China's manufacturing profits fell sharply more than expected in the year to March, data showed on Thursday, suggesting the country's manufacturing sector is struggling to recover despite the lifting of -most restrictions related to COVID-19. What does this mean for India? Let's see.
Manufacturing profits in China fell 21.4% in the three months to March 31, data from the National Bureau of Statistics showed. The decrease was much larger than the expected decrease of 12% and was in sharp contrast to the increase of 8.5% at the same time last year. Industry profits fell by almost 23% in the first two months of 2023 – the worst decline since mid-2020, at the height of the COVID-19 pandemic.
The decrease is partly due to a decrease in foreign demand. Companies today are more concerned about the resilience of their supply chains and are therefore looking to expand their supplier networks, and this is clearly an indication for India to move ahead of China.
By 2030, India can become the manufacturing centre of the world. It could add more than $500 billion a year to the global economy. According to the Department of Promotion of Industry and Domestic Trade (DPIIT), India has become one of the most attractive investment destinations in the manufacturing sector. Total investment in the manufacturing sector between April 2000 and June 2021 was $100.35 billion. In May 2020, the Indian government automatically increased foreign direct investment in the defense industry from 49% to 74%.
India must be careful not to lose this tailwind. Because this is a one-time economic opportunity for India. India has the physical and digital infrastructure to make a sincere effort to be a key player in global supply chain mechanisms such as production linked incentive (PLI) schemes as a platform for global industrialization, said the economic survey, as global supply disruptions are expected to intensify this year due to the conflict between Russia and Ukraine, Western limits on Russian oil prices and the rise from -new Covid-19 in China.
The pandemic has had a significant impact on global manufacturing networks, dramatically changing logistics costs and purchasing networks. Manufacturing has responded as one of the fastest growing sectors in India.
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