A solution to supply chain chaos

China’s ambitious “Made in 2025” campaign to move up the manufacturing value chain has seen many investors look elsewhere for the next wave of cheap goods production. With over 1.4 billion people, low comparative wages and young demographics, plenty see India as a more than suitable candidate. But that view may be short-sighted, according to India Avenue Management’s Mugunthan Siva. In today’s appearance, he explains why value-added exports are the name of the game for India rather than trying to compete purely on labour costs, a view bolstered by Apple recently shifting manufacturing of some iPhone components from China to its neighbour to the west. Mugunthan says India’s scale, health of corporate balance sheets which sit at all-time lows in aggregate debt-to-equity terms, put the nation in a good position for capex additions to help build capacity and increase global market share. “What is happening is that India’s global market share in trade is rising,” he says. “For example, India’s trade with US is rising relative to China’s.”