Personal Protective Equipment, vernacularly known as PPE, is a term we’ve all come across several times amidst the global pandemic. From the shortage of PPE kits to countries ramping up the manufacturing process, are some of the only topics that made headlines most of 2020 and through the latter 2021. In between all this, the cardinal question of “What is PPE?”, comes to our mind. From being used by beekeepers as reported in ancient literature, to 16th-century plague doctors in Europe to modern times, Personal Protective Equipment has come a long way. It forms a very important part of the protective armor not only for the frontline warriors in healthcare but also in various other industries. The Oxford Dictionary describes personal protective equipment as, “clothing and equipment that is worn or used to protect against hazardous substances or environments.” They include not just the disposable coveralls worn during the pandemic, but all kinds of protective gear ranging from – helmets, safety shoes, leather boots, polycarbonate lenses, for the construction workers, to ear defenders for the aviation industry, jackets, gloves, ear defenders, to name just a few things. All equipment designed to protect our head, hands, body, feet, and against fall, comprises PPE. They protect us from contaminants, shocks, cuts, trips, biohazards, abrasions to name a few hazards, and it is India’s vital presence in the markets of such products that make India a viable contender for leading the global PPE production. For the analysis of India’s current position, and future growth prospects in the industry, we will thus try to look at the various elements that make India’s PPE sector strong.
An important aspect behind India’s growth story is the strong manufacturing sector of the country. It is considered the backbone of development in general and economic development. India has emerged as the second most sought-after manufacturing destination (Global Manufacturing Risk Index | Industrial Research) across the world indicating the growing interest shown by manufacturers in India as a preferred manufacturing hub over other countries, including the U.S and those in the Asia-Pacific region, showed Cushman & Wakefield’s 2021 Global Manufacturing Risk Index, and in October 2020, our manufacturing sector recorded improvement for the third consecutive month, with businesses growing production to the greatest extent in 13 years in the middle of robust sales growth.
One may wonder, what makes India special, and the mystery lies in a variety of reasons:
- Large Consumer Market: India is home to over 1.25 billion people. There is an increasing demand for several products due to the increasing wealth. As disposable income grows, many multinationals want to sell their products to the Indian consumer and the most cost-effective way to do so is to start manufacturing in India. As a result, the increased consumption will likely drive the growth of manufacturing operations in India.
- Availability of Labor: Companies eying the Indian market often choose to decide after assessing the availability of labor in the region. The India Skills Report 2021 found that about 45.9% of young people would be considered employable. Along with this, the Parliament has also approved four new labor laws which increase the scope of the workforce, provide greater autonomy to the employers, include more firms and employees under its umbrella, make the legal framework easier, and reduce compliance costs of the firms.
- Labor Cost Advantage: Speaking of the labor pool, India serves as a worthwhile alternative to China because of its lower cost of labor. As of 2020, the hourly manufacturing labor cost in India averaged less than 2$, compared to $5.51 in China, which makes manufacturing in India 80% cheaper for labor intensive products and overall, an economical option.
- Raw Material Control and easy raw material availability make it easier to manufacture in the country near the sources. For instance, in the fiscal year 2020, the production volume of performance plastics across India was around 1.7 million metric tons. The Indian chemical industry is highly diversified. With a coverage of over 80 thousand products, India is the sixth-largest producer of chemicals in the world and the fourth largest in Asia. It is also the second-largest producer of cement, just after China, producing 340mn MT of cement in 2020 (Garside) and the third-largest producer of power, with the country’s solar, installed capacity at 47.7 GW as of 31st October 2021.
- Political Stability: Service-oriented companies can shut down their offices and move to other locations overnight without causing too much financial distress. However, this is not the case with manufacturing facilities. The amount of money and area required to build such facilities is huge. Also, the gestation period to recover the investment is quite large. Companies would not want to build their facilities unless they are sure that their investment is secure. After a long time, India has had a government that has sustained majority votes and has been issuing manufacturing-friendly policies looking to improve supply-side economics.All these aspects of Indian manufacturing have now been revitalized with the Atma Nirbhar Bharat Abhiyan package introduced by the government. Under this plan, the government announced a $280 billion package in May 2020, which focused mainly on the supply side, and long-term reforms to induce private investment.Along with this India is seeking duty free market access for leather goods in countries, including the UAE, the UK, and Australia, as quoted by the Commerce and Industry Minister Piyush Goyal which further opens doors for the growth of the PPE industry in the country.
