The Covid 19 is an eye opener for the world. The disruption in supply chain in China can prove to be an opportunity for India. When China sneezed, the world caught the cold alluding China’s position as the factory of the World.
But is India prepared to take China’s position, the answer is yes in due course of time. The government of India should adopt a staged strategy, prioritizing several immediate, medium and long-term components. In the near term, the government should announce eye-catching schemes to invite companies to manufacture in India provide them with land in mega special economic zones, ready to move facility, sector specific friendly regulations, simple labor code and tax benefit.
India should target low hanging fruits initially in next six to eight months. Target should include pharmaceutical, mobile phones, machinery, and other sectors where there is a robust network of small and medium-sized enterprises (SMEs). These rapid early successes will set the momentum in attracting subsequent mega manufacturing investments in other sectors.
Still the process wont be easy as things are still at an evaluation stage and decisions are unlikely to be made in a hurry. In an environment where global balance sheets are fractured, relocating entire supply chains is easier said than done. The opportunity is same for Vietnam, Taiwan, Bangladesh and South Korea. In order to win this India will have to show comparitive advantage at par with other competitive destinations in Asia.
India without China ?
As the rhetoric in India grows over Chinese products in the light of the Ladakh tensions, the realities on the ground show the business relationship between Asia’s two economic giants is too big, too complex to blanket boycott.
Knowing the fact that Chinese Companies have heavily invested in Indian Startups and Companies. As many as 18 of 30 unicorn startups are Chinese funded. Major Chinese firms investments are Alibaba, Tencent and ByteDance.
The investments are made in Big Basket, Paytm, Paytm Mall, Zomato and Snapdeal, Byju’s, Dream11, Flipkart, Hike Messenger, Ola and Swiggy.
Chinese platforms that are directly available in India are in the form of TikTok, UC Browser, SHAREit, and Vigo Video, etc”. These apps have a significant user-base in both rural and urban India.
The domination of Chinese hardware is far more than one can imagine, the market share in Indian market is more than 70 percent. Brands like Xiaomi, Vivo, Oppo, One Plus, Lenovo, Motorola have become household name. A lot of China-made hardware, electronic items and home utility products sold in the open market don’t have any brand name to identify with.
India’s top imports from China are
• Electrical Machinery and equipments, television, Sound recorders
- Machinery, Nuclear Reactor, Boiler, Mechanical Appliances.
- Organic Chemicals
- Plastics
- Fertilizer
- Iron and Steel
- Vehicles other than railways and trams
- Ships, boats and floating structure.
- Textile
- Furniture One must explore the opportunity lying in front of them. It’s time Indians should focus more on manufacturing and technology sector to make itself “Atmanirbhar”.
15th May 2020