India holds significant potential in high-tech manufacturing, underpinned by its vast domestic market and a deep reservoir of engineering talent. However, several structural challenges continue to impede its ability to compete with established players such as China, South Korea, Japan, and the United States.
One of the most pressing obstacles is access to advanced technology. Unlike its global competitors, India lacks well-developed technology clusters in critical sectors such as semiconductors, aerospace, and medical devices. This reliance on foreign collaborations and technology transfers not only limits autonomy but also creates vulnerabilities in strategically sensitive industries.
Another challenge lies in the absence of a robust high-tech manufacturing ecosystem. India’s industrial base lacks the depth of supply chain linkages and partnerships necessary for rapid scaling. Global firms are often hesitant to collaborate with Indian manufacturers due to limited experience in cutting-edge production. This creates a self-reinforcing cycle where the lack of credentials prevents Indian firms from integrating into high-value global supply chains.
Furthermore, India faces a significant talent retention issue. Despite producing a large number of engineers and technical professionals annually, many migrate to higher-paying markets abroad. This brain drain exacerbates workforce shortages in critical areas of high-tech manufacturing.
Despite these challenges, India’s achievements in low-tech manufacturing provide a strong foundation for its high-tech aspirations. By building on this base, India can create spillover benefits that accelerate its transition to advanced manufacturing.
Infrastructure development offers a clear pathway for this transition. Addressing long-standing issues such as energy reliability and logistical inefficiencies will not only benefit low-tech industries but also enhance the viability of high-tech sectors. For instance, improving transport networks and energy supply chains can reduce bottlenecks that hinder high-end manufacturing.
Workforce development serves as another critical bridge between low- and high-tech industries. Structured vocational training programs tailored for low-tech sectors can gradually upskill workers for more sophisticated applications. This approach ensures a steady pipeline of talent capable of supporting India’s high-tech ambitions.
Traditional manufacturing ecosystems have historically been organized around vertically integrated value chains, with tightly linked networks of suppliers, OEMs, and manufacturers. However, the digital revolution has disrupted this paradigm, giving rise to more modular and dynamic production systems.
The smartphone industry exemplifies this shift. Telecommunications providers, software developers, operating system creators, and device manufacturers now operate within distinct yet interconnected layers rather than rigid value chains. This layered structure fosters greater flexibility and efficiency by allowing firms to specialize in specific segments of the value chain.
For India to compete effectively in high-tech manufacturing, it must embrace this new paradigm. Rather than replicating traditional supply chains dominated by established players, Indian firms should focus on identifying lucrative niches within these layered structures. Specialization will enable Indian manufacturers to carve out competitive advantages in global markets.
India’s potential as a high-tech manufacturing leader is most pronounced in sectors where demand is growing rapidly and foundational strengths already exist:
| ● | Medical Devices: While India has established itself as a producer of basic medical equipment like blood pressure monitors, it has yet to make significant strides in advanced devices such as MRI machines. Strengthening production capabilities could position medical devices as a cornerstone of India’s high-tech ambitions. | |
| ● | Aerospace and Defense: Recent efforts have focused on component production and airframe assembly. Expertise in advanced materials engineering and precision manufacturing will be critical for scaling this sector. | |
| ● | Space Technology: Building on ISRO’s success in cost-efficient satellite launches, India has an opportunity to expand into commercial satellite manufacturing. | |
| ● | Semiconductors: With geopolitical shifts prompting supply chain diversification away from China, India is well-positioned to attract investments in semiconductor design and fabrication. |
Though in a different context, China’s rapid ascent in high-tech manufacturing offers potential lessons for India’s path forward:
| 1. | Talent Development: China prioritized STEM education to ensure a steady pipeline of engineers and technicians. | |
| 2. | Government Incentives: Targeted subsidies and R&D grants enabled Chinese firms to scale rapidly. | |
| 3. | Technology Transfers: By mandating joint ventures with foreign firms, China secured access to advanced technologies that bolstered domestic capabilities. |
Foreign Direct Investment (FDI) will play an indispensable role in advancing the nation’s high-tech manufacturing capabilities. Beyond capital infusion, FDI brings global best practices and cutting-edge technologies that enhance competitiveness. To mitigate risks associated with geopolitical fragmentation, India must diversify its FDI sources by engaging with multiple countries.
To attract global investors and technology partners, Indian policymakers must address regulatory complexities that deter foreign firms. Simplifying tax structures and easing compliance requirements will create a more conducive environment for investment.
Equally important is fostering competition rather than overprotectionism. Industries shielded by excessive government intervention often struggle to remain globally competitive. Encouraging open competition will drive innovation and efficiency across sectors.
India possesses the market size, talent pool, and industrial foundation needed to emerge as a global leader in high-tech manufacturing. Success will hinge on its ability to overcome structural challenges while leveraging opportunities through strategic investments and policy reforms. By embracing modular industry structures and drawing lessons from global best practices, India can position itself at the forefront of the high-tech revolution. The next decade will be pivotal—will India rise to meet the challenge?
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Kohki Sakata, CEO of IGPI Singapore
After joining Cap Gemini and Coca Cola, Kohki joined Revamp Corporation where he managed projects on global expansion and turnaround in various sectors including F&B, healthcare, retail, IT, etc. After joining IGPI, he has managed projects mainly on global expansion and cross border M&A in various sectors such as logistics, IT, telecom, retail, etc. In addition to his broad experience in implementing solutions that has been developed in Western countries, he has developed multiple methods to turnaround Asian companies with focus on setting clear vision and employee empowerment. Kohki has proven the practicality of these methods by turning around Asian companies not only as an advisor but also as senior management.
He graduated from Waseda University Department of Political Science and Economics and IE Business School.
Shivaji Das, Managing Director of IGPI Singapore
Shivaji has over 20 years of strategy consulting experience, specializing in New Business Models, Innovation Roadmaps, and Sustainability Journeys. He has worked with private and public sector clients across 25 countries in sectors like Technology, Semiconductors, Chemicals, Healthcare, Renewable Energy, and Construction. Previously, Shivaji was a Partner and Managing Director-APAC at Frost & Sullivan. His paper on Artificial Intelligence was presented at CAINE-2000 in Hawaii, USA. He is the author of seven acclaimed travel, art and business books including The Visible Invisibles and Rebels, Traitors, Peacemakers (both Penguin Random House), as well as The Great Lockdown: lessons learned during the pandemic from organizations around the world (Wiley, USA).
He is an alumnus of IIT Delhi and IIM Calcutta.
IGPI Group is a Japan rooted premium management consulting & Investment Group headquartered in Tokyo with a footprint in Osaka, Singapore, Hanoi, Shanghai & Melbourne, as well as parts of Europe and India. The organization was established in 2007 by former members of the Industrial Revitalization Corporation of Japan (IRCJ), a USD 100 billion sovereign wealth fund focusing on turn-around projects in Japan. IGPI Group has 13 institutional investors, including Nomura Holdings, SMBC, KDDI, Recruit & Sumitomo Corporation to name a few. IGPI Group has vast experience in supporting Fortune 500s, Govt. agencies, Universities, SMEs and funded startups across Asia and beyond for their strategic business needs and hands-on support across a wide variety of industries. IGPI group has ~8,500 employees on a consolidated basis.
* This material is intended merely for reference purposes based on our experience and is not intended to be comprehensive and does not constitute as advice. Information contained in this material has been obtained from sources believed to be reliable, but IGPI does not represent or warrant the quality, completeness, and accuracy of such information. All rights reserved by IGPI.
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