India’s cost competitiveness in manufacturing vis-à-vis Europe may decline from current level of about 44% to 30% by 2023 owing to growing labour costs, according to an Assocham-Roland Berger joint study.
“Manufacturing in India is currently 15% cheaper than Europe but the cost difference is reducing due to increasing wages and other costs,” noted a study titled ‘Indian Auto Industry: The way ahead,’ conducted by The Associated Chambers of Commerce and Industry of Industry of India (Assocham) and Roland Berger Strategy Consultants.
It highlighted that India has a natural cost advantage in engineering works vis-à-vis Europe, being over 44% currently and by 2023; India is expected to still be 30% cheaper than Europe.
“There is a need to encourage industry-academia collaborations to understand innovation requirements better, besides funds should be attracted from private sector to support research at academic and R&D institutions,” recommended the Assocham-Roland Berger study. “Availability of both basic infrastructure facilities and skilled workforce can increase the scope for R&D centres in smaller cities and towns,” it added. The study also suggested that Government must cut red tape as bureaucratic hurdles are primary reasons for India’s tough business environment.