India has surpassed the United States (US) to secure the second position as the most favored global manufacturing destination, driven primarily by cost competitiveness, according to a report by real estate consultant Cushman & Wakefield. China maintains its top position in the 2021 Global Manufacturing Risk Index, evaluating advantageous locations for global manufacturing among 47 countries in Europe, the Americas, and the Asia-Pacific (APAC) region.

In its statement, Cushman & Wakefield noted, “India takes the second spot after China as the most sought-after manufacturing destination globally.” The US is now in the third position, followed by Canada, the Czech Republic, Indonesia, Lithuania, Thailand, Malaysia, and Poland. The reversal of positions between India and the US from the previous year’s report reflects the increasing interest manufacturers are showing in India as a preferred manufacturing hub.

The report attributes India’s growing appeal to its favorable operating conditions, cost competitiveness, and demonstrated success in meeting outsourcing requirements. The rankings are based on four key parameters: the country’s ability to restart manufacturing, business environment (talent availability, market access), operating costs, and various risks (political, economic, environmental).

The switch in rankings between India and the US is explained by plant relocations from China to other parts of Asia, particularly in the pharmaceutical, chemical, and engineering sectors, amid ongoing US-China trade tensions. Despite India retaining the third spot in cost scenario rankings, there are challenges ahead, particularly in managing geopolitical risks and restarting manufacturing operations after the impact of the COVID-19 second wave.

While India has made significant strides in becoming a preferred manufacturing destination, there is acknowledgment of the need for continued efforts, especially in areas requiring resilience against geopolitical risks and post-pandemic recovery.