What are some items that are mostly imported from China but can be profitably manufactured in India itself?

Let’s first understand the current situation of manufacturing in India by analyzing the data. As per the world bank data, despite the launch of Make in India program in 2014, India’s manufacturing output in 2018 was 403 billion US$. Point to be noted is that in 2018, China's manufacturing output was 10 times the size of the Indian manufacturing output. In 2018, Chinese manufacturing output stood at a massive 4.003 trillion US$.

Now, let’s again come back to India. Out of this 403 billion US$ of manufacturing output, nearly 50% is generated by the auto sector. Therefore, if we take out the auto sector, then, despite the initiation of the Make in India policy in 2014, India’s manufacturing output in other areas is minuscule for a country with a population size of 1.35 billion.

Therefore, we end up importing simple common household goods from China. Goods like toys, plastic goods, Diwali Lights, electrical items, electronic items, souvenirs, etc. etc. The list of products that we import from China is endless thereby resulting in a massive trade deficit of 60+ billion US$ with China. That’s huge, 60+ billion US$ means approximately 4.5 Lacs Crores Rupees on a yearly basis. If we make all these goods in India itself rather than importing these goods from China, then, that surely will generate Lakhs or Crores of jobs in the country. So, why are not we making these simple common household goods in India given that the very purpose of the Make in India campaign was to boost India’s manufacturing? What is the problem?

Let’s understand this by taking a simple item like a plastic toy that is sold in India but is made in China. Why don’t Indian manufacturers make these simple plastic toys in India itself? To answer this, let us first understand the technical aspects of toys. A typical plastic toy comprises a shape (it could be an animal form, or doll, or human form, etc.). Once the shape or form is defined, then, battery or other accessories are fitted in the toy. It’s so simple and basic.

Now, let’s get going. To make the shape or form of the toy, an Indian manufacturer, or any manufacturer across the world would have to first develop the mold of that shape or form. This is the first step. Well, the first step is the 3D design in the computer, but the first real manufacturing step is the development of the mold to get the shape or form of the toy that we want to manufacture. This mold development step in India takes at least 5-6 times more time than what it takes in China. The Make in India program too failed to focus on these simple basic technical aspects of manufacturing in India. So, when mold development takes a huge amount of time, then, it is clearly understandable that the cost of the final product will rise. Besides the cost, the quality of the mold produced is inferior to what is produced in China. Now, when the shape or form of the toy is not only expensive to make in India but also inferior in quality, then, who will buy the final toy? Therefore, instead of making a simple plastic toy in India itself, our entrepreneurs have no choice but to bring the same toy from China and then sell that toy in India.

The second step in the manufacturing of this toy is getting the other parts. Parts such as the battery, and other accessories. It is true, we have to source these parts from other vendors. And since, when we ourselves are facing the challenges in manufacturing the shape or form of the toy in India, then, it is given that other manufacturers are also facing the same challenges to manufacture batteries and other accessories in India. The Make in India policy framework does not support bottom-up manufacturing and therefore all small scale entrepreneurs and MSMEs face similar challenges. Therefore, even if we are able to develop the shape or the form of the toy, then, it is inevitable, we will end up sourcing some parts from China. Maybe a battery or maybe other accessories. But surely, we would have to rely on China.

The third step is ‘assembly’. Now that you have the mold to make the shape or the form of the toy. And you also have the other necessary parts to make the complete toy. The next step is the assembly. Automating the assembly line would require a huge amount of money, therefore, a small scale entrepreneur or the MSME that decides to make the toys in India would deploy manpower to do the final assembly of the toy. However, manpower in India is not properly trained, therefore, it can take months before the assembly line is perfectly fine-tuned. And no entrepreneur in India wants to wait for months before getting the desired high-quality toy. Therefore, most people would instead bring goods from China and then sell them in India. The Make in India initiative does not give the right tools for entrepreneurs to make goods in India itself.

Therefore, unless and until Make in India policy focuses on boosting and promoting small scale entrepreneurs and MSMEs, we would continue to source simple common household goods from China. Entrepreneurs shall be involved in the final draft of the Make in India policy. The policy shall encourage India’s entrepreneurs and MSMEs. The current policy only focuses on attracting global companies to India. And no global company makes simple common household goods. These simple common household goods can only be made by Indian entrepreneurs and MSMEs. But at the moment, there is no policy support to these entrepreneurs and MSMEs. And therefore, we continue to source simple common household goods from China.