1,000 Companies May Exit China & Come to India
Due to COVID-19 outbreak and its origins in China, many foreign companies are planning to relocate productions to India.
China has always been known as a manufacturing hub. But now companies are talking about “Exit China”
In this coronavirus situation, major countries are expected to move production factories out of China. According to top government officials, many countries like Japan, US and South Korea are very dependent on China. Japan has announced $2 billion financial aid for its companies to shift production out of China. Many countries would follow Japan’s idea. This will benefit India
About 1000 foreign companies are in talks with Indian authorities to shift the manufacturing to India. About 300 of these companies are strongly planning production plans of mobiles, electronics, medical devices, textiles and synthetic fabric in India. To support local domestic production and with the hope to get more foreign investment, in September 2019 the government had reduced corporate tax to 25.17 %. This rate is lowest in South East Asia.
Guruprasad Mohapatra, Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) said, "India is an attractive destination because of its market size and also it is a possible hub for exports in the future. Government is trying hard to show India as a manufacturing hub. But the production cost difference between India and South East Asian countries is about 10-12 % Now India is trying to focus on reducing the production cost.
The government thinks that the large market size of India is a big plus for manufacturers. An official involved with the government's Make-in-India initiative said."If you manufacture mobiles in Vietnam, you have to export them. You can't sell there as there is no local market," However In India there is a huge demand for cheap phones and companies can even export their products after manufacture.
