The coronavirus (COVID-19) pandemic has shaken up the entire world and India too has not been spared from its effects. However, amid this challenging situation, India is emerging as a new global manufacturing hub. In fact, companies are finding ways to diversify their supply chains and find new markets.
Many headlines show India becoming a destination of choice for global manufacturing giants currently manufacturing in China. Talking about past, many countries like South Korea, America and Japan were earlier dependent on China. However, now they are looking forward to shifting some or all of their manufacturing to India. These companies belong to different sectors including pharmaceuticals, automobiles, electronics, textiles and computer hardware.
Some of the big names that wish to shift their business from China include Teledyne (American Electronics and Technology firm), Wistron Corporation (Taiwanese subsidiary of Apple), Hyundai Steel (South Korean) and Johnson and Johnson (US-based pharmaceutical company).
Besides, Facebook has invested USD 5.7 billion in Reliance Jio during the coronavirus pandemic. Furthermore, a well-known German footwear brand, Von Wellx will soon shift its production from China to Agra. The company will bring an initial investment of USD 14.5 million (Rs. 110 crores) in India. All headlines demonstrate that foreign companies see a substantial economic and growth potential in India.
Benefits of having a manufacturing set-up in India
India has many advantages as a manufacturing hub for companies worldwide. The country has low-costs in manufacturing, relatively cheap land and labour, ever-improving infrastructure and favourable business policies. Furthermore, there are reduced corporate tax rates and government support.
Besides, India is aggressively working to enhance its supply chain capacities. This will help cater to foreign companies looking to shift from China to India. One example of this is the successful running of the first double-stack container train by the Indian Railways. It reflects that India is capable of providing a world-class facility for the movement of goods by any transportation network.
Furthermore, India climbed another 14 positions to stand 63rd in the World Bank’s Ease of Doing Business 2020 report.
Government Efforts to Boost India as a Top Manufacturing Destination
The Indian Government is actively bringing reforms to boost the Indian economy and promote FDI. Some of the steps taken by the Government include:
- The corporate rate tax has reduced from 30% to about 25%. India’s corporate tax rate is now the lowest in Southeast Asia.
- Introduction of initiatives such as ‘Make in India’ and ‘Skill in India’. They focus on creating job opportunities in the manufacturing sector. Moreover, they also focus on enhancing skill development to create a large pool of skilled human resources.
- Land acquisition rules have relaxed.
- Companies and Limited Liability Partnerships benefit from several relaxations in the Companies Act 2013 and LLP Act 2008.
- Income tax, GST and customs reliefs came in as Lockdown lifted.
We have organised a webinar on 30th June 2020. Here our experts will talk about the opportunities and the road ahead for setting up a manufacturing facility in India.
The webinar is for Country Heads, CEOs, MDs, & CXOs of foreign companies. Especially, those who are looking at setting up new manufacturing plants or considering a change in its manufacturing strategy.
Please click here to get the recording of “Expert Talk: Business Beyond COVID-19: Make in India“.