The country lagged significantly behind countries like China (USD 189.1 billion), Brazil (USD 86.1 billion) , Australia (USD 61.6 billion), and Canada (USD 52.6 billion) as noted in the World Development Report 2023, it said.
It suggested that India must offer a more competitive cost structure to attract businesses shifting from China or considering alternative production locations.
For this, India needs to address the four cost-related components – labour, rate material, energy and financial costs.
“In India, raw material costs are higher for non-traditional productions due to import dependence and high tariffs. China benefits from lower costs due to large-scale local production and efficient supply chains, while Vietnam offers competitive costs with low or zero tariffs on imports,” GTRI Founder Ajay Srivastava said. He said that the financial costs in India are the highest, with lending rates around 9-10 per cent, while China enjoys lower interest rates at 4-5 per cent, and Vietnam’s rates are moderate at 7-8 per cent. “India needs to address these costs and strive to be the most cost-effective option,” Srivastava added.
To further improve the ease of doing business, the GTRI suggested the identification of priority sectors, particularly those where India’s manufacturing and export capabilities are currently weak, such as electronics, computers, telecom, precision equipment, and factory machinery.
Secondly, invite top global firms as anchor manufacturers. These firms can drive technological innovation and improve productivity across sectors.
“Additionally, there is a need to ensure quick factory-to-ship movement. Improving logistics through dedicated freight corridors and strategically locating industrial zones near ports will streamline port and customs processes, facilitating faster shipments,” it added.
Recommending to create a framework for evaluating investment proposals, it said investments involving technology transfer must be assessed for their potential to enhance local technological capabilities, especially in high-tech areas where India aims to close gaps.