- Geographical Location: The geographical location of India is advantageous to foreign trade and commerce due to its 7,517 km-long coastlines. Besides, the location of India is placed in a way that extends between the Middle East and the Far East. The Trans-Indian Ocean passages are connected to both the industrially advanced countries of Europe and the developing nations of East Asia. In this way, India is placed in the center, and therefore, it possesses a favorable spot for practicing trade with Australia and other African nations, the Europe, and the Far East.
While these facts prove that India is indeed a worthy option for manufacturing goods, the question remains – Does this fact hold for the PPE industry also? Is India capable of rising in the global PPE Market?
To answer these, we analyze two of the primary products used in the production of this equipment – Textile and Leather. Textile is the basic product required to make any workwear, be it a coat, or jacket, or coveralls also gloves and shoes now while leather is used to manufacture gloves, shoes, boots, workwear, to name a few things.
The Ministry of Textiles is playing a major role in supporting India to become a world leader in PPE manufacturing. An outreach program has been launched by the Ministry of Textiles and Ministry of Health & Family Welfare (MoHFW) inviting fabric and garment manufacturers to develop suitable products and build manufacturing capacities on a war-time basis. The government has notified the $1.45 billion Production Linked Incentive (PLI) scheme for textiles, specifically aimed at boosting the production of man-made fiber (MMF) fabric, MMF apparel, and technical textiles. PPE is covered in the technical textiles under the scheme. This would encourage producers to move towards boosting PPE production, as participating companies expected to achieve the minimum turnover requirements after a gestation period of two years and starting FY25 are entitled to a 15% incentive on attaining the required turnover in the first phase of the scheme.
Along with this, the government has also notified about the setting of the PM-MITRA Scheme, under the Union Budget 2021-22 wherein 7 mega textiles are to be set up, with a total outlay of $600 million. These parks will offer an opportunity to create an integrated textiles value chain right from spinning, weaving, processing/dyeing, and printing to garment manufacturing at 1 location. Along with this, it is intended to generate about 1 lakh direct and 2 lakh indirect jobs through the park. For holistic development, the Hon’ble Prime Minister has cited the ‘5F’ Formula- Farm to fiber; fiber to factory; factory to fashion; fashion to foreign. This formula aims to enhance the position of the country in the global textile market which is inclusive of PPE workwear.
The leather industry in India accounts for around 13% of the world’s leather production of hides/skins and handles a robust annual production of about 3 billion sqft. of leather. The industry is known for its consistency in high export earnings, and it is among the top ten foreign exchange earners for the country. India has an abundance of raw hide with access to 20% of the world’s cattle and buffalo and 11% of the world’s goat and sheep population.
Both analyses prove that India is on its way to healthy growth in the PPE industry. Given the right nudge and support, there is no doubt that India will emerge as a leader in the global market. The COVID outbreak has taught that if push comes to shove, India will shine brighter than all. The country, which was not manufacturing any PPE kits before 2020, achieved an almost unrealistic goal of producing 2.06 lakh PPE kits daily within two months and we are now the second-largest producer of the kits in the world. This only shows the commitment of the producers and the government to take the country to the top. To bridge the information gap, the GoI has involved DRDO, Apparel Export Promotion Council (AEPC), and Bureau of Indian Standards (BIS), and Confederation of Indian Industries (CII) to disseminate the important information about quality, processes, and ways of addressing technical and resource issues.
Through a coordinated effort, the GoI has thus been able to develop the business ecosystem where local manufacturers could be guided by bigger players in the market and industry associations. PPE kits are just the tip of the iceberg, if such steps are taken for the entire industry, it would not be wrong to say that the Indian Tiger is ready to pounce into the future.
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