Recently, Japan declared ‘India’ to be included in the list of South-Eastern Asian countries for manufacturing base alternative to China. This will allow Japanese firms to avail the financial benefits, under the National Subsidy Scheme, provided by the Japanese government for shifting out their current Chinese operations.
This development is a crucial announcement at this point of juncture when on one hand Indian economy is desperate for a V-shaped recovery and on the other China is continuously hardening its approach in the South East Asian region along with the Chines role in spreading Coronavirus due to their shabby immediate handling of the pandemic, which is ultimately hurting biggest economies of the world including India.
Now, the real question is whether India really deserves to be an alternative to China and more than this whether Indian supply chain, infrastructure, government policies and the rule of law; is developed enough to roll red carpets for giant corporations for their South Asian operations if not global? The answer is YES. There are multiple evidences available for us to conclude this right from the capabilities generation of the skilled manpower to the infrastructure priorities of the government to the financial access to ancillaries and MSMEs. For any nation ‘The bureaucracy’ is the backbone and that remains upright if the political leadership has the will and courage to push in the right direction unlike the traditional vote bank politics. For India, since her freedom from the colonial rule, never before Indian leadership was so committed for international business and this we could see in the recent steps taken by the current leadership. Be it GST, formalisation of economy, maintaining rule of law, digitisation of government interactions, single window clearances, Redressal mechanisms, Export Zones, so on & so forth; all these steps along with many others only laid the foundation for global businesses to operate confidentaly. Such a nation to play global role and exactly our point to congratulate our finable prime minister Mr. Modi.
Moving a step further towards the assessment of the on-ground implementation of such policies. How far are we from the letter & spirit misbalance? well, the reality is still far away form the anticipated. Though, we have seen the fast paced developments on the top but below, on the ground, the action is delayed and lethargic from the local authorities. The reason is simply i.e. the size of India and the resources available for running such grand visions. On the other hand, this very big market is the attraction point for foreign companies to not ignore India. No doubt volume is the ‘can’t ignore India’ factor and will continue to be so for businesses all over, while evaluating India market. On the top of it is the millennials, young population, which is getting skilled at a much faster pace than ever, adds to the comfort of human resources departments of MNC’s. In order to further make India a more attractive investment destination government has recently allowed states to create fast tract investment models with a quick dedicated single window clearance access to the executives. There are dedicated land banks being identified and made available for foreign businesses with some additional corporate tax waivers for initial 5 years.
In the recent pandemic crisis of Covid-19 we have witnessed a realisation for governments towards self reliance (a totally different concept from protectionism) which in turn has created a possibility of future demand for products which are locally made in India. This will be a crucial input for decision to create local manufacturing in India which is also what government is targeting to reduce the import bills. The import tariff are increased for many China based import products which is also a key factor for growth in domestic manufacturing. Recently, many local trading associations in India has collectively come out in support of Indian governments strict stance towards Chinese imports. They want to sell locally sourced and made products provided the quality is up to the mark. This quality improvement can be quickly improved if the global giants are manufacturing locally, training the local manpower and educating customers about the non-Chinese quality of products.
For the manufacturers China is no further a sweet spot for contract manufacturing after Covid pandemic. The unsaid faith in the humanity was shaken when world was kept unaware of the virus spread in China, by the Chinese authorities. This disappointment is further added when Chinese government is involved in the arm twisting tactics let alone being guilty of the current pandemic. Similarly, the US backed block of nations, of which primarily are the South Asian nations, are in no mood to entertain Chinese hegemony both politically and economically when they feel they can be bullied. On the other hand India is a land of mahatma and our constitutional ethos & the foundations lie in the equality of all & respect of all.
Presently in India, we see that locally markets are open & running well (though less than pre-covid levels, with customers now inculcating post-covid world developments. Still India is managing the pandemic well along with fast tracking economic measures being implemented. Overall, a win-win situation lies ahead for the foreign firms to enter India and Indian government to attract foreign investment.
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