Rajesh Shukla’s views on “The Impact of China’s Growth on India: Navigating Challenges and Opportunity”

The growth of China as a global economic powerhouse still has effects across its borders, especially in the developing countries. Considering the Indian viewpoint, it poses a query.  The ever-changing climate presents both possibilities and problems for Indian enterprises, investors, and authorities. Given how quickly the world is changing, it is even more important to understand these processes.

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Shifts in Investment Patterns

As more recent trends suggest a drastic change in the investment patterns for Indian MF’s and high net worth individuals with a major portion of them shifting to South East Asian Region, especially China. As the studies reveal more than 30% of Indian HNI wealth is invested in outside Indian markets and a part of this is increasingly going to China. This trend also shows why many people are optimistic with their investment in China due to its rapid growth as well as the returns on investments.

The Manufacturing Dilemma

The fact that China can afford to provide low prices for manufacturing is one of the emerging problems for Indian manufacturers. China, being the world's largest manufacturer, benefits from economies of scale and cutting-edge production practices. For example, the country is responsible for manufacture of more than 28% of world commodities which also puts Indian manufacturers at a competitive incapability for prices and manufacturing capacity.

This type of competition constitutes a threat to the Indian manufacturing industry which is an engine for growth and employment in the country. Other manufacturing sectors like textiles, electronics and even automotive components may become highly competitive as Indian firms could not keep pace with the implementation of new technological advancements like the Chinese companies. In response, Indian manufacturers have to learn new technologies and the same shall be adapted by their industries towards more systematic and efficient processes with the aim of reducing costs and increasing manufacturing capacity.

The Risk of a Working Capital Crisis

Imminent threats to the availability of the working capital of Indian businesses are posing challenges as the level of rivalry rises. Emphasis on the economy along with the rising transportation and real estate costs due to supply chain issues is expected to hamper performance and profitability. Indeed, a recent report suggested, the logistics costs India is about 13%to 14% of the GDP which is still higher as compared to most of the developed countries. The higher cost is due to inefficient transportation, ware housing and related infrastructure.

In order to address the above risks, companies from India must find ways of revolutionising logistics in order to bring the costs down. Transforming supply chain management practices with new technologies and improving inventory management efficiency can greatly improve liquidity and the overall economic position.

Investing in Skill Development

In this situation, the role of skill development becomes very crucial in India. As the industry advances, so does the demand for the skilled labour force. The recent analysis of the National Skill Development Corporation notes about 300 million skilled hands will be required in India equivalent to the demands of the industry by the year 2025.

Due to increased demand of skill development Many NGOs and Institutions have come forward to provide skill related education and the education which can help in generating employment and improving the per capita income.

Narayan Shastri Institute of Technology / Institute of Forensic Science & Cyber security is the university who is providing skilled based development. University is more focussed on giving Skill Training to people which shall help in creation of employment rather than just giving a degree their students. The university is a role model for many institutes in India. The similar example is an NGO, Jagoo Nari Federation, the NGO provides skill training to underprivileged girls and ladies in India. Their recent achievement is their skill training given to girls for making Nests. This has created the jobs for over 15 K girls in India. These girls are further giving the training to other girls and by seeing the demand of these nest it is further going to further involve more people. Forensic science is a field where there shall be demand of approx. 5 Lakh people every year from 2026.

The Government and players in the industry need to work together in order to make sure that vocational training and education are improved. This way, India will be able to develop a world class manpower that fits into the market especially the technological and manufacturing sectors.

Strategic Changes for Business Promoters

To effectively address these threats, Indian business promoters should have to make strategic changes in management practices. To increase operational functioning and expand the market, it is necessary to hire competent and experienced workforce in the relevant fields. Additionally, fostering a strong sense of teamwork and permitting appropriate task delegation will increase the business's adaptability. Promoters must focus on understanding market demands and consumer preferences. This insight can drive product innovation and help businesses respond swiftly to changing market conditions.

Long-term Strategic Recommendations

To remain competitive The key is adaptability, and Indian businesses should consider the following long-term strategies:

Invest in Technology: Adoption of mechanisation, artificial intelligence and data analysis enhances productivity and cuts costs. Technology will play the most important role in future and companies not adapting the technologies will be out of the markets.

Build Supply Chain Resilience: Stronger supply chains help address the issues posed by global supply chain interruptions.

Seek New Markets: Insurance against competition from China can be offered by expanding to other developing countries.

Enhance Cooperation: Bringing the two sectors together can nurture creativity and develop growth enhancing policies.

Conclusion

For India, China's expansion presents both a challenge and an opportunity. Growth opens up opportunities for innovation and planning. Indian enterprises can focus on skill development and resource optimisation to prepare for global market competition. In order to capitalise on this important turning phase of our economic trajectory, we will need to be adaptable and resilient. Looking ahead, many of the decisions we make today will shape India's economic prospects in the coming years.

An Article By Mr. Rajesh Shukla, Chief Strategist, National Intellectual Advisory, Mentor at Venture Studio Capital, Jagoo Nari Federation, and Padhega Bharat

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