually. While its economy has slowed this year, observers still expect GDP growth in 2009 of approximately 5% to 6%. The U.S. is India's largest trading partner, with merchandise trade between the two countries of $41.6 billion in 2007.
Last year's nuclear cooperation agreement between the U.S. and India marked the beginning of a new era between the countries, according to a Confederation of Indian Industry (CII) report. Given the right conditions, said CII, merchandise trade could increase to $320 billion by 2018. The report notes that India intends to import 24 reactors in the next 11 to 15 years, and could create as many as 20,000 new jobs in the U.S. as a result of nuclear trade.
In June, Secretary of State Hillary Clinton encouraged a closer relationship between the two countries, referring to "U.S. -- India 3.0," a third era in the U.S.-India relationship where cooperation between their governments would "catch up with our people-to-people and economic ties."
Clinton observed that a "funny thing happened on the way" to this third era: "Our scientists and business people, our universities and movie studios, and vibrant Indian-American personal familial connections accepted the truth that cooperation between our counties can be a driver of progress long before our policymakers did."
INOX Air ProductsHundreds of major U.S. businesses, of course, know India well. Ten years ago, Air Products, the manufacturer of industrial gases, began a joint venture with INOX. Today, the company has 34 operations across India and 1,100 employees supplying bulk and packaged gases to industries including steel, pharmaceuticals and chemicals.
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