India seems to be working on the latest package of offers to lure businesses moving away from China, with businesses from Samsung Electronics Co. to assembly partners of Apple Inc. expressing interest in investing in the South Asian country. In March, the government of Prime Minister Narendra Modi proposed rewards to made niche businesses — electronics producers — liable for a payout of 4% -6% of their incremental revenue over the next five years. The result: about two dozen firms promised $1.5 billion in investments to set up the country's cell phone factories.Besides Samsung, Hon Hai Precision Industry Co., branded as Foxconn, Wistron Corp., and Pegatron Corp. are others who have shown interest. India has already provided similar offers to pharmaceutical firms and aims to include several industries under the scheme, which could include vehicles, textiles, and food manufacturing.
Although companies have been aggressively trying to diversify supply chains during U.S.-China trade disputes and the coronavirus epidemic, despite the nation making it easier for companies to open shop, it has not yet converted into big profits for India. According to a recent survey by Standard Chartered Plc, Vietnam remains the most favored destination, followed by Cambodia, Myanmar, Bangladesh, and Thailand. One of the first ports to settle for closer inspection of Chinese imports was the Port of Chennai, a vital import center for automotive and technological products. Imported goods from India were also held back by Beijing in Hong Kong and Chinese customs in response. Tensions with China may also have a big effect on the pharmaceutical industry in India, which is the third-largest in the world by volume, accounting for 60 % of the world's overall exported drugs and medicines.
In terms of gradual investment in supply chains within the country over the medium term, there is a fair possibility for India to benefit. These projects seek to increase India's share of the gross domestic product in manufacturing. There is a risk for carriers to circumvent ports and, as a result, manufacturers with suppliers located in India and China can prepare inventories to ensure that production schedules can be fulfilled if port congestion continues and Chinese imports are subject to additional strict customs regulations or tariffs, the DHL report noted. The Economic Times claimed that Samsung plans to produce $40 billion worth of smartphones in India and could move a large part of its production from Vietnam and other nations, citing individuals it did not name. Samsung didn't respond to newspaper inquiries. According to analysts led by Neelkanth Mishra at Credit Suisse Group AG, the incentives would help bring an extra investment of $55 billion over five years, contributing 0.5 percent to India's economic performance. This could move an additional 10 percent of global smartphone demand to India in five years, most of it from China, they wrote in a study on Aug. 10. That complements Modi's target as part of his 'Make in India' policy to increase the share of manufacturing in the economy to 25 percent from the current approximately 15 percent. His government has now cut corporate taxes to one of the lowest in Asia, aiming to draw new investments in an economy that is heading for its first recession in over four decades this year.
References:
https://www.india-briefing.com/news/covid-19-india-impact-supply-chain-china-19724.html/
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