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My colleague @ISOcertified & I recently wrote in @Diplomat_APAC on diversifying supply chains in the wake of #COVID19. A few commentators have brought in some skepticism on India’s ability to cash. We're fact-checking some commonly pointed concerns (1).. https://thediplomat.com/2020/04/after-covid-19-manufacturing-indias-new-economic-potential/
Skeptics commonly point to restrictive trade regime, labor, land, tax uncertainties & lack of investment strategy. GOI has overcome some of these problems. Due to this reform trajectory, we believe #India is more closer to attracting manufacturing investments than ever before (2)
Some major reforms for which govt doesn’t get enough credit: bridging production cost difference between #India & SE Asia. GOI is bridging through some sector-specific policies. Ex: MeitY's trilogy of manufacturing schemes to provide production, capital & land/infra incentives(3)
This will bring #India at par with the most competitive electronic manufacturing destinations in Asia ($10 bn incentives for electronic manufacturing) ii)Tax breaks: tax cut of $20bn announced September 2019 was also aimed at competing with SE Asia (4).. https://economictimes.indiatimes.com/industry/cons-products/electronics/cabinet-approves-production-linked-incentives-for-electronics-manufacturing-firms/articleshow/74746717.cms?from=mdr
This had already made India more attractive to companies looking for alternate manufacturing locations to #China. Furthermore, land reforms- such as land pool of 461589 hectares to lure businesses moving out China is a welcome move in this regard (5).. https://www.bloomberg.com/news/articles/2019-09-20/india-announces-slashing-corporate-tax-rate-for-local-companies
However, the GOI has to still come up with a strategy to utilize #India's strategic eastern coast & connect with Asia-Pacific markets cost-efficiently, protect investment zones, provide regulatory predictability & access to international arbitration (6) https://economictimes.indiatimes.com/news/economy/policy/india-offers-land-twice-luxembourgs-size-to-firms-leaving-china/articleshow/75534412.cms
On tackling #China’s internal supply chain strengths: #Modi govt has learned from its mistake of projecting #MakeInIndia across diverse sectors & is focusing on 10 sectors: #pharma #electricals #heavyengg #chemicals etc, where #India has strong advantages. https://www.wionews.com/india-news/india-developing-land-twice-luxembourgs-size-for-firms-moving-out-of-china-says-report-296777
This is more likely to succeed as #India has well-developed domestic supply chains in these sectors with robust MSMEs which consistently rank among the country’s top 10 exports. Companies leaving #China in such sectors would definitely look favorably upon India’s strengths (8)..
On labor reforms: the sweeping reforms by states such as UP & MP is a positive development. The states should now clarify that these are applicable to both existing & future investments & also extend them for a period beyond 3 years #India (9).. https://twitter.com/someshjha7/status/1258421242538930177?s=20
