China’s Loss = India’s Gain: India decided to become “Atmanirbhar Bharat” wherein the Government decides to make most of its indigenous items. Government’s latest set of incentives to entice businesses moving away from China and they decide to work with companies like Samsung, Apple etc. Companies also show interest and they decide to invest in the country.
The government has announced new initiatives that encourage electronics manufacturers eligible for a payment of 4%-6% of their incremental sales over the next five years, in March. As a result of this announcement about two dozen companies pledged $1.5 billion of investments to set up mobile-phone factories in the country.
Besides Samsung, there are several other companies that have shown interest are Hon Hai Precision Industry Co, known as Foxconn, Wistron Corp and Pegatron Corp. India has also taken decisions to extended similar incentives to pharmaceutical businesses, and for more sectors that include automobiles, textiles, and food processing under the program.
Due to the US-China trade tensions and the coronavirus outbreak, companies have been actively looking to diversify supply chains; India hasn’t yet received any big opportunity, despite the nation making it cheaper for businesses to open shop. The number one in the list would be Vietnam, followed by Cambodia, Myanmar, Bangladesh and Thailand, according to a recent survey by Standard Chartered Plc.
Samsung plans to make $40 billion worth of smartphones in India and may shift a major part of its production from Vietnam and other countries, the Economic Times reported, citing people it didn’t identify. Samsung didn’t respond to queries from the newspaper.
According to analysts Neelkanth Mishra’s of Credit Suisse Group AG these decisions would help bring an additional investment of $55 billion over five years, adding 0.5% to economic output. In a report they wrote on 10 August mentioned this could shift an additional 10% of global smart-phone production to India in five years, most of it from China.
That complements PM Modi’s goal to grow the share of producing within the economy to 25% from the present around 15% as a part of his ‘Make in India’ program. The government has already lowered taxes on companies to among rock bottom in Asia, seeking to draw in new investments in an economy headed for its first contraction in additional than four decades this year. The latest output-linked incentive plan may be a “big win for Make in India,” Amish Shah, an analyst at BofA Securities, said during a report back to clients.