Global Manufacturing Risk Index_00.1
UPSC Exam   »   How to Prepare for UPSC CSE Mains Examination: Step-by-Step Guide for Beginners   »   Global Manufacturing Risk Index

Global Manufacturing Risk Index

Context

  • In the Global Manufacturing Risk Index 2021, India became the second most sought-after manufacturing destination globally, driven mainly by cost competitiveness.
  • India ranked second in the Global Manufacturing Risk Index 2021 by taking over the USA which now ranked third.
    • In last year’s report, the US was in the second position while India ranked third.
    • In terms of cost scenario ranking, India continued to retain the third spot like last year, while Vietnam is pushed to the fourth position from the third.

Global Manufacturing Risk Index_50.1

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Key Points about Global Manufacturing Risk Index

  • About Global Manufacturing Risk Index: It is released by the US-based property consultant Cushman & Wakefield.
    • It assesses the most advantageous locations for global manufacturing among 47 countries in Europe, the Americas, and Asia-Pacific (APAC).
    • The baseline ranking for top manufacturing destinations is determined on the basis of a country’s operating conditions and cost-effectiveness.
  • Key Parameters used for Ranking: Global Manufacturing Risk Index uses four key parameters for determining the ranking of a country. They are-
    1. Country’s capability to restart manufacturing,
    2. Business environment (availability of talent/labour, access to markets),
    3. Operating costs,
    4. Risks (political, economic, and environmental).

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Key Findings of the Global Manufacturing Risk Index 2021

  • China is the most sought-after manufacturing destination globally, ranking first in the Global Manufacturing Risk Index 2021.
  • The US ranked in the third position, followed by Canada, Czech Republic, Indonesia, Lithuania, Thailand, Malaysia, and Poland.

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Significance of improved ranking in the Global Manufacturing Risk Index

  • The improvement in ranking indicates the growing interest shown by manufacturers in India as a preferred manufacturing hub over other countries, including the US and those in the APAC region.

 

Key reasons for Improved Ranking in the Global Manufacturing Risk Index

  • India’s operating conditions and cost competitiveness: is the main reason for its attractiveness to global manufacturers.
  • India’s proven success in meeting outsourcing requirements has also led to an increase in the ranking year on year.
  • US-China trade tensions: resulting in plant relocations from China to other parts of Asia due to an already established base in pharma, chemicals, and engineering sectors.

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Scope for Improvement for India in the Global Manufacturing Risk Index

  • There is a lot of scope for improvement for India in areas like-
    • Managing the geopolitical risks involved in running the business.
    • Ability to restart its manufacturing business after a devastating second wave of the COVID-19 virus.

 

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