Companies Shifting From China To India | Companies Moving to India -Explained

Are American companies shifting from China ?
USA will shifting 200 companies from china to India ?
China claims that they have stopped the spread of COVID-19. After the intense lockdown Chinese manufacturing sector has started to reopen. But after this pandemic China's manufacturing sector will not be the same as it was before.
In the recent COVID-19 pandemic, companies got to know that they cannot depends on only one supplier for their products. Also governments across the globe are encouraging their companies to move out of china. To know more on "Why Companies are moving out of China watch this video : https://youtu.be/Y_t1bb8dfsk
Companies are now looking for alternative for china. And they are considering countries like India, Vietnam, Malaysia, Indonesia & Mexico.
The investors always thought of Vietnam as the best for manufacturing. Yet there is a country which has been driving a lot of attention lately.
And that is India.
Companies are shifting from China to India.
India has a bunch of reasons why investors should be looking forward to it as a first preference.
Reason no.1 - Low labour cost
This is one of the major reason behind companies moving in India.
The average monthly wage for a Chinese labour is between 140 dollars to 340 dollars. And in India it is as low as 70 dollars to 200 dollars. So it is significantly cheaper to manufacture any products in India compared China.
Reason no. 2 - Low taxes
Last year in 2019 the corporate tax in India was cut down from 30% to 22% and for new manufacturers it is 15% from 25% back then. This is lowest corporate tax in South Asia region right now. Also implementation of GST in tax collection makes easier for companies to pay their taxes. All this reforms attracts more investors in India.
Reason no. 3 - Indian's huge market
India has second largest population in world.
Even if you sell your products to 5% of people in this country, It will be more than the entire population of most of the countries. Also if companies are manufacturing their products outside India they have to pay extra for export taxes and transportation.
Reason no. 4 - Democracy
India is a democratic country. So most of the western companies can easily adapt them self for Indian markets, Law and order, government agencies and culture of India. Unlike china in India companies have fair competition in markets. And they can easily sue anyone including government. So companies feels more secure in India than China.
Reason no. 5 – India’s growth in the past years
India has roughly same population as china. Also India is 5th largest economy in the world. And India has lifted more than 300 million people out of poverty in last 18 years. Unlike china, India's growth does not came with rise of manufacturing industry. But it came with its service based industry like IT, banking and retail. But from last couple of years manufacturing sector of India has grown significantly. According to some sources India's manufacturing sector is increasing 8% per year.
There are many reasons ‘Why India could be the next manufacturing hub.’
But along with that India have some limitations they need to work on. Because of these limitations companies around the world are concerned.
Limitation no. 1 - Poor infrastructure
Although India is working on its infrastructure, it is not good as china or even Vietnam. Companies in China were established decades ago. Also they have good access of global supply chain in China.
Limitation no. 2 - Ease of doing business
If companies want to open manufacturing in India, they have to go through 12 procedures and this requires nearly 27 days. Also the corruption in India has been a major concern for Multinational companies from a long time.
Limitation no. 3 - Currency
India’s currency, rupee is very volatile because of free-floating currency. But countries like Vietnam have more stable currency because of crawling peg system. That means value of one dollar in Vietnam does not change suddenly. And this is beneficial for companies.
Limitation no. 4 – Political issues
Building an exclusive economic zone or a manufacturing plant requires lot of land. And during acquisition many oppositions can be made, this can become a political issue. So this kind of thing is also a big issue for companies.
But from last couple of years government is taking some actions to solve these problems. Also India is changing policies to attract companies and boost the economy. The Make in India initiative has also attracted many foreign investors in India.
Companies Moving to India is true.
So, all of this could lead India to become the next big manufacturing hub.

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