India tries to attract manufacturing firms . . .
Bloomberg has reported that India is developing a massive land pool twice the size of Luxembourg to attract manufacturing companies. Difficulties with land purchase has reportedly been one of the main issues for companies looking to invest in India, which has delayed projects and added substantial cost. Through these new measures, the Modi government hopes to facilitate the attraction of new investments, which are very much needed as India’s economy is facing significant challenges with an expected contraction of 15 per cent in its GDP.
COVID-19 accelerates manufacturing relocation . . .
Rising labor costs and the political uncertainties created by the U.S.-China trade war have already forced multinational companies to reconsider their global supply chains and diversify their manufacturing capacity away from China. The pandemic is poised to accelerate this trend of relocation away from China, which India seeks to capitalize on through numerous policy and fiscal incentives. More specifically, New Delhi has taken measures to enhance conditions of doing business in land purchase, labour, and taxation – three areas of challenge that have been flagged by investors, and the new land policy is part of this initiative.
Challenges ahead . . .
India has made significant progress in enhancing its business environment in recent years, and the new land policy for investors seems to be a step in the right direction. Combined with its economic potential, some believe that India has what it takes to win this new wave of global rebalancing for a range of advanced and labor-intensive industries. However, India, ranked 63rd in the World Bank’s ease of doing business index in 2019, highlighting several challenges to seize the “Make in India moment” such as difficulties for conducting business and poor infrastructure. The Modi government will need to do more to capitalize on the China exodus.
- Bloomberg: India offers land twice Luxembourg's size to companies leaving China
- Hindustan Times: Once lockdown ends, govt plans Make in India boost
- Times of India: The Make in India moment is here