In September 2014, Prime Minister Modi launched his “Make in India” campaign. With labour costs rising in China, the campaign aims to encourage companies to switch their manufacturing and assembly to India. Long seen as an ICT and services hub, India hopes to build a reputation in the 21st Century as a manufacturing powerhouse. But where does that leave Europe?
Hourly manufacturing labour costs in India average about 25% those in China ($0.92 per hour as opposed to $3.52), and wages in both countries are many, many times less than in Europe. News that the world’s 4th-largest smartphone maker, China’s Xiaomi Inc., is opening an assembly plant in the Indian state of Andhra Pradesh is certainly a boost to “Make in India” (though analysts warn that India still lacks the investment in infrastructure that multinational corporations would need to fully make the switch).
Will Modi’s “Make in India” campaign benefit Europeans as well as Indians? Or is it a recipe for higher unemployment in Europe? To get a reaction, we spoke to Blaise Fernandes, Chief Executive Officer of Gateway House, an Indian foreign policy think-tank.
Fernandes argued that outsourcing a larger share of manufacturing to India would be a win-win for everybody, as increasing purchasing power in India would lead to a bigger market for European products, and a bigger Indian middle class would boost tourism in Europe:
To get another perspective, we also put the same question to Claude Moraes, British Labour MEP and member of the European Parliament Delegation for relations with the countries of South Asia. What would he say?
On the one hand, we’re in a global marketplace and it’s important for the EU to be trading with India… On the other hand, we need to ensure any trade relationship is balanced and fair for both parties. But, overall, I think it’s a good sign that there is a fluid trade relationship between the EU and India, given that India is a rapidly-growing economy compared with Europe.
Should European companies outsource to India? Or would outsourcing manufacturing to India only increase unemployment in Europe? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!