The View | Make in India: Who needs another manufacturing powerhouse?

A Zimbabwean friend once explained to me why he preferred the country’s long-time corrupt and tyrannical president to remain in office. He assumed Robert Mugabe had already siphoned off a satisfactory cache of country’s wealth, whereas a newcomer would start a fresh plunder of the coffers.

This is strange analogy, but such a principle roughly applies to China in its role of “factory of the world”. Even if we are critical of China’s reckless, predatory industrial supply build-out, the glut already exists. Do we really want another country to start anew?

Now it might be India’s turn to follow the export-oriented manufacturing development path. Prime Minister Narendra Modi has staked his political life on the “Make in India” campaign, and with some success. Last year the country received more in foreign direct investment flows than China, for the first time. Foxconn plans to hire up to 1 million workers there. Western companies are shifting production there and Indian producers are expanding.

Not only does India seem to have the right demographics for a manufacturing boom, but the global overcapacity in commodities offers an opportunity for India to invest in capital stock on the cheap. And by all means, the country needs better roads, bridges, ports and power infrastructure. And on the margin, more factories. But the next manufacturing powerhouse?

There are two obvious concerns that come to mind. One is that the existing manufacturing supply glut is a deflationary drag on regional and global growth. The other is environmental. As it is, India already has 13 of the world’s 20 most polluted cities.

When China opened to the world for business, it gave producers in the West an opportunity to escape high wage bills, and to enjoy much lower regulatory costs. As the saying goes, the world “outsourced” its pollution to China.