200 US Companies Wanted To Ditch China For India In 2019, That Number May Grow In 2020
Coronavirus outbreak has rekindled interest in shifting manufacturing bases from China to other countries. India is familiar with the situation and is actively making efforts towards it. Around 1000 companies have shared their proposals with the Indian government for setting up their alternate manufacturing hubs in the country.
Multinational firms across the globe had since long been pondering upon the prospect of shifting their manufacturing bases from China to other countries.
The outbreak of the novel Coronavirus now comes as a stark reminder of the necessity of the move. If so, India might stand to gain from this by being the next manufacturing destination.
India manufacturing hub
To be clear, the vision of India being one of the prime manufacturing hubs is not new. Back in April last year, around 200 US-based companies were seeking to move their manufacturing base from China to India. The interest was highlighted by a top US-based advocacy group, anticipating continues efforts towards the same post the general elections in India.
The enthusiasm did not really yield a significant investment in manufacturing hubs in the country at the time. The interest, however, has rekindled in recent times due to the massive impact on supply chains. The Coronavirus induced lockdown in China was enough to set several industries come to a standstill and this dependency on the nation is now under scrutiny.
What's India¡¯s response
India is familiar with the situation and is actively making efforts towards it. Back in March, the Indian government came up with three schemes for a total of Rs 48,000 crore worth of incentives to boost mobile phone manufacturing within the country. The incentives were aimed to attract top smartphone players including Apple, Samsung, Oppo and Vivo to set up their entire value chain in India. The idea was to then make India as their export hub.
(Representative Image: Reuters)
An ET report quotes a situational analysis by a top government official looking into the matter, ¡±the government is working to address disabilities across sectors, including for pharmaceuticals and automobiles, to try and establish India as an alternate to China for manufacturing for local and global markets across sectors,¡±
Building on the efforts, the Ministry of New and Renewable Energy (MNRE) has now set up Renewable Industry Facilitation & Promotion Board to facilitate investment in the sector. The ministry has also got in touch with trade representatives of various countries inviting them to "invest in this promising opportunity in India", a recent release by the ministry mentions.
In addition, the centre had slashed corporate tax to 25.17 percent back in September last year. Applicable tax for new manufacturers was also cut to lowest in South East Asia at 17 percent. The centre is now focussing on reducing the production cost in various sectors.
India as a preferred manufacturing destination
While India prepares for the opportunity at hand, companies are actively seeking the transition as well. A report by Business Today mentions around 1000 companies to have shared their proposals with the Indian government, for setting up their alternate manufacturing hubs in the country.
"About 1,000-odd companies are currently engaged in discussion at various levels such as investment promotion cell, central government departments and state governments. Out of these companies, we are targeting 300-odd companies," the report quotes a top official. The interest pans across the industries of electronics, medical devices, textiles and synthetic fabric.
(Representative Image: Reuters)
The interest is mutual among major trading nations including the US, Japan, South Korea and others, majorly propelled by the recent and prolonged break in supply chain from the far east nation.
Last week, the Japanese government earmarked a record economic stimulus package worth $2.2 billion to help its manufacturers shift production out of China.
Several firms from other parts of the globe are following suit. Apple¡¯s manufacturing partner Wistron Corp, for instance, was considering to assemble printed circuit boards (PCBs) for iPhones at its new plant in southern India. The new assembly line, if and when it comes, will be in addition to the a few models of iPhone assembled within the country already.
Whether Coronavirus-related impact across global product manufacturing and supply chain ends up benefiting India's manufacturing ambitions remains to be seen, but so far all the noise and signalling seems to be going in India's favour.
