India is looking to capitalise on the shift away from China as companies diversify their global supply chains, before the window of opportunity closes.
HOSUR/CHENNAI/SANAND - When Mr Ganesh Sethuraman moved to India in 2023 to set up a new manufacturing facility for his Singapore employer, JLK Automation, he quickly learnt that perseverance was essential for doing business in the country.
Nestled among metamorphic rocks, the small town has no cinema hall, mall or park, but is an ideal home for the JLK factory. It is situated just 42km from Indian giant Tata Electronics and 90km from Foxconn’s new factory near tech hub Bengaluru’s international airport. – after Bengaluru – and third-largest financial and banking hub, the city in Haryana accounts for approximatelyWorld Bank president Ajay Banga called this moment India’s “window of opportunity that is available only for a short period” of three to four years before alternative supply chains are set up. Some economists estimate the window will be open for up to 10 years.
American plane manufacturer Boeing opened its largest engineering centre outside the United States in the tech hub of Bengaluru in southern India, while GE Aerospace is making more aeroplane parts in the country for export. TSMT Technology, a Taiwanese manufacturer of circuit boards for phones, has been in Chengalpattu, Tamil Nadu, since 2017. It employs 800 workers. PHOTO: RAMESH S.
Wistron quit India over labour issues in 2023, but its operations were quickly taken over by Tata Electronics at its plant in Hosur. Electronics exports grew from US$8.4 billion in 2018-2019 to US$22.7 billion in 2022-2023. Over half of that boost came from mobile phone exports. According to Indian government figures, more than 440 companies from Singapore are registered in India in various sectors, including JLK, industry solutions company Flextronics Technologies and manufacturing services company Hi-P.
The programme, which starts in May, will offer 50 internship positions of three to six months at 13 Indian and Singapore companies, including CapitaLand Investment and Tata Steel. It aims to offer Singapore university and polytechnic students “first-hand experience of the local corporate and business culture”.
For “long-term competitiveness”, however, the “government’s real task is to improve the component ecosystem” that supplies parts to foreign multinationals, said Ministry of Electronics and Information Technology secretary S. Krishnan. He said the next round of incentives from the government would focus on electronics component manufacturing.
At Micron’s upcoming plant in the Sanand Industrial Estate in Gujarat, multiple signs warn workers not to drive above the speed of 10kmh. India’s federal government approved Micron’s project in June 2023, and within a week, land was identified just 36km from Ahmedabad, Gujarat’s capital, and an agreement signed between the company and the state government.
Micron Technology’s senior vice-president of global assembly and testing Gursharan Singh said “the abundance of highly skilled engineering talent in India will enable us to scale our operations quickly”.Dr Rahul Gupta, managing director of the Gujarat Industrial Development Corporation, said a substantial portion of land at Sanand has been earmarked for Micron’s vendors like South Korea-based Simmtech, which makes circuit boards for semiconductors.
Upgrading manufacturing is crucial for India to sustain its high level of growth, reduce poverty levels, and provide meaningful employment to a young population. India has 246,504 factories and over 3,800 industrial parks, and hires 35.6 million workers, compared with China’s 2.8 million factories, over 20,000 industrial parks and 83 million workers. However, it took China 20 years to rise from the world’s sixth-largest manufacturer in 1990 to pole position in 2010, overtaking the US. In 2020, India ranked sixth.
Efforts are under way to plug these gaps, including a single-window system to help businesses get clearances faster amid doubled investment in highways and ports. “It can take two years for companies to lease land from the government and build a factory. But if they use our ready-made factories that have power, water connections and all the approvals, they can start operating in just three to six months,” said CapitaLand India’s chief executive Sanjeev Dasgupta.
American manufacturer TPI Composites makes 79m-long blades for Danish wind turbine-maker Vestas. PHOTO: RAMESH S.Mr Jules Shih, director of the Taiwan External Trade Development Council in Chennai, said a big culture shock for Taiwanese companies in India is the “extreme slowdown” in the government’s processing of paperwork once the foreign manufacturer is actually in India.
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