India has a US$1.2 trillion plan to snatch factories from China

Hope is an initiative called PM Gati Shakti will fast-track projects to give India an advantage, especially with China mostly closed to the outside world

Asia’s third-largest economy offers cheap labour, and a talent pool of English-speaking workers, but rickety infrastructure may keep investors away

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An employee examines solar cells before lamination process at the Vikram Solar manufacturing plant in Oragadam, in the southern Indian state of Tamil Nadu. Photo: AFP

Published: 10:20am, 3 Oct 2022Updated: 4:06pm, 22 Oct 2022

In India, half of all infrastructure projects are delayed, and one in four run over their estimated budget. Prime Minister Narendra Modi believes technology is the solution to these perennial and notorious bottlenecks.

Under a 100-trillion-rupee (US$1.2 trillion) mega project called PM Gati Shakti – Hindi for strength of speed – India is creating a digital platform that combines 16 ministries. The portal will offer investors and companies a one-stop solution for design of projects, seamless approvals and easier estimation of costs.

“The mission is to implement projects without time overrun and cost overrun,” Amrit Lal Meena, special secretary of logistics in the ministry of commerce and industry, said in an interview in New Delhi. “Global companies choosing India as their manufacturing centre is the objective.”

Fast-tracking projects will give India an advantage, especially with China still largely closed to the outside world and companies increasingly adopting a China-plus-one policy – finding other countries to expand in or source from – to diversify their businesses and supply chains. Asia’s third-largest economy not only offers cheap labour, but also a talent pool of largely English-speaking workers, even though rickety infrastructure keeps many investors away.

“The only way to compete with China, apart from the fact there are political requirements of countries to move away, is to be as competitive on the cost as you can be,” said Anshuman Sinha, a partner at Kearney India who leads transport and infrastructure practices. “Gati Shakti is about making it easier to have a flow of goods and manufactured components across the length and breadth of the country.”

The key pillars of the project are identifying new production clusters that don’t exist today, and linking those sites seamlessly to the nation’s railway network, ports and airports, Sinha said. “If you peel the layers of Gati Shakti, it’s made up of identifying nodes and strengthening the logistics network connecting those nodes.”