India Should Be Ready To Welcome Companies From China
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12-May-2020

India Should Be Ready To Welcome Companies From China

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Union Minister of Road Transport and Highways and Micro, Small and Medium Industries Nitin Gadkari is saying that no one in the world wants to invest in China and we have appointed a Joint Secretary level officer in our ministry to do this work Foreign investment can be brought to India. Gadkari has said that India should take advantage of the worldwide mistrust of China. He has expressed confidence that the Indian government under Prime Minister Narendra Modi will be able to take advantage of this opportunity.

As a minister in the Government of India, Nitin Gadkari's goodwill seems natural and the country is also looking at the way that when India exits China, their natural destination will be India. According to the latest UBS market report, India may be the most suitable place for companies going out of China. The report was released by UBS on the basis of interactions with top executives of 500 major companies. Many agencies in the world also believe that India may be the best place for companies wishing to exit China, but investment from such a goodwill report does not. 

For companies to bring their units to India from a country like China, it is most important that the Government of India prepare a report of companies setting up manufacturing units in China, for what reasons these companies are frozen in China. India has become competitive with China in terms of cheap labor and uniformity in policies but has any such report been prepared by officials of the Ministry of Foreign Affairs and Finance of the Government of India on other parameters.

The answer is not visible at the moment and here the problem seems to be bigger than only such reports will show how companies coming out of China will come to India. 

It was only during the trade war between the US and China that American, Japanese and South Korean companies started preparing to exit China. Only then the Government of India should have made this preparation on a war footing, but the Government of India could not succeed in it.

Certainly, Prime Minister Narendra Modi and Foreign Minister S Jaishankar have diplomatically improved relations with the US, Japan, South Korea and other countries so much that India may be the first priority for companies of these countries under goodwill, but we must understand It would be that large companies do not move their investment from one country to another on the basis of goodwill report.

Especially moving companies from China to their manufacturing unit in another country is more difficult because companies have invested heavily in China. 

Now, look at some facts. Rico shifted the printer production unit from Shenzhen in China to Thailand in July itself. Nike is also exploring the possibility of coming to India along with Vietnam and Thailand. A Panasonic official had clarified that his company was exploring the possibility of moving out of China.

Japanese automaker Mazda has shifted production from China to Mexico amid this epidemic. And all this is happening despite the fact that the Government of India has reduced the corporate tax from 35 percent to about 25 percent to bring foreign companies to India under 'Make in India'. In many cases it has been increased to 22 and in case of new companies to 15 percent. 

The people have chosen Narendra Modi as Prime Minister with a thumping majority to plan and implement this historic occasion in favor of India. Companies that start their business outside of China can turn to India, but for this they will have to formulate the right policy and negotiate with them and assure them of starting economic activities immediately.

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