InvestSense Webinar Series

Create Wealth in India's Manufacturing Industry : The SHIFT Strategy

September 2, 2020 @ 5:30 PM – 6:30 PM

Webinar : Create Wealth in India’s Manufacturing Industry – The SHIFT Strategy

Create Wealth in India's Manufacturing Industry : The SHIFT Strategy

September 2, 2020 @ 5:30 PM – 6:30 PM

Vikas Khemani – Founder, Carnelian Capital

India is at the cusp of manufacturing cycle turn-around, primarily led by 3 factors: 1) Import Substitution 2) Rising exports opportunity 3) Market consolidation whereby big becomes bigger

A. ) Over the last 5 years, a lot has happened in term of following reforms in the Indian economy that should result to increase in manufacturing in the coming years :

  • Tax Reforms: GST brings one nation one tax & thereby reduced many inefficiencies in terms of cost, logistics, warehousing, etc. Also, GST has introduced a formalization of businesses.
  • Investment Reforms: FDI Limits across sectors like manufacturing, defense, retail have been made liberal with conditions of local manufacturing.
  • Transportation Sector Reforms: Creation of a transportation network through rail and road connectivity.
  • Power Sector Reforms: Power generation to aid industries across the country.
  • Land Reforms: Creation of SEZ and special zones for businesses and factories, earmarking land and easing approval process
  • Availability of capital to various industries.
  • Tariff and non-tariff barriers to entry of foreign manufacturers.

B.) India makes eco-system conducive to boost Manufacturing :

  • Domestic labor cost is half to one-third of China as China has systematically increased minimum wages, the Lowest Tax rate in the world. Lower Logistics & Power costs.
  • Led by anti – China sentiments major global manufacturers are looking at a China +1 strategy, global exposure, and dependence on Chinese manufacturers is expected to reduce.
  • Strong domestic consumption markets.
  • Proven entrepreneurship across sectors and businesses represent the skillset and capability of Indian businessmen.
  • Tariff and non-Tariff barriers implied on external businesses like special registration requirements, reducing the automatic FDI options to countries.

Thus, 3 – Fold impetus to Indian Manufacturing :

  • Import Substitution
  • Export Opportunities
  • Market Share Consolidation

Import Substitution: is a major trend triggered by COVID and the Geopolitical situation, the Indian government and manufacturers are looking at ways of stepping up manufacturing in India. Import substitution across sectors like pharma, electronics, computer hardware, machinery, etc.

Export Opportunity: Globally as countries look for a China plus one strategy, India has a lot of things going for her to gain global export markets. Global majors like Ford, General Motors, Apple, IBM, etc are setting up manufacturing facilities in India to create a reliable and stable source of products.

Market Share Consolidation: As the crisis unfolds in all forms, companies with a healthy balance sheet and access to capital with good product development and research capabilities will become bigger and gain market share. Effectively, these companies will also create moats and barriers to entry and ensure successful multiyear growth strategies.

List of sectors that will benefit from Manufacturing boost and are expected to be part of Carnelian Capital PMS – “The Shift” Strategy focused on Indian Manufacturing: Chemicals, Capital goods, Consumer Electronics, Auto & Auto Ancillaries, Défense, Footwear, Metals, Papers.

Carnelian “The Shift” Strategy


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