Immediate challenge is to restart existing manufacturing facilities amid labour shortage: Official

The immediate challenge before the industry and the government is to re-start the existing manufacturing facilities amid labour shortage, a senior commerce ministry official said on Saturday.

Sanjay Chadha, additional secretary in the commerce ministry, also said the domestic industry needs to scale up its manufacturing capacity and become more competitive.

Speaking at a webinar, organised by the PHD Chamber of Commerce and Industry, he said multinational firms are not looking to move out from China as balance sheet or profit margins are good there, and China itself is a big market for them.

"The immediate challenge is to get the existing production going" as labourers have gone back," he said, adding that the government also needs to support the industry to come out of this Covid-19 crisis.

When asked about electronics manufacturing in India, he said things are being worked out with the ministry of electronics and IT to get chip manufacturing in India.

Citing one of the instances reflecting India's lag on the large-scale production front, the official said that in one of the interactions between a domestic firm and a US-based retailer, the American firm stated that it needed about 40,000 pairs of shoes a quarter, but the Indian firm did not have the capacity to supply this order.

"We need to scale up and we have to be more exportable...," the additional secretary said adding that currently, the industry can gain in the short term but in the long run, "we need to look at factor of production and logistics costs".

He said that more needs to be done to boost manufacturing in the country.

Further, the official said that companies are shifting to Vietnam because the country has free trade agreements with the US, Europe, Australia and India, and these factors also play a ley role when MNCs look to shift.