India uses lockdown period as perfect time to woo Foreign investment
China has fallen from grace; it is no more a preferred cheap option for manufacturing. A lot of companies have shifted business or plan to do so quickly and are now scouting for cheaper options.
What has started as a result of the US-China trade war has precipitated into a mass exodus post the Covid-19 led supply chain disruptions.
Investors are looking scouting for other markets and India feels it’s a perfect opportunity for it to invite these investors to set shop in India states. Around 1000 foreign firms are already mulling production in India and are already in talks with the administration at different levels.
Of these, at 30 percent are interested in investment in mobiles, electronics, medical devices, textiles and synthetic fabric. Assam and Uttar Pradesh is already in news for welcoming investment with open arms. Sources have confirmed that many American, Japanese and Korean companies have decided to shift their production facilities from China to India. This is due to the adverse effect that the corona virus pandemic had on various industries which were forced close operations at the time of Chinese lockdown.
India has been one of the few nations, which has been extremely optimistic despite a lockdown situation and has been hopeful that this lull will only give its economy a huge boost.
According to, state industries minister Chandra Mohan Patowary, China should look at Assam as a perfect place to set shop due to “its abundant natural resources, strategic location and robust industrial infrastructure.”
Currently, the Assam government is already in talks with Japan External Trade Organisation (JETRO) and US-India Business Council and US Chamber of Commerce apart from other Indian industrial consortiums to move ahead with industrial investments in its state. Uttar Pradesh state government is also in talks with various embassies and accessing the investment patterns in Vietnam and Thailand to see how they can make their state investment friendly offering huge employment opportunities.
In comparison to Vietnam, which was being preferred as the next best destination to move manufacturing amidst the China-US trade war, India has made itself more sellable. In September 2019, the Centre slashed corporate tax to 25.17 per cent. This was a step taken in the right direction of boosting domestic manufacturing, For new manufacturers, the applicable tax was brought down to 17 per cent making it the lowest in South East Asia. Together with reduced tax rate and the roll-out of goods and services tax (GST), India hopes to attract sizeable foreign investment in the manufacturing sector.
The African sub-continent is also looking at a promising place where business could be shifted. But an unstable political situation may leave room for long term business planning.