India has made a bold and ambitious pledge to become a global manufacturing hub via the “Make in India” program; however, the reality on the ground tells a different story. The policies, incentives, and international interests surrounding India’s manufacturing capacity are growing, but how far India can take this ambitious agenda seriously is made difficult by the poor infrastructure in vital industrial regions. Let’s delve into this topic more!

The Sad Reality of Industrial Areas Around Delhi

When walking through the industrial areas around Delhi—be it Sahibabad, Karkardooma or Okhla—it is clear to see the mess that has been created. Roads are often in bad shape, either broken, uneven or simply clogged with traffic, in addition to the dirt and rubbish scattered everywhere, and the dirty open drains and filthy canals that are blocked. The industrial areas around Delhi are sometimes cleaned, but it is occasional, leaving the areas in an unhealthy, desolate state, which would also make investors think twice.

When manufacturers have to continue operating in sectors with such bad road conditions, efficiency and productivity are often sacrificed. Trucks with raw materials and finished goods waste hours traversing these industrial areas, while workers also contend with unsafe, unhealthy and unhygienic conditions. The overall result is that businesses are spending extra amounts of money on maintaining their workplaces, transportation, logistics and maintenance.

Why Infrastructure is the Backbone of Manufacturing

Strong infrastructure is paramount for manufacturing. Good roads, reliable access to logistics, effective management of waste and clean surroundings are not perks; they are essential requirements. China, Vietnam and South Korea have built a strong physical ecosystem while also growing their industrial base to attract foreign investors to the local and global market.

In India, however, the disparity between vision and reality is stark. While policymakers are talking about ramping up exports and attracting global firms, the lack of basic civic amenities in industrial zones is sufficient enough to make these goals seem ludicrously ambitious. An ill-maintained factory will not compete on a global scale while being buffered by broken access roads and clogged sewer drains.

How It Affects India’s Global Competitiveness

Global manufacturers take into account many considerations besides labor costs when deciding where to locate their plants. They will consider the efficiency of the supply chain, logistics support, and the ease of moving goods across borders. In the industrial belts of Delhi, the combination of unfortunate connection and neglected infrastructure adds costs that are coupled with productivity losses, with the knock-on effect of producing elevated unit costs for products, which makes them lack competitiveness.

Additionally, pollution and unsanitary surroundings also affect workers’ health, which means they are less productive and more likely to be absent from work. Companies have a challenging task of achieving productivity—maintaining the highest quality and throughput and staying within timelines is all significantly compromised—getting back to those levels will set India’s profile as a low-cost manufacturing destination back even further.

The Way Forward: Infrastructure First

If India is serious about establishing itself as the global manufacturing center, it is time for authorities to focus on the infrastructure. Some key areas to focus on are:

• Improving Roads: Smooth, wide roads to facilitate truck and cargo traffic.
• Waste Management: Routine clearing and cleaning of canals, drains, and public areas.
• Transportation Support: The logistics of better transportation connectivity to ports, airports and highways. 
• Work Environment: Clean, safe industrial zones where workers can easily work.

Gireesh Sharma

Director, Manufacturing Industry

 //andrespenabad.com