China's loss may become India's gain in shifting supply chains
NEW DELHI: India’s latest set of incentives to entice businesses moving away from China seem to be working, with companies from Samsung Electronics Co to Apple Inc’s assembly partners showing interest in investing in the South Asian nation.
Prime Minister Narendra Modi’s go nment in March announced incentives that make niche firms -- electronics manufacturers -- eligible for a payment of 4%-6% of their incremental sales over the next five years. The result: about two dozen companies pledged $1.5 billion of investments to set up mobile-phone factories in the country.
Besides Samsung, those that have shown interest are Hon Hai Precision Industry Co, known as Foxconn, Wistron Corp and Pegatron Corp. India has also extended similar incentives to pharmaceutical businesses, and plans to cover more sectors, which may include automobiles, textiles, and food processing under the program.
While companies have been actively looking to diversify supply chains amid the US-China trade tensions and the coronavirus outbreak, it hasn’t yet translated into big gains for India despite the nation making it cheaper for businesses to open shop. Vietnam remains the most favored destination, followed by Cambodia, Myanmar, Bangladesh and Thailand, according to a recent survey by Standard Chartered Plc.
“There is a reasonable chance for India to gain in terms of incremental investment of supply chains within the country over the medium term,” said Kaushik Das, chief India economist at Deutsche Bank AG in Mumbai. “These programs are aimed at increasing India’s manufacturing share in the gross domestic product.”
The go nment expects the program for electronics alone could lead to $153 billion worth of manufactured goods over the next five years and create about one million jobs directly and indirectly.
This would bring an additional investment of $55 billion over five years, adding 0.5% to India’s economic output, according to analysts led by Neelkanth Mishra at Credit Suisse Group AG. This could shift an additional 10% of global smart-phone production to India in five years, most of it from China, they wrote in a report August 10.
That complements Modi’s goal to grow the share of manufacturing in the economy to 25% from the current around 15% as part of his ‘Make in India’ program. His go nment has already lowered taxes on companies to among the lowest in Asia, seeking to attract new investments in an economy headed for its first contraction in more than four decades this year.
The latest output-linked incentive plan is a “big win for Make in India,” Amish Shah, an analyst at BofA Securities, said in a report to clients. He sees gains for industrials, cement, pharmaceuticals, metals and logistics, with long-term indirect benefits across many sectors.
Steps taken by this go nment will realise in 3 to 4 years and start production in India. It is good step in deed.
This govt has another 24 -27 months to make the economy gallop.. so that NDA forms the next govt in 2024..
There is nothing impossible.If there is a will there is a way.Let us hope for the best.
Improved working environment and incentives will surely lure MNC's to shift their manufacturing base to India
Indians have to be as hardworking as the Chinese.
under the present gov, nothing much is going to happen. world knows the policies of this gov.
For Progress Like China?? Urgent Need is Strict family Laws!! 2-Children Only!!
India now has more daily new Covid-19 cases than any country on earth. Things are rapidly deteriorating across the board. But, Feku keeps on creating new jumlas on a daily basis, despite the fact that 80 crore people now need free food grains to keep themselves alive.
Talk is easy and cheap. When they open up shop here we can boast about it. Until then please stay quiet.
There is something called technology which is with China still, India cannot even make a pcb the basics of electronics and thinking of shifting jobs to India. China spends 48 billion dollars for education and India 2 billion, priority of our govt is religion and thinking about competing with China
you should shift to China
Just dreams till realized.
First do than talk. Only empty talk as usual.
Who would want to invest in India where Modi is busy destroying economy. We dont even have roadmap of where lockdown would would end. Out of 42 textile firms that left China, 22 went to Vietam, 12 to Bangala Desh and only 2 came to India.
May?....we live on this may.......Always hoping for the impossible. Rehmo karam pe jeena bolte hein isko. We have to grow strong by Honest hard work and with faith in self....rather than hoping for miracles. They dont happen.
I have dealt with Chinese suppliers. The facts are that the quality has improved. Besides the service levels are consistently superb. There is a genuine caring attitude from all staff of a Chinese supplier. Their approach is under commit but over deliver.
No hope for a corrupted country like India. We can't compete to China. All the border states of India are still underdeveloped compare to the to border states/province of China. Indian Governance is far behind in comparison to China, Thailand and Japan etc.
Economy already going negative. Such news will not lift economy. Economic blunders are having negative effect now
Unless corrupt politicians & officials are rooted out, its just a dream.
India should grab the chance with both hands.
stupid article india is at loss by banning imports from china...really idiotic move
Keep on hallucinating!!
Maybe more tea stalls will be set up!